Some key words and phrases explained

Additional State Pension

A pension paid on top of your basic State pension. It used to be called SERPS, but it is now called State Second Pension. Self-employed individuals cannot build up an additional State pension.

Alternatively Secured Pension

From age 75, a way of getting an income from your pension fund without buying an annuity. The income is taxable.

Annuity rate

The amount of monthly income you get for your pension fund, which is dependent on several factors such as your age, sex, state of health and the type of annuity you require.

Anti-Forestalling

This is legislation introduced on 22 April 2009 to restrict high rate income tax relief on pension contributions for high earners. Please contact us for further details.

AVCs – Additional Voluntary Contributions

A pension top-up policy for an occupational pension. You pay contributions into a scheme run by your employer to boost your main pension.

FSAVCs – Free-Standing Additional Voluntary Contributions

A pension top-up policy for an occupational pension, but separate from your employer’s pension scheme. It is normally run by an insurance company.

Lifetime annuity

An investment that converts your pension fund into a lifetime pension income. The income is taxable.

Market value reduction

A reduction to your pension that could apply if you want to cash-in your with profits policy before or after its maturity date or other date(s) specified in the policy.

Open Market Option

Your right to shop around and purchase your annuity from the company offering the most advantageous deal.

Relevant Income

Is broadly earnings from employment and self-employment, pension income and investment income, less gross pension contributions up to £20,000, any gift aid deductions and any trading losses. There are other considerations – you should contact us for details.  

Retirement annuity contract (RAC)

A RAC is similar to a Personal Pension, but could only be arranged before 1988 when Personal Pensions first became available.

S32 policy (buy-out bond)

Used by members of occupational pension schemes when they leave service or the scheme is wound up. A way of securing pension scheme benefits in the name of the employee.

Tax-free lump sum

An amount of cash set by HMRC which you can take at retirement free of tax. Individual pension schemes may have different rules on the amount of tax-free cash you can take.

Triviality

Taking your pension benefits as cash if they do not exceed a certain level. This level changes each tax year.

On-line Valuations

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2010 Budget Report

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Contact Us

Email enquiries@jeames.co.uk or call on 020 7608 1455 to see how our services can apply to your circumstances.