The basic level of pension paid by the State, depending on the number of years you’ve made qualifying National Insurance contributions.

Investment wrappers that can offer tax planning advantages for larger sums. Onshore Bonds are based in the UK, while Offshore Bonds are based outside the UK, with different tax treatment applying to each.

A relief that can exempt qualifying business assets from Inheritance Tax, provided they’ve been held for a minimum period before death.

How much you could afford to lose from your investments without it materially affecting your standard of living — distinct from how much risk you’re emotionally comfortable taking.

A tax payable on the profit made when you sell certain assets, such as investments, for more than you paid for them, above your annual exempt amount.

Those in a relationship who have entered into a Civil Partnership in accordance with the Civil Partnership Act 2004.

Investments such as unit trusts and OEICs that pool your money with other investors to access a diversified range of assets.

The historic process of giving up entitlement to the Additional State Pension in return for lower National Insurance contributions, with the difference redirected into your own pension.

An insurance contract purchased with your pension fund to pay a known and guaranteed income for life.

An occupational pension scheme, also known as a final salary scheme, where your pension is guaranteed and based on a percentage of your final salary.

A pension scheme, also known as a money purchase plan, where contributions are invested and the eventual value depends on investment performance rather than being guaranteed.

Taking a flexible income directly from your pension fund while the remainder stays invested. Replaced Capped and Flexible Drawdown for new plans from April 2015.

Taking your pension and any lump sum before reaching your scheme’s normal retirement age.

An annuity paid on improved terms if you’re in poor health or have certain lifestyle factors, such as smoking, that could shorten life expectancy.

An annuity that starts lower than a level annuity but increases each year, either by a fixed percentage or in line with inflation.

Everything you own at the time of your death, minus any debts, used to calculate any Inheritance Tax due.

Organising your assets and affairs ahead of time to manage how your estate is distributed and reduce the Inheritance Tax payable.

Also known as a Defined Benefit scheme. A guaranteed pension based on a percentage of your final salary.

The regulatory body that authorises and regulates financial services businesses in the UK.

A public body that considers complaints between consumers and financial firms.

The UK’s compensation fund of last resort for customers of authorised financial firms that are unable to pay claims against them.

A temporary annuity running for a set period, allowing you to draw an income while deferring the purchase of a Lifetime Annuity.

Extra pension contributions made to a separate, outside provider rather than your employer’s own scheme.

The option to buy an annuity from your existing pension provider at a pre-defined, often favourable rate. Common in pension schemes written from the 1960s to mid-1980s.

The minimum benefit an occupational scheme must provide for employees contracted out of the Additional State Pension between 1978 and 1997.

A period of up to 10 years from the start of your annuity during which payments continue to your estate if you die.

The government department responsible for tax approval of pension schemes and the taxation of contributions and benefits.

Also known as an Enhanced Annuity. Paid on improved terms if you’re in poor health or taking medication for a medical condition.

See Drawdown. Allows you to draw a taxable income directly from your pension fund while the rest remains invested.

A tax paid on the value of someone’s estate after death, above the available tax-free thresholds. Find out more →

An annuity that pays an income for life while providing potential to benefit from investment returns. Income can go down as well as up.

A tax-efficient wrapper for cash or investments. A Stocks & Shares ISA allows investments to grow free of UK income and capital gains tax, within your annual allowance.

An annuity that continues paying an income to your spouse, civil partner or dependant after your death, usually at a reduced rate.

An annuity that pays a fixed income for life, which does not increase to keep pace with inflation.

A previous limit on the total value of pension savings you could build up while still getting full tax benefits, last set at £1,073,100. The Lifetime Allowance was abolished from 6th April 2024 and replaced by the Lump Sum Allowance and Lump Sum and Death Benefit Allowance below.

Introduced on 6th April 2024 to replace the Lifetime Allowance, the LSA caps the total tax-free lump sums you can take across all your pensions during your lifetime, currently set at £268,275. Any tax-free cash above this limit is taxed at your marginal income tax rate. The allowance may be higher if you hold valid Lifetime Allowance protection.

Also introduced on 6th April 2024, the LSDBA limits the total tax-free lump sums that can be paid out in respect of you, including tax-free cash taken during your lifetime and certain lump sum death benefits paid if you die before age 75. It’s currently set at £1,073,100, the same level as the former Lifetime Allowance. Amounts above this limit are taxed at the recipient’s marginal rate. There’s no mechanism in current legislation for this figure to increase in future.

A tax-free lump sum, usually up to 25% of your fund, paid when your pension benefits come into payment.

An adjustment applied to a pension or investment policy when benefits are taken earlier than originally planned, reflecting current market conditions.

A reduced annual allowance for pension contributions that’s triggered once you start taking a taxable income from Drawdown.

Also known as Defined Contribution. A scheme where contributions are invested, and the eventual pension value depends on investment performance.

Where information and comparisons are provided without a personal recommendation, leaving you to make your own informed decision. This applies to our annuity comparison service.

The age from which retirement benefits are paid under a particular pension scheme.

A pension scheme set up by an employer to provide retirement and/or death benefits to employees.

The right to buy an annuity from a provider other than your existing pension scheme — commonly known as “shopping around.” Find out more →

Also known as tax-free cash. Broadly calculated as 25% of the value of your crystallised pension benefits.

Bringing together pensions held with different providers into a single plan, to simplify management and potentially reduce charges. Some pensions hold valuable guarantees that could be lost on transfer, so this should always be checked first. Find out more →

A court-ordered division of pension benefits on divorce, giving a spouse a credit towards their own retirement provision.

A pension scheme approved by HM Revenue & Customs under the Finance Act 2004.

The predecessor of the personal pension, available before April 1988 to the self-employed and those without access to an occupational scheme.

A pension that allows you to make your own investment decisions with a wider choice, including the ability to invest directly in shares or commercial property.

A temporary annuity running for no longer than five years, allowing you to draw an income while deferring a Lifetime Annuity.

An annuity that continues for your lifetime only, with payments stopping when you die.

A low-cost, flexible type of personal pension that must meet requirements set out in legislation.

The value of your pension benefits when transferring from one scheme to another.

A legal arrangement that can hold assets for the benefit of others, sometimes used in Inheritance Tax planning to pass on wealth outside your estate. Trusts are not regulated by the FCA.

Pension funds that have not yet been allocated to provide any benefits, such as a lump sum or income.

An annuity option that pays a lump sum to your estate if you die before age 75, equal to your fund value minus income already received, subject to tax.

Also known as an Investment-Linked Annuity. Pays an income for life with the potential to benefit from investment returns, though income can go down as well as up.