The Geeks' glossary

Are you a Pension newbie? Bored by all the financial nonsense and confusing sentences?

Unlock the next level of saving by upgrading your vocab to Pension Geek and check out our Pension Glossary – where we explain tricky terms with lucid lingo.

Annual benefits statement

This is a document your pension provider will send you each year. It gives you a summary of your pension savings and tells you about the savings you have now and what they could be worth in the future.

Automatic enrolment

This sounds like something to do with a car, but it isn’t. If you’re working, then you’ve probably been put into a workplace pension. This is called: ‘automatic enrolment’, and it’s a legal requirement.

Contribution

Any money you, your employer or the government put into your pension.

Defined benefit (DB)

There are different types of pension. A ‘defined benefit’ pension means you’ll have a secure income for life – which is based on your salary and how long you’ve worked for your employer.

Defined contribution (DC)

Most of us with a workplace pension have what’s called a ‘defined contribution’ pension. This means the total amount you have in your pension pot depends on how much you and your employer pay in and how your investments grow.

ESG investment

E is for Environmental, S is for Social, and G is for Governance. It’s a type of investment that prioritises companies with all-round lovely policies, including climate, employee diversity and treatment, and more.

ISA

An Individual Savings Account, free from tax. There’s a maximum allowance that you’re allowed to contribute each year – this is called… drumroll please… an ISA allowance. Who’d have guessed?

LISA

A Lifetime Individual Savings Account, also free from tax. It’s usually used for buying property but could eventually be turned into a pension too. You’re only allowed to contribute up to 4 big ones (that’s £4,000) each year.

Master trust

This is a pension scheme that looks after pensions for lots of different employers.

Matching contribution

When you put money into your pension from your salary, your employer can match it up to a certain percentage. It’s not always done like this though, so check your statement or the information pack provided by your employer.

Pensionable salary

Your salary, but the amount that you would get if tax didn’t exist. It’s usually on your pension statement, or your employment contract, or both.

Lucky you!

Salary sacrifice

A kind of contribution where the money comes straight out of your salary before tax. Not bad, huh?

State Pension

A State Pension is an additional pension provided by the government based on your age and how many National Insurance contributions you’ve made.

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