JARGON BUSTING

Contributions that you can make in addition to your normal contributions to an occupational pension scheme in the public or private sector to increase your retirement benefits.

The annual allowance is a threshold which restricts the amount of pension savings you are allowed each year before tax charges apply.

The annual allowance is the maximum amount of pension savings an individual can make each year without an annual allowance charge applying. This includes pension contributions made by the individual, their employer, a company or a 3rd party

A fixed sum of money paid to someone each year, typically for the rest of their life.

If you hold funds in a General Account you could consider selling them and reinvesting the proceeds in an ISA. This process is called a Bed and ISA. This means you’re moving money from a taxed account to a more tax-efficient account.

This refers to the liabilities of the fund before liquidation taxes as a percentage of the total fund assets.

Debt instruments with a fixed coupon, at times also with a variable rate of interest and generally with a fixed maturity and redemption date. The most common issuers are major companies, government bodies such as the federal government and the cantons, public institutions and international organisations such as the World Bank or the International Monetary Fund.

A tax (also called CGT) on the disposal of an asset where the profit is capital in nature. It applies to individuals, including personal representatives,  trustees and individuals carrying on a trade or business in partnership.  Companies do not usually pay CGT but pay corporation tax on any chargeable gains.

Where firms follow the regulations and all of the rules put in place by the FCA to improve customer experience, reduce fraud, and push anti-money laundering. If you are compliant then you are behaving and carrying out your work in the financial sector in an honest manner.

To consolidate (consolidation) is to combine assets, liabilities, and other financial items of two or more entities into one. In the context of financial accounting, the term consolidate often refers to the consolidation of financial statements wherein all subsidiaries report under the umbrella of a parent company.

The commencement of pension benefit payments from all or part of a pension scheme, as income and/or lump sum. Crystallising defined contribution benefits can trigger the money purchase annual allowance.

Consumer price index is an index that represents the variation in prices over time that consumers pay for a basket of retail goods and other items, such as transportation, food, and medical care. The changes in CPI are used to evaluate price changes associated with cost of living. In other words, it can be used to identify periods of inflation or deflation.

A way of getting pension income when you retire while allowing your pension fund to keep on growing. Instead of using all the money in your pension fund to buy an annuity, you leave your money invested and take a regular income direct from the fund.

Endowments are investment policies designed to run for a set period of time, with money paid into the endowment invested with the aim of meeting a target amount.

Your contributions are then invested to give you a pot of money for retirement. As FSAVCs are separate from your main scheme, you can usually begin to take money from this pot at any time after age 55 (57 from April 2028)

The FCA regulates the financial services industry in the UK, with a focus on protecting consumers and promoting effective competition. The two regulatory bodies FCA and the PRA replaced the FSA (Financial Services Authority) on 1 April 2013. See PRA.

The Foreign Account Tax Compliance Act (FATCA) is part of a larger piece of legislation introduced in the United States in 2010 to ensure that that country’s citizens are fully disclosing their worldwide income to the Internal Revenue Service (IRS).

The Financial Services Compensation Scheme is the UK’s statutory compensation scheme for customers of UK authorised financial services firms. This means it can step in to pay compensation if a firm is unable, or likely to be unable, to pay claims against it.

A European Union (EU) law that came into effect on 25th May 2018. GDPR governs the way in which we can use, process, and store personal data (information about an identifiable, living person).

Tax relief refers to any government program or policy designed to help individuals and businesses reduce their tax burdens or resolve their tax-related debts.

When your money is in an account that ‘wraps’ around your investments or savings to offer some protection from tax, as long as the money stays within these wrappers.

For the 2024/25 tax year, if you live in England, Wales or Northern Ireland, there are three marginal income tax bands – the 20% basic rate, the 40% higher rate, and the 45% additional rate (also remember your personal allowance starts to shrink once earnings hit £100,000).

A swap agreement in which one party makes payments based on a set rate, either fixed or variable, while the other party makes payments based on the return of an underlying asset, which includes both the income it generates and any capital gains.

The lifetime allowance is the total amount you can build up in all your pension savings without incurring a tax change.

The amount of tax free income you can have in a year is called your personal allowance. It depends on your age; and can be affected by the level of your income. For couples one of whom is born before 6 April 1935 there is a Married Couple’s Allowance.

A power of attorney is a legal document that lets you (the ‘donor’) appoint one or more people (known as ‘attorneys’) to help you make decisions or to make decisions on your behalf.

An adviser’s primary tool for managing and overseeing a client’s long-term savings. Unlike a traditional life office product, they enable comprehensive financial planning by aggregating pensions, ISAs and general investments in one place

Professional indemnity insurance covers thew cost of compensating clients for loss or damage resulting from negligent services or advice provided by a business or an individual.

There are considered to be two ‘domicile’ concepts. One is where you have your permanent home (not the same as residency, since that is where you spend your time for tax purposes). The second is your ‘domicile of origin’, which where your father’s permanent home was.

A retail client is defined by the FCA as a client who is not a professional client or an eligible counterparty. A professional client is defined as an entity required to be authorised or regulated to operate in the financial markets.

To transfer the ownership of that asset from one person/company/entity to another person/company/entity in its current form, that is without the need to convert the asset to cash.

A Financial Conduct Authority (FCA) initiative that aims to provide greater clarity about different types of financial services available.

Managed by HMRC, it is the government’s way of keeping a record of trusts in the UK. The TRS records the beneficial ownership of assets held in trust.