Jargon Buster

Most traditional equity and managed funds focus on beating a stock market index or other managed funds. This means they tend to go up and down in line with other funds in these sectors - their returns are judged relative to other investments. Absolute Return funds are, as the name suggests, not focused on beating other funds but on generating positive (or absolute) returns, typically over a 3-5 year period.

This is where serious illness cover is selected in conjunction with life cover. If the benefit is claimed, it will reduce the level of life cover by the amount of the claim.

Also known as: Accelerated Critical Illness Benefit

This is a benefit included on some life insurance policies. A life insurance policy does not come into legal effect until you pay the first premium to your insurance company, but some insurers offer 'accidental death' benefit from the date they receive your application form.  This means that if you die suddenly before the policy is issued, the life company will pay out either the sum assured or a certain percentage of it, up to a specified limit.

The rate at which an employee's pension increases for each year of pensionable service they complete in a defined benefit scheme.

The value of assets built up by investing the contributions in a defined contribution or personal pension scheme.

A member of a pension scheme who is currently in employment that relates to the scheme and is included in the scheme for a pension benefit.

An investment strategy where the Fund Manager buys and sells holdings with the intention of maximising gains and minimising losses. Typically, active management allows the fund manager flexibility to adapt to changing market conditions. This is the opposite of passive management.

Trustees of defined benefit schemes are obliged to submit this certificate signed by an actuary to The Pensions Board every 3 years. The certificate demonstrates that the scheme complies with the Funding Standard under the Pensions Act.

An investigation by an actuary into the ability of a pension scheme to meet its benefit promise. This is usually done to calculate the recommended contribution rate, which takes account of the actuarial values of assets and liabilities of the fund. The actuary also needs to conduct this investigation to complete a funding certificate.

The current cash value of a future payment. The actuarial value of a future pension payment takes into account the likelihood of the scheme member surviving to claim. It also factors in any future investment returns that may be earned.

A specialist in the mathematics of risk, especially as it relates to insurance calculations such as premiums, reserves, dividends and annuity rates.

This is when serious illness cover is selected in addition to life cover. This benefit does not impact the level of life cover if claimed.

Also known as: Additional Critical Illness Benefit.

Additional contributions paid by a member of an Occupational Pension Scheme in order to receive additional benefits to those set out in the Rules of the Scheme. Where there is no provision in an occupational pension scheme for AVCs, the company must offer either a Group AVC pension scheme or an AVC PRSA.

This is the percentage of your money that is used to buy units in a pension or other type of investment fund. For example, an allocation rate of 97% means that for every €100 you invest, €97 is actually used to buy units. So in effect you pay €3 (or 3%) as a charge to the firm you invest with.

A change to the conditions or cover of a policy.

See Approved Minimum Retirement Fund below

A document issued by the company managing a pension, retirement plan or investment to the policyholder. It informs the policyholder of his or her status in the plan, contributions paid in the last year, accumulated contributions and the estimated value of the plan as at the statement date. Further details may be included.

If you have an ARF or vested PRSA you are advised to withdraw a minimum amount (referred to as an annual deemed distribution amount) out of it every year as otherwise Revenue require the “Qualifying Fund Manager” to pay the appropriate amount of tax as if you had made that minimum annual withdrawal. Annual deemed distribution does not apply to an AMRF.

A report, which is required by the Pensions Act, prepared by the trustees of a pension scheme annually. It provides information about the scheme, its administration and its financial position.

An individual who is in receipt of an annuity.

An annuity is a contract with a life assurance company that will pay you a specified, regular pension income for the rest of your life in return for you paying a lump sum when you are ready to retire. You can choose to buy a level or increasing pension. You can also add on some protection for your dependants so that in the event of your death, the pension continues to be paid to your estate for the remainder of a set period of time and or a specified percentage of your pension is paid to a dependant.

 

The amount of pension income you receive depends on a number of factors including the size of the lump sum, annuity rates at the time, your age and state of health and the type of pension you choose.

 

Also known as: Pension

The cost associated with securing a series of payments in the form of an annuity.

An AMRF is like an ARF except that you cannot withdraw your original investment until you are aged 75 or are in receipt of attain the minimum specified income, whichever event occurs first. At this point an AMRF becomes an ARF. You can only withdraw the investment income gains through your AMRF in the meantime. The value of an AMRF can go up or down depending on the performance of the investment funds.

An ARF is a post retirement investment plan that you can take money out of when you want. Certain qualifying conditions must be met to be eligible to take out an ARF. The value of your ARF can go up or down, depending on the performance of the investment funds and the amount of withdrawals that you take. All withdrawals from your ARF are subject to income tax, PRSI and universal social charge as appropriate. Each year you must take a minimum withdrawal (5% if your total ARF value is not greater than €2,000,000) from your ARF or pay tax on it as if you have.

The proportion of each different asset class in an investment portfolio. 

Company shares (or equities), property, bonds, alternative assets, cash etc.

The person/company you transfer the ownership of an asset (e.g. a policy) to.- for example a bank, building society in the case of a life assurance policy for a mortgage.

The transfer of legal ownership of a policy, usually for a certain period of time, or related to a specific condition e.g. repayment of a loan.

See Additional Voluntary Contribution above.

A person who is entitled to benefit, or who will become entitled in specific circumstances (e.g. on the death of a member).

The portion of a premium taken to cover the cost of providing specific benefits.

This is a statement giving details of your pension plan that is sent out to you usually once a year.

This is an investment charge and refers to the difference between the buying and selling price of a unit in an investment or pension fund. A typical bid-offer spread would be 5%. For example, if you invest €100 in a pension or investment fund, its value would become €95 (€100 less 5%) if you withdrew the money immediately. The bid/offer spread is the difference between the bid price and the offer price.

The price at which units are sold/encashed back to the company.

In simple terms, bonds or fixed interest securities are loans to governments (gilts) and companies (corporate bonds). These bonds are designed to pay interest (coupon) over a fixed term with the original loan being repaid at the end of the term. The level of risk depends on the credit worthiness of the government or company issuing the bond.

A Buy Out Bond is a special type of occupational pension scheme, to which the only premium payment is a Transfer Value from a previous pension scheme. The benefits available from a Buy Out Bond at retirement age depend on the investment return achieved during the period between the payment of the contribution and retirement and the rules of the original pension scheme.

Also known as: Personal Retirement Bond

This refers to any profit you make if you sell an asset, such as shares, for a higher price than you originally paid.

This is a government tax on profit you make (a capital gain), above a certain amount in any tax year, if you sell an asset such as shares or investment property. Check the Revenue website for current rates. If you make a loss, you can usually subtract the amount of the loss from any amount that you may owe in CGT.

If you have an investment with capital security, typically this promises that an investor will get back a minimum of 100% of their capital at some point, e.g. in 5 years time, regardless of how their investment performs.

This is the regulator that is responsible for the supervision of most financial institutions in Ireland.

The certificate of cover is the document you receive confirming the specific type of level and cover you get under a particular insurance policy.

A chargeable event happens when benefits are received (or deemed received) from a life insurance policy, life annuity or capital redemption policy.

The request for payment of the policy benefits.

The date the insurance company's liability for a policy comes into force.

Also known as: Policy Commencement Date, Risk Commencement Date (RCD), Start Date.

The money a company pays an intermediary or advisor for selling their product. The amount paid is usually connected to the level of contributions into and the term of the policy.

Also known as: Sales Remuneration

The benefits payable to a spouse or other dependant from a pension arrangement in the event of the death of the member during the period of employment (or self-employment).

A single amount or regular instalment paid for a contract.

Also known as: Premium

Sometimes, a company will pay a bonus in return for the regular payment of contributions.

An Occupational Pension Scheme to which employees are required to contribute (usually a fixed percentage of their Pensionable Pay) in order to meet part of the cost of the benefits.

A statutory amount of time, immediately after the purchase of a life policy, during which, the policyholder may decide to change their mind and cancel the contract, without deduction of fees/charges.

This insurance pays out a lump sum if the Life Assured is diagnosed with one of the  specified critical illnesses covered by your policy.

Also known as: Specified Illness Cover

Members of defined benefit schemes can sometimes have their contributions or transfers treated as though they had been made under a defined contribution scheme.

This is the date used to determine the unit price applied to a transaction.

Also known as: Effective Date.

This is a life assurance benefit, linked to an occupational pension scheme. If the employee dies while still employed by the scheme owner, the benefit is usually paid to an employee’s next of kin.

Declaration which confirms no material change in general health over a specified period, usually since a specific event e.g. proposal for a policy, or policy lapsing. Where a material change in health has occurred, such change(s) would be detailed in this declaration.

An automatic investment strategy that is certified by an actuary. It usually provides for investment in pooled funds.

If you leave an Occupational Pension Scheme before Normal Retirement Age having completed the Vesting Period but do not have entitlement to an immediate pension, then you are entitled to a Deferred Benefit. You can then access this benefit from Normal Retirement Age based on the service you completed to date of exit in a Defined Benefit Scheme, or on the accumulation of employee and employer contributions in a Defined Contribution Scheme.

A person entitled to a pension payment at a future date. This is normally an early leaver of a pension plan, but the term is sometimes used to describe someone whose retirement is being postponed.

The length of time you must be out of work due to sickness or disability before your income protection insurance policy pays out. The deferred period may be a little as 4 weeks for benefits such as absence from work, but can usually range from 13 – 52 weeks for benefits such as Income Protection.

Defined benefit schemes provide members with retirement and death benefits based on formulae set out in the rules of the scheme. Benefits are often based on a members’ salary close to retirement and on his or her pensionable service. Many defined benefit schemes are “integrated” with the State pension providing a level of benefit that makes an allowance for the State pension.

Also known as: Final Salary Scheme, Superannuation

Defined contribution schemes provide retirement benefits by using the value of the member’s individual retirement account. The retirement benefits a member receives will usually be based on:

1. the contributions paid into the account (employer and employee); and

2. the investment returns on those contributions.

Many company defined contribution pension plans also provide Death in Service Benefit.

Also known as: Money Purchase Plan

A person who depends financially on a scheme member, pensioner or policyholder. Children are usually considered as dependants until they reach the age of 18 or leave full time education or vocational training. A spouse or civil partner is always considered as a dependant. Please note however, that the actual definition may vary between Occupational Pension Schemes.

This is money you hold in a savings or deposit account at a financial institution that earns interest.

This is a tax you pay on any interest you earn for money deposited in a financial institution (e.g. a bank or building society. Most financial institutions automatically take it from the interest it pays to your account and pass it over to the Revenue Commissioners.

This is the portion of a member's retirement benefits that a Pension Adjustment Order allocates for payment to his/her dependant spouse or children.

 

A Direct Debit Dishonour occurs when a direct debit is not paid due to insufficient or unavailable funds in the account and the insurance company does not receive the premium/contribution due for the policy.

Under the terms of the Pensions Act, trustees of occupational pension schemes must give information to scheme members and others about their personal entitlements, the running of the scheme and about its financial situation.  Employers are also required to provide certain information.

 

Regulations issued under the Pensions Act requiring specific information about pension schemes and their benefits to be disclosed to interested parties. Disclosure Regulations are not confined to pensions.

This is when a stockbroker will invest money on your behalf. The stockbroker does not have to tell you about every trade that is made on your behalf.

 

The Gender Ground, Family Status Ground, Marital Status Ground, Sexual Orientation Ground, Religion Ground, Age Ground, Disability Ground, Ground of Race and Traveller Community Ground are among the discriminatory grounds.

Spreading an investment across different asset classes, different funds or different types of investments within an asset class, with the aim of reducing risk.

 

The proportion of a company’s profits paid out to its shareholders.

This is a contract where two lives assured are covered separately. In the event of a successful claim on one life assured, cover will continue on the other life assured, usually at a revised premium.

The receipt of the available valuable of the benefits/fund of a contract before it becomes a claim by maturity or death.

Also known as: Early Withdrawal. Early Surrender

The available value of the benefits/fund when the contract is terminated before its projected maturity date.

Also known as: Early Withdrawal Value, Early Surrender Value

The date on which a transaction is deemed to have been effective.

Also known as: Deal Date

 

An emergency fund is money set aside in an accessible savings account for events such as unemployment, medical bills, and car repairs. You should try to build up a saving fund that covers your basic living costs for three to six months. 

An employee means a person of any age engaged under a contract of employment.

An employer is the person with whom the employee has entered into a contract of employment with and pays their wages.

The receipt of the benefits of a contract when it becomes a claim by maturity, surrender or death.

Also known as: Withdrawal, Surrender

The value of the policy/fund at maturity or surrender.

Also known as: Maturity Value, Surrender Value

 

A document that acts as evidence of a change to an existing policy. After issue, it becomes part of the customer’s policy terms and conditions.

Life assurance policy that provides for a lump sum payment at a future date, usually after a specified term or on death.

An endowment trader is an individual or company that specialises in buying endowment policies from policyholders.

If you are thinking of surrendering or cashing in an endowment policy, you may wish to compare the option of cashing in with your insurance company or selling or trading to an endowment trader, to get the best value.

This is a charge for setting up your pension plan or investment.   

These are issued by companies usually listed and traded on a stock exchange. Each share represents ownership of part of the issuing company. Some shares also pay an income in the form of a dividend.

Equity is the value of any assets you own after any debts are paid. In the context of your property, your equity refers to the difference between its market value and the mortgage you owe on it.

This is used to show the full price of interest on a bank or building society account. EAR takes into account the basic rate of interest charged or earned, and any additional charges such as quarterly fees, set-up charges, and so on.  EAR calculates interest as if it is paid once a year, even if it is paid twice or three times per year. The higher the EAR, the more interest you will be charged or earn. EAR applies to deposits (credit) as well as overdrafts (debits).

An estimation of the value of a policy at maturity based on assumptions of fund performance. This value is not guaranteed.

 

The ECB is the central bank for Europe's single currency, the euro. Its main task is to maintain the purchasing power of the euro and price stability in the euro area. One of the functions of the bank is to set interest rates for the member countries in the euro zone.

This is the first part of any insurance claim that you have to pay yourself. It is usually a fixed sum. Remember for home insurance a subsidence excess will be a much higher amount (typically €1,000). For motor insurance you may not have to pay any excess on certain types of claim such as windscreen replacement on a motor policy. Excess is often called 'standard excess' on many insurance policy documents.

This is an investment fund that tracks the shares of a particular stock market index, such as the top 20 shares quoted on the Irish Stock Exchange. The fund itself is also quoted and traded on the stock market.

Exclusions, or restrictions, are events or situations that are not covered by your insurance policy. Standard exclusions are contained in every policy. Specific exclusions are restrictions your insurer adds to your policy only.

This is where a stockbroker is simply instructed to buy or sell a particular investment on your behalf. The broker has no say about the trade and does not provide you with any advice.

An occupational pension scheme and is normally designed for a Company Director(s) and or selected employee(s). Each Executive Pension is set up by way of a Letter of Exchange where the employer notifies the employee concerned that a pension is being set up for him or her. Individual policies are issued to the Employer who normally acts as a Trustee to provide benefits for the director/employee concerned.

This is a charge applied by a financial institution when you cash in an investment within a set number of years or before a specific maturity date.

Also known as: Early Encashment Charge, Exit Charge.

 

This is a tax payable if your investment makes a profit. It is subtracted from your investment when you withdraw the money or when a Chargeable Event occurs.

The expiry of claims is when your insurance policy expires.  It arises from the insurance contract and it varies depending on the type of claim and policy wording.

This is where additional units are purchased in a fund on behalf of an investor, on top of those purchased with the initial capital invested.

A financial advisor is someone who is regulated by the Central Bank of Ireland to give advice to individual members of the public. Advisors can either be “tied” and only able to advise on products of a particular product producer or can be “independent” and able to advise on a range of providers and products.

The Financial Services Ombudsman is an independent statutory office who deals with complaints from consumers about financial services providers. The FSO only deals with complaints that have not been resolved through the provider.

This means interest is fixed at a particular rate over a fixed time. If rates fall you can miss out on the benefits. If you want to pay off your full loan within the set time, you have to pay penalty fees.

An amount you may have to pay if you wish to pay off your loan, part of your loan or change any of the terms, during the fixed rate period.

With fixed-term deposits you put money into your account for an agreed amount of time. Usually the interest rate is fixed for that period and if you take money out during that time you generally pay a penalty.

This means that the majority of the agreed charges are deducted from the initial premiums on the policy.

 

A pool of money which invests in assets.

This is a fee paid to a fund manager for managing the investment funds. It is normally expressed as an annual percentage, but can be deducted daily, weekly, or monthly.

The fund manager runs the fund and decides what assets the fund should invest in.

This is the rate of return on investments in a fund.

This is the percentage of contributions/policy value allocated to each selected fund.

Where the policyholder switches the fund(s) they are invested in to avail of different funds in different markets or with different risk profiles or rates of return.

Occupational pension schemes set up by most companies are usually financed by setting aside money into a trust fund, separate from the employer’s business, to finance the payment of pensions.

 

Separating the scheme’s assets from the employer’s business should ensure that these assets would be available to pay members’ pensions, whether or not the employer stays in business. The funding approach also helps to spread the cost of providing pensions over the lifetime of scheme members and to reduce the cost through the returns obtained from the investment of the pension contributions paid into the scheme.

 

A document which the scheme trustees must submit to The Pensions Board if a defined benefit scheme doesn’t meet the Funding Standard set out by the Pensions Act, explaining how they intend to rectify the scheme’s funding.

The funding standard ensures that a defined benefit scheme has sufficient funds for the pension rights that members have built up. To comply with the funding standard, a defined benefit scheme must be able to meet certain liabilities, as set down in the Pensions Act.

See Bonds

This is a government charge deducted from premiums paid on all life assurance contracts (currently 1%, January 2012).

A pension scheme generally operated by an employer for a group of employees where the employer helps fund the arrangement.

Also known as: Occupational Pension Scheme.

 

This is a benefit included on some life insurance policies. It gives the option to increase benefits on an existing life policy (within certain limits, without the need for Medical Underwriting) on the occurrence of certain events e.g. birth of a child, marriage, new mortgage.

This is a person who agrees to pay off a loan if the borrower fails to pay.

Income protection provides you with a replacement income if you cannot work because of an illness or injury after a certain period. It will pay you up until you are able to return to work, or retirement, whichever is sooner.

Also known as: Permanent Health Insurance (PHI), Disability Insurance

When an insurance company indemnifies any losses, it will pay for the damaged goods or property to be restored to the condition they were in before an event or as close as is possible. Most general insurance policies provide indemnity cover.

A measurement tool that provides a representation of the prices which constitute it. Indices often serve as indicators for a given market or industry and benchmarks against which financial or economic performance is measured. 

Indexation or Index linking increases the benefit on your life insurance or investment policy automatically every year to make allowances for inflation. Your premium also increases each year to pay for the increased benefit.

The increase in the general level of prices of goods and services in the economy over a period of time. Consumers’ buying power goes down as prices increase.

The risk that inflation will over time erode the real value of your savings/investment.

This is the amount you pay to borrow money and is added to the loan.

You can earn interest on certain accounts. This money is added to your savings.

The risk that an investment may result in a loss and may not provide the expected returns. This is usually directly linked with growth potential i.e. the greater the investment risk the greater the investment growth potential.

The investor compensation scheme pays compensation, subject to certain limits, to eligible consumers if an authorised investment firm fails. You can get more information about the scheme on the The Investor Compensation Company website.

This is where stocks and other securities are bought and sold. The Central Bank regulates the Irish Stock Exchange.

This is where two lives are covered for the same benefit on a policy. This benefit is payable only once in relation to the first life assured to claim. Following a successful claim the benefit ceases in relation to the other life assured. 

A policy which the policyholder has stopped paying contributions into, which has no value. Unless revived within a certain time period, any claim received would be invalid.

A pension scheme with 100 or more active and deferred members.

The person(s) on whose life a policy is written.

Also known as: Life Insured/Lives Insured

The amount payable on death during the term of the contract.

Also known as: Sum Assured, Death Benefit.

An investment fund that automatically changes the level of exposure to investment risk in line with the policyholder’s age. Generally, as the policyholder gets closer to Normal Retirement Age, a greater portion of their investment moves to lower risk assets.

This is the ease or speed with which an investment can be turned in to cash. Illiquid assets, such as property, cannot be converted to cash quickly.

This is a charge added to an insurance premium because of some specific risk factor such as the health of an individual looking for a life insurance policy.

Pension benefits payable at or after the normal retirement age (NPA), assuming that you remain in relevant employment until the NPA. Long service benefit may take the form of regular pension payments and/or a lump sum. It also includes any benefits payable on death after the NPA to your spouse or dependants. These benefits may be a separate pension or, for example, a guaranteed payment of your pension for a set period after your death.

This is a benefit included on some life insurance policies.  It gives you the option of converting your life cover to long-term care cover, to ensure that you have money to fund the cost of future care.  It is paid out in the form of a cash payment for an agreed period of time. 

A once-off payment into a pension or investment fund.

Also known as: Single Premium Investment

A once-off payment that a person may receive from an investment, such as a pension, or from an insurance policy, for example if they have a serious accident and cannot work.

Also known as: Payout, Gratuity (from pension), Claim Proceeds

An investment fund where the underlying assets are managed by the fund manager.

An instruction by a customer to a bank/company to operate the customer’s account according to their instructions.

This is a reduction in the value of your investment that your life insurance company may apply when you withdraw some or all of your investment except at certain times.

When an investment, such as a term deposit, or a life insurance policy ends. Maturity occurs when the policy reaches the maturity date.

The date at which the pre-selected investment term of a policy ceases.

The value of the policy at the maturity date. This will include any bonuses that may apply on maturity.

A person admitted to membership of a pension scheme who is entitled to scheme benefits. This includes active members, pensioners and deferred pensioners.

The spouse of a member of the pension scheme.

If you are eligible, You must have a minimum specified income for life of 1.5 times the maximum annual rate of State Pension (Contributory) payable, at the date you retire if you want to invest in an ARF or take the taxable lump sum option.

If you do not have this guaranteed income then you must use an amount equal to 10 times the maximum annual rate of State Pension (Contributory) payable, of your pension fund (or the balance if less) to buy a pension and or invest in an Approved Minimum Retirement Fund.

A life policy designed to pay off the outstanding balance of a mortgage, where death (or possibly serious illness) occurs during the term of the mortgage. The term and sum assured should match the term and amount borrowed of the mortgage. The sum assured reduces each year, broadly in line with the outstanding balance on the mortgage. The policy ceases on the payment of a valid claim, or on the specified end date.

This is a Government agency that manages the national debt and administers the national pension fund. It also administers a fund where unclaimed money from dormant accounts is transferred.

This will normally be an individual’s Relevant Earnings less charges on income such as covenants, allowable interest and maintenance and related losses and capital allowances.

Initial period of a policy where all premiums paid are taken in charges.

Investment fund with a fund management charge which is usually higher than standard investment funds. The higher charge is usually because of the unique/specialised nature of the underlying assets in the fund.

This is the age at which retirement benefits become payable. This will be set out in the Trust Deed and Rules of an Occupational Pension Scheme or may be set out in the policy document of the Personal Pension Plan. Normal Retirement Age is usually between 60 - 75 for personal pensions and 60 – 70 for executive pensions.

Also known as: Normal Retirement Date, Normal Pension Date.

A pension scheme set up by an employer to provide retirement and/or death benefits for employees. The term occupational pension scheme distinguishes job related pension schemes from State Social Welfare schemes. The employer must contribute financially to the scheme but in most schemes both the employer and employee make contributions.

This is an official appointed to represent the interests of the public to investigate and address unresolved complaints reported by individual citizens.

You can send your complaint about a financial service to either the Pensions Ombudsman or the Financial Services Ombudsman depending on the nature of your complaint.

The price a person pays for each unit when investing in unit-linked funds.

A defined contribution scheme that is established for one person only and that one person will always be the only member. However, if the scheme is made the subject of a pension adjustment order, it may also include the person(s) referred to in the order.

These give the holder the right but not the obligation to buy or sell an asset at a pre-determined price on a fixed date or within a certain time period in the future. The predetermined price is called the exercise or strike price.

Payments other than salary, in respect of termination of service, retirement, old age, death, interruptions of service by reason of sickness or invalidity, accidents, injuries or diseases arising out of or in the course of a person’s employment, unemployment or expenses incurred in connection with children or other dependants.

This is an investment strategy where the investment manager simply aims to match (as opposed to beat) the index or benchmark that is set for the fund.

This is the value of your pension made up of payments into the fund and any growth that it has earned. Any fees and charges you have to pay will reduce the value of your fund.  

A policy taken out (by those who are self employed or who are in non-Pensionable Employment) from an insurance company, in order to provide benefits in retirement. This is sometimes also called a “Retirement Annuity Contract”.

The Pensions Ombudsman investigates complaints and disputes involving occupational pension schemes and Personal Retirement Savings Accounts (PRSAs) and decides on a resolution. The Ombudsman is completely independent and impartial and is a free service to the complainant. 

The period of insurance, shown on your insurance policy schedule, tells you the dates that you are covered under your policy, and any subsequent period for which you can renew your insurance.

A percentage point is the difference between two percentages. A fall of one percentage point would be a fall from ten to nine percent. When the ECB moves interest rates, it is usually by a quarter or half a percentage point.

Generally, an administration fee usually charged monthly or annually.

Also known as the sum assured, this is the amount of money you could receive if you make an insurance claim that is successful.

PTD can mean two different things, depending on your insurance policy. It can mean you are permanently and totally unable to do your current job. Or, it can mean you are not able to do many normal daily activities, so you are permanently unable to work at any job.

A personal retirement savings account (PRSA) is a type of personal pension policy available from banks, life assurance companies, and through brokers. It is more flexible than a traditional personal pension plan. Anyone up to the age of 75 can take out a PRSA. You don't have to be earning an income to do so.

The policy start date is the date from which the insurance cover begins.

The investments held by an individual or a fund.

A pooled investment is where many people put in different amounts of money into a fund, which is then invested in one asset or a mix of assets such as shares, property, bonds or cash. A professional fund manager picks the investments and chooses when to buy and sell them. The main benefits of pooled investments are that you can spread your risk, choose from a range of different funds  and have lower dealing and administration costs.

Also known as: Collective Investment

A pre-existing condition is any condition, injury, disease or symptom which was in existence at the start date of your insurance policy.

A plan, for savings or insurance, for which a written document is usually supplied to the policyholder.

Also known as: Plan, Account.

See Personal retirement savings plan

A single amount or regular instalment paid into a contract for an insurance or pension product.

Also known as: Contribution.

A proposal is your application for insurance under the policy.

See capital above.

Withdrawal of some of the policy value by selling a certain number of units held.

Also known as: Partial Surrender, Partial Withdrawal

Contributions and/or benefits are based on these earnings in Occupational Pension Scheme. It would be common to exclude variable earnings such as overtime or commission, although this is not always the case.

Also known as: Pensionable Salary

A policy where contributions are on hold but a value or benefit still exists.

A PRSA is a contract between an individual and an authorised PRSA provider in the form of an investment account. The PRSA benefits will be determined by the contributions paid by and on behalf of the contributor and the investment return on those contributions. There are two types of PRSA contract:

 

• A Standard PRSA is a contract that has a maximum charge of 5% on the contributions paid and 1% per annum on the assets under management. Investments are only allowed in pooled funds, which include unit trusts, and life company unit funds.

 

• A Non Standard PRSA is a contract that does not have maximum limits on charges and/or allows investments in funds other than pooled funds.

The date each year from when policy first commenced.

A policy taken out with an insurance company in order to provide retirement benefits. These may be taken out by those who are self-employed or who are in non-pensionable Employment.

Also known as: Retirement Annuity Contract (RAC)

The tax on investment growth, which is deducted at every eighth policy anniversary from certain life assurance investment policies.

See: Chargeable Event

A shortened name for Pay Related Social Insurance, under which individuals who earn an income pay related contributions to the Social Insurance Fund and in return are covered for certain scheme insurance benefits, e.g. State Pension (Contributory).

The benefits the policyholder avails of as part of the policy.

Employment is referred to as pensionable in this booklet if the individual is a member (or is eligible to become a member) of an Occupational Pension Scheme because of that employment.

The conditions of a policy that set out the rights and responsibilities of the parties involved.

Also known as: Policy terms and conditions.

A Personal Retirement Bond is a special type of occupational pension scheme, to which the only premium payment is a Transfer Value from a previous pension scheme. The benefits available from a Personal Retirement Bond at retirement age depend on the investment return achieved during the period between the payment of the contribution and retirement and the rules of the original pension scheme.

Also known as: Buy Out Bond

A put option gives the holder (buyer) the right but not the obligation to sell an asset at a predetermined price (exercise price), on a fixed date or within a certain time frame in the future.

A person being paid from a pension scheme (also called a pensioner).

PTD can mean two different things, depending on your insurance policy. It can mean you are permanently and totally unable to do your current job. Or, it can mean you are not able to do many normal daily activities, so you are permanently unable to work at any job. The definition of criteria usually depends on the insurance policy.

Also known as: Total Permanent Disability (TPD)

A court of law can make a ‘Pension Adjustment Order’, following a judicial separation or divorce, on the trustees of a pension scheme of which either spouse is a member, requiring the trustees of that scheme to pay a proportion of the pension benefits to the other spouse or for the benefit of a dependent member of the family

See Permanent total disablement

Regular and lump sum payments a person receives from their pension scheme.

An act to regulate occupational pension schemes.

This is a term assurance policy, which can be taken out to coincide with the term of a pension policy to provide risk benefits. Tax relief may be claimed in respect of premiums paid.

The paperwork that makes up the policy - the formal document, and any schedules or amendments.

Temporary deferral of payment of agreed policy premium.

Also known as: Premium Skip

The price given by an insurance company for protecting against a particular loss or damage based on information provided by the Proposer.

The value the investment fund is expected to reach at a future date based on current information and a set of assumptions. This value is not guaranteed.

Also known as: Estimated Value

The person who owns and controls the use of the policy.

Also known as: Policy Holder

The date at which the policy lapses or ends.

Qualifying Service is the total service completed as a member of any company pension plan for pension benefits and any similar service in a previous employer from which a transfer has been received.

The percentage of premium paid which is taken in charges.

Also known as: Contribution Charge

An employee who is or will be eligible to join the scheme but has not yet joined.

A pre-existing condition is any condition, injury, disease or symptom which was in existence at the start date of your insurance policy.

This principle dictates that there shall be no discrimination on any of the nine discriminatory grounds in respect of any rule of a pension scheme. The principle applies in relation to members, members’ dependants, and those seeking access to membership of an occupational benefit scheme.

The length of time for which the policy is valid.

The rate of expected growth of an investment at a point in time, which is based on actuarial assumptions and is not guaranteed.

The date at which the policy lapses or ends.

Person or persons who apply for a life assurance policy.

Personal Public Service number – a unique identification number for each person in the State for the purposes of tax, social insurance and social welfare benefits.

An authorised investment firm, life assurance company or credit institution, which produces, markets or sells PRSA products

The person who owns and controls the use of the policy.

Also known as: Policy Owner

If you leave your job, or contributions to your company pension scheme cease or the scheme is wound up and not replaced, your benefits must be preserved for you once you have completed at least two years’ service. In the case of a defined contribution scheme, the preserved benefit is the value of both the employer and any employee contributions. With a defined benefit scheme, the preserved benefit includes a deferred pension and deferred lump sum (if applicable) which must be re-valued each year by the lesser of 4% and the consumer price index.

A person appointed to act as auditor who must not be:

• a member or trustee of the pension scheme;
• a person employed by any of the trustees;
• an employer of any member of the pension scheme;
• a director of the employer or a participating employer.

This document sets out the specific details of the policy, including benefits, term, premium, life assured and policy owner.

Also known as managed funds, these are collective investment schemes in which investors’ money is pooled to buy a portfolio of assets including Government bonds, deposits, property and stocks etc.

The time you have spent in relevant employment (including part-time employment) while a member of a pension scheme. It does not include service as a member of a scheme where:  

• the only benefit under the scheme is payable on death before the NRA  
• you have been notified in writing by the trustees that the period of service does not entitle you to benefits on retirement
• the scheme does not come within the scope of the Pensions Act (e.g., a scheme based in another state that has not been approved for tax purposes).

This is a way to compare the charges on an investment product over a period of time. It works by showing the return that you would have received if there were no charges. For example, a personal pension plan has a projected return of 5% per year. The result of the charges is a reduction in yield of 1.5%, so the actual projected return is 3.5%. You can use the RIY to compare products and the lowest RIY charges, check regularly that the RIY does not change over the term your investment.  

Periodic automatic payment received by the policyholder.

An amount that a person must pay regularly for insurance, savings or pension.

Also known as: Regular Contribution

Relevant earnings are broadly defined as income from a trade or profession or from an office or employment.

Any employment where you are contributing to a pension scheme.

The restart date is when you have to pay a new monthly insurance premium because you have changed your monthly benefit.

If you leave an occupational scheme and are entitled to some benefit from Normal Retirement Age or have a Paid up Personal Pension Plan or Personal Retirement Bond, then such benefits are known as Retained Benefits. These may be taken into account by the Trustees of your current scheme in deciding whether your overall benefits are within Revenue Limits.

An individual pension policy, which can only be effected by individuals who are in non-pensionable employment or who have taxable earnings from a self-employed trade or profession.

Also known as: Personal Pension Plan/Policy

Any payment arising under a pension scheme, payable to the member, member’s spouse or to others, at and following retirement.

The Revenue Commissioners restrict either the amount of benefits ultimately payable to an individual and/or the contributions payable to the occupational pension scheme  by or in respect of an individual, along with tax reliefs that may be claimed. These are known as Revenue Limits.

The greater the potential return wanted from savings and investments, generally, the greater the risk that has to be undertaken. Most investments involve an element of risk:

• Return Risk – the risk that your investment may not achieve the return expected
• Capital Risk – the risk that you could lose some or perhaps all of the original money that you had invested.
• Inflation Risk – the risk that inflation could erode the real value of your savings.

Risk can vary from fund to fund and it is very important, before a decision is made that investors understand all the risks associated with any fund.

Benefits payable in the event of death or disability, which are not pre-funded. These risks are often insured.

The money a company pays an intermediary or adviser for selling their product. The amount paid is usually connected to the level of contributions into and the term of the policy.

Also known as: Commission.

 

A person who has been admitted to membership of a pension scheme and is entitled to benefits under the scheme. This will include active members, pensioners and deferred pensioners.

This policy pays a lump sum benefit if you are diagnosed as suffering from one of the serious illnesses specifically covered by your policy.

A policy where the benefit is payable on the occurrence of the specified event for the single Life Assured.

A one time only, not repeatable single payment.

Also known as: Lump Sum Investment, Single Premium Injection

A small scheme is a defined benefit scheme or a defined contribution scheme, which at the beginning of the scheme year has in aggregate less than 100 employed members and deferred members (pensioners are not counted).

This insurance pays out a lump sum if the Life/Lives Assured is diagnosed with a specified critical illness covered by your policy.

Also known as: Critical Illness Cover

No extra loading/weighting of initial standard premium quoted for a policy.

Also known as: Ordinary Rates

This is an instruction you give to your bank to make regular payments out of your account to another account. Unlike a direct debit, you instruct your bank directly about how much is to be paid and the amount is fixed and can only be changed by you.

The date the policy is effective as of.

Also known as: Commencement Date

Trustees of occupational pension schemes must provide to a member transferring to a PRSA or a PRSA provider a statement of the benefits, which may accrue, from the scheme in respect of that member.

All occupational pension schemes other than small schemes must put in place a Statement of Investment Policy Principles (SIPP). A SIPP sets down in writing the trustees’ investment policy. The SIPP must be reviewed at least every 3 years, and must be revised in any event following a change in investment policy, which is inconsistent with the statement.

A statement predicting the likely future worth of a pension. It is based on assumptions relating to future contributions and investment returns.

A marketplace where stocks, shares, commodities, derivatives and other financial instruments are traded.

The realisation of the benefits of a contract before it becomes a claim by maturity or death. Also known as:  Withdrawal, Encashment

In an insurance contract, the available value of the benefits being funded, when the contract is terminated, usually early before the maturity date.  

Also known as: Withdrawal Value, Encashment Value

A policy that provides a lump sum if a life assured dies (or in some cases is diagnosed with a serious illness) before a fixed future date. Such policies are frequently used for the provision of lump sum benefits payable on death in service.

These are advisors who work in financial services firms like banks and insurance companies, who advise on and sell their own products. They only offer advice on products from their own financial institution. They still have to give you a product that is suitable for your needs, but they cannot shop around on your behalf. Other types of advisors include authorised advisors and multi-agency intermediaries.

Additional single contribution to an existing policy.

Also known as: Single Premium Injection.

A scheme to provide benefits over and above the benefits given under another scheme.

Also known as: supplementary scheme

Members leaving an occupational pension scheme with an entitlement to a preserved benefit have a right to transfer their benefits in the form of transfer payment to either:

• the scheme of their new employer; or
• an approved insurance policy or contract; or
• a PRSA (only possible if less than 15 years’ scheme service); or
• an unfunded scheme (most public sector schemes are unfunded) provided that the trustees/administrator of the receiving scheme are willing to accept the payment.

The value of your pension if you leave an occupational benefit scheme with entitlement to a deferred benefit. In the case of a defined benefit scheme, the transfer value represents the actuarial value at the date of transfer of the amount payable to your dependants in the event of your death. In the case of a defined contribution scheme, the transfer value represents the accumulated value at the date of transfer of the employer and employee contributions.

An arrangement under which a person or group of people hold and look after property on behalf of a specified beneficiary.

A legal document, executed in the form of a Deed, which establishes, regulates or amends a trust.

The monies and assets held under management by trustees.

An individual or a company, which, alone or jointly, becomes the legal owner of property administered for the benefit of someone else (the beneficiaries).

Individuals or a company that, alone or jointly looks after the assets held in a trust fund. In a company pension scheme the trust fund is the monies and assets for the time being held by the trustees subject to the trusts of the scheme.

Underinsurance is when the policy limit is lower than the replacement value of an item. In the case of property insurance this can have serious consequences for the policyholder, as he/she is not fully compensated for the damage. In the case of partial damage, the insurance benefits are also reduced in proportion to the underinsurance.

Schemes in the non-commercial public sector, such as the civil service, local government, education and health services, are financed on a pay as you go basis. This means the cost of pensions is met from current revenues. These schemes can operate in this way because the State raises its money through taxation. An unfunded scheme is not connected to a fund or policy.

The price of a share in a unitised investment fund.

A fund that a person invests in by buying units; their money is used by a trust manager to buy investments and the value of the units changes from time to time in line with the value of the fund.

Date used to determine unit price to be applied to a transaction.

This is the period of membership of an Occupational Pension Scheme, which you must complete in order to be entitled to a Deferred Benefit on leaving service.

A PRSA where some benefits (ie retirement lump sum) have been taken.

Life assurance policy that provides risk benefits throughout the life of the assured person as long as required premiums are paid.

Taking money out of an account or policy.

Also known as: Encashment, Surrender.