Jargon Buster

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

Accrual rate

A term that could appear in your pension statement. In this context, it means the proportional amount of pensionable earnings you will receive from your final salary scheme (defined benefit scheme) for each year of service. This is often described as 1/60th or 1/80th.


Accrue

In terms of equity release, this means the build up of interest associated with a lifetime mortgage.


Actuary

A business professional who deals with the financial impact of risk and uncertainty. 


Additional advance

An additional amount of money taken after the initial advance. Either from the pre-agreed cash facility, or outside of the facility providing further advice is taken and further funds are available. Additional advances are not guaranteed.


Alternatively secured pension

Alternatively secured pensions were abolished from 6 April 2011. They were a type of drawdown pension applicable to those aged over 75.  


Annuitant

The person who receives the income from an annuity.


Annuity

An annuity is a product which pays a regular income in exchange for a lump sum. 


Annuity protection

Annuity protection (also known as value protection) is an option you can choose when you take out your annuity that returns a lump sum to your beneficiaries if you die without receiving the full value of your pension savings.

You can protect a percentage of your pension savings – up to 100% - so that when you die, your beneficiaries will receive the value of your protected pension savings less the total gross income paid to you already as an annuity income.

After 6 April 2015, any lump sum payments made through annuity protection are tax free, should you die before your 75th Birthday. If you die later, the lump sum will be taxed at your beneficiary's marginal rate of tax.


APR

Annual percentage rates - an indication of how much interest will be charged on a loan including known charges associated with taking out the loan. It reflects a total cost of borrowing over a year. APR rates can be used to compare similar types of credit, over similar periods.  


Attorney

Person(s) appointed to act on behalf of another person (for example when someone is unable to look after his or her own affairs due to ill health). A formal legal document called a 'Power of Attorney' is used to appoint the attorney.  

BACS

Bankers Automated Clearing System - a system for sending money electronically from one bank account to another. 


Bankruptcy

A legally declared inability of an individual or organisation to pay its creditors.


Benchmark interest rate

This is an interest rate (FTSE 15 YEAR Gilt Index) used by Just when calculating any early repayment charge.   


Beneficiary

Someone who benefits from a will, a trust, a life insurance policy or death benefits from an annuity or pension. 


Building insurance

Insurance that covers physical damage to a building (as opposed to its contents) e.g. damage to walls caused by subsidence. Equity release customers are required to have buildings insurance appropriate to the value of their property, as stated in the survey.

Capped drawdown

Capped drawdown is a type of income drawdown arrangement that was available before 6 April 2015.

If you already use capped drawdown it will continue under its existing rules, but if you withdraw more income than is allowed by the drawdown ‘cap’ then you’re considered going forward to be in ‘Flexi-access drawdown’ and the tax relief you can get on future pension savings is reduced.


Carer

This refers to a live-in carer who looks after someone. If you need a carer to move in with you and you are a lifetime mortgage customer, you must first get Just's written agreement.


Cash advance

An amount of money paid to a customer under the equity release product. 


Cash facility

A fixed amount available to lifetime mortgage customers from which the initial advance and additional advances are taken.


CHAPS

Clearing House Automated Payments System - a form of electronic payment transfer between two banks on the same day.


Compound interest

Roll-up lifetime mortgages have compound interest added. This means that any interest accrued is added to the loan amount and future interest is charged on top. 

Got a spare 2 minutes? Watch our video on compound interest to learn more.


Contract Out

You or your employer were given the option to opt out of the State Second Pension (formerly the State Earnings Related Pension Scheme) in exchange for lower National Insurance contributions (and higher pension contributions) or a rebate into your pension. Since 6 April 2016 you can no longer contract out.If you were contracted out, your National Insurance contributions increased to your standard rate after this date. 


Conventional annuity

A conventional annuity is an annuity purchased with the proceeds of a pension plan, which pays a guaranteed, regular income for life. The income payable from this type of annuity is not linked to the performance of investments. 


Conversion feature

The Conversion feature allows the member to convert the Plan into any pension contract allowable under pension legislation, at any point during the plan term, if financial advice has been provided.


County Court Judgement (CCJ)

An order issued through court for payment of a debt. CCJs will appear on a credit file and will be marked as satisfied once the debt is repaid. Any CCJs must be declared when taking out equity release.


Credit agreement

This is a written contract between the lender and the customer. The lender will allow the customer to borrow money under the agreed terms and conditions. 

Data Protection Act

The Data Protection Act 2018 is designed to safeguard personal data. It requires anyone who handles personal information to comply with a number of important principles. It also gives individuals rights over their personal information.    


By signing a Deed of Consent a person living in a property is confirming that they consent to the mortgage and understand that:

  • The mortgage will take priority over any claim they may or may not have on the property.
  • They can be evicted if the property is repossessed.

Defined benefit pension (also known as a final salary scheme)

With this type of pension, the amount of retirement income an employee gets is set in advance. The amount of income they get is based on the number of years they have been a member of the scheme and their salary at or near their retirement date (or at date of leaving the scheme, if earlier).


Defined contribution pension (also known as a money purchase scheme)

Defined Contribution pension schemes are also known as money purchase schemes. They provide benefits on retirement based on:

  • the amount of money that has been paid in to the scheme
  • how long this money has been invested
  • the level of charges
  • and investment returns over this period.

Money purchase schemes cover a wide range of different pension plans. Some are provided by employers—employer-sponsored schemes—and others are personal, or individual, schemes.


Dependant

If you die and have dependants, they may receive benefits from your pension scheme.

Schemes may have different definitions for dependants, but they could typically include your spouse or registered civil partner, your children (if aged less than 18 or in full-time education) and anyone else who may be financially dependent on you.


Dependant's pension annuity

An option when buying an annuity that means, in the event of death, a percentage of your annuity income may continue to be paid to a surviving spouse, civil partner, or dependant. If you choose for your annuity to be paid to a dependant, they may be asked to prove that they are financially dependant upon you.  


Drawdown (as relating to equity release)

Drawdown in lifetime mortgage terms is the process of taking an additional cash advance from your pre-agreed cash facility. This is done after the initial advance is paid. Only when a drawdown is taken does the interest start being charged on that amount. 


Drawdown lifetime mortgage

A lifetime mortgage is a loan secured against your home, designed to last for the rest of your life. No repayments are usually made until the death or movement into permanent long-term care of the last surviving borrower.

A drawdown lifetime mortgage allows an initial advance together with an approved cash facility from which additional advances can be taken as and when you need it. Interest is only charged on the amounts taken rather than the full amount available within the cash facility.


Drawdown pension

If you are a member of a defined contribution pension scheme, drawdown or ‘income drawdown’ is an option which allows you to take income directly from your pension fund, while it remains invested.

Early repayment charge

A fee that some companies charge if you choose to repay your mortgage early. This charge only applies in certain instances and will vary from provider to provider.  


Enduring Power of Attorney (EPA)

A legal document giving the attorney the power to make decisions on behalf of someone else. This continues should that person lose their mental or physical capacity in the future. If they become mentally incapacitated, this document needs to be registered with the Office of the Public Guardian.

In October 2007, EPAs were replaced by Lasting Power of Attorney (LPA) in England and Wales. However, existing EPAs continue to be valid and new ones can continue to be made in Northern Ireland.


Enhanced annuity

An enhanced annuity is an annuity that pays a higher income to an individual if aspects of their lifestyle (such as smoking and drinking alcohol) or medical history may shorten life expectancy. 


Equity

Equity is the value of your home minus any outstanding mortgage or other debts secured against it.


Equity release

Equity Release is a way of releasing some of the wealth tied up in your home. There are two main types of equity release product: lifetime mortgages, which are mortgages that are secured against your home; and home reversion plans, where you sell all or part of your property to a reversion company in exchange for money.

Lifetime Mortgages and Home Reversion plans are also included in this jargon buster. 


Escalation / inflation linking

This describes the way in which an annuity income can increase each year - you may choose to have no increase (level annuity) or increase your annuity each year at a fixed rate (say 3% per year) or in line with the change in a measure of inflation, such as the Retail Prices Index (RPI) for example.


Estate

Your estate is the name for everything you own, including your home, possessions and any savings or investments. 


Executive pension plan (EPP)

Executive pension plans are pension plans arranged with an insurance company which usually provide pension benefits for the controlling directors of a company. They are similar to Small Self Administered Schemes. 

FCA

The Financial Conduct Authority - the UK's financial regulator set up by the government to regulate financial services and protect your rights. This means they set standards that financial services firms have to meet and take action if they don't.


Final salary scheme

Also known as a defined benefit scheme. With this type of pension, the amount of retirement income an employee gets is set in advance. The amount of income you get is based on the number of years you have been a member of the scheme and your salary. 


Financial adviser

Also known as financial intermediary, these are professionally qualified individuals who provide financial advice to meet customer's needs and objectives. In doing so they will offer the most suitable and competitive product from the range of providers available to them. 


Fixed rate

All of our lifetime mortgages have fixed rates, which may vary for different advances. This means that the interest rate on each advance will never change throughout its term. 


Fixed term annuity (FTA)

Fixed Term Annuities are a type of drawdown arrangement, which gives you an opportunity to keep your options open in case your circumstances change later in retirement. It provides a regular retirement income for a number of years –typically five– as well as a ‘maturity amount’ at the end of the specified period. The maturity amount can then be used to invest in another retirement income product such as a lifetime annuity or another fixed term annuity.

Gilt

A gilt is a bond issued by the UK government which provides a certain return over a set period of time.


Gilt yield

The level of interest payable to investors holding government bonds, which is usually shown as a percentage.


Government limits

The Government Actuary's Department (GAD) currently limits the maximum amount of income that can be taken from capped drawdown arrangements purchased prior to 6th April 2015. This is to try and ensure that those who invest in these plans leave enough in their fund to support a reasonable level of income for the rest of their retirement. These limits were removed for new flexi-access drawdown plans purchased after 6th April 2015. Existing Capped Drawdown plans will continue to apply the GAD limits, unless switched to a new flexi-access plan.  


Grant of Representation

A Grant of Representation is part of the Probate process. It is an order that’s issued by court, to give authority to designated individuals to deal with a deceased person's estate. 


Guarantee period

An annuity income is payable for as long as the annuitant - the person receiving the annuity - lives. They can choose a guarantee period (anything up to 30 years), which means that, if they die within that guarantee period, the annuity will continue to be paid for the remainder of that period. The remaining payments are made to the beneficiaries of the deceased.


Guaranteed maturity amount

The lump sum you receive at the end of the term of the Fixed Term Annuity you have with us. You can use this to purchase a lifetime annuity or another pension product available under pensions legislation at that time.


Guaranteed Minimum Pensions (GMP)

This is the part of pension benefit built up in defined benefit schemes, which relates to contracting out between 1978 and 1997 and is roughly equivalent to the amount of State Earnings Related Pension Scheme (SERPS) which would have been paid for that period. This is the minimum pension payable under the scheme. As GMP is a replacement of a state benefit, certain restrictions apply to the income you receive from it.

HMRC

In 2005, the Inland Revenue and Her Majesty's Customs and Excise merged to form Her Majesty's Revenue & Customs. They are responsible for the collection and administration of the main forms of UK taxes.


Home reversion plan

A type of equity release, where you sell all or part of your home in return for a cash lump sum. You continue to live in your home for as long as you wish.

Immediate vesting pension (IVP)

There are two different types of immediate vesting pensions: 1) A pension fund is transferred to an annuity provider's pension plan, where it is immediately converted into an annuity. The annuity follows the rules of the annuity provider's pension plan and any tax-free lump sum is paid by the annuity provider. This is the type of IVP that we offer. 2) An individual pays a lump sum of their savings outside of pensions into an annuity provider's pension plan, tax relief is added and the total is then converted into an annuity. The amount you can pay into this type of IVP is dependent on your earnings. We do not offer this type of policy. 


Impaired annuity

An impaired annuity is an annuity that pays a higher income than a standard/conventional annuity for those who have significantly lower life expectancy due to an existing medical condition.


In advance / in arrears

You can choose whether your annuity payments start as soon as your annuity has been set up (in advance) or at the end of your chosen payment frequency (in arrears). 


Income drawdown

A type of retirement income product that allows you to draw an income directly from your pension fund.


Inflation

Inflation is a term used to describe the average increase in the price of goods and services. It is measured and expressed as a change over a set period, such as month or a year.


Inheritance

This is the value of an estate that is left to beneficiaries upon a person's death. 


Inheritance tax

Inheritance tax is a tax that is potentially payable upon death depending on the value of your estate. It can also be payable on certain gifts during your life, mainly connected to trusts.


Initial advance

The amount of money taken from the cash facility when the lifetime mortgage completes.


Initial cash advance

The amount paid to customers at the start of their lifetime mortgage.


Insolvent

If you are bankrupt and have insufficient assets to cover your debts, you are insolvent.


Interest serviced lifetime mortgage

A lifetime mortgage is a loan secured against your home, designed to last for the rest of your life. No repayments are usually made until the death or movement into permanent long-term care of the last surviving borrower.

An interest serviced lifetime mortgage provides the option to pay all or some of the monthly interest amount which could help to reduce the overall cost of the loan.


Investment linked annuity

The income payments from this type of annuity may fluctuate in value as they are linked to the performance of an investment fund(s). Income from an investment-linked annuity has some guarantees attached to it so it's worth checking what these are and how these work with the provider. If investment returns are good, your annuity income payments may rise. If investment returns are poor, then your annuity income payments may fall, so they are not without risk. Two types of investment linked annuity you may have heard of are the with-profits annuity and unit-linked annuity.


Investment risk

When you make an investment, there will be a risk that you may lose some or all of the money you have invested. For most investments, the outcome of your investment is uncertain. An investment is considered to be ‘safer’ when there is a higher chance of you getting your money back. Conversely, when something is considered to have a high investment risk, there is a high possibility that you may not get back all of the money you invested. Risk and return are linked and usually the higher the risk, the higher the potential return.

Joint life annuity (also called dependant's pension / annuity)

In the event of your death, a percentage of your annuity income may continue to be paid to a surviving spouse, civil partner or dependant if you have selected a joint life annuity. If you choose this option, the dependant may be asked to prove that they are financially dependent on you.  


Just For You Lifetime Mortgage

A lifetime mortgage is a loan secured against your home, designed to last for the rest of your life. No repayments are usually made until the death or movement into permanent long-term care of the last surviving borrower.

Our Just For You Lifetime Mortgage allows an initial lump sum release with the added flexibility of a cash facility from which you can release additional amounts in the future as and when needed. It also provides an option to pay some or all of the monthly interest amount which could help reduce the overall cost of the loan amount.

Key facts document

Important information set out in a standard way, so you can compare service, product and costs. 


Key features illustration

Important information set out in a standard way, so you can compare service, product and costs.

Lasting Power of Attorney (LPA)

Lasting Powers of Attorney replaced Enduring Powers of Attorney in October 2007 in England and Wales. An LPA is a legal document giving the attorney the power to make decisions on your behalf about your property and/or financial affairs and/or your health and welfare. This legal document can be used should you lose your mental or physical capacity in the future and needs to be registered with the Court of Protection. 


Lifetime allowance

The lifetime allowance is the maximum amount of pension savings you can build up without having to pay a tax charge. The amount is set by the government and is currently £1,055,000. Whenever you draw benefits from a pension scheme, these are tested against the lifetime allowance and your pension provider will tell you the percentage of the lifetime allowance you have used. 


Lifetime annuity

A lifetime annuity is a product that you buy with the funds from a pension scheme. It will pay you a guaranteed income for the rest of your life.


Lifetime mortgage

A loan secured on your home, designed to last for the rest of your life. No repayments are usually made until the death or movement into permanent long-term care of the last surviving borrower, unless you choose to make interest payments.


Limited price index

This is a measure of inflation, calculated as the Retail Price Index (RPI) or Consumer Prices Index (CPI) with some limits. LPI has a cap in the growth of RPI of 2.5% or 5% each year and also a floor of 0%, which the measure will not fall under.


Loan to value factor

A figure showing the maximum percentage of the value of your property that can be obtained as a loan against your property. For instance, if the loan to value factor is 20%, you can obtain a maximum of 20% of the value of your property. This figure is calculated after deduction of any outstanding debt secured on the property.  

Maisonette

A self-contained apartment on either one or two floors in a larger house. They often have their own entrance from the outside.


Managed funds

Managed funds are where your money is pooled with that of lots of other investors, and then a fund manager buys and sells investments on your behalf. You buy units in the fund, and then depending on how the underlying investments perform, the value of those units go up or down. Managed funds can focus on particular objectives, geographic sectors, asset classes and industry sectors, and there are hundreds of such funds available to most UK investors from a range of product providers and investment managers.  


Material fact

A material fact is any information that could affect an underwriter's assessment of the risk, such as details of a particular medical condition.


Medically enhanced lifetime mortgage

A lifetime mortgage is a loan secured against your home, designed to last for the rest of your life. No repayments are usually made until the death or movement into permanent long-term care of the last surviving borrower.

With a medically enhanced lifetime mortgage, health and lifestyle are taken into consideration when calculating the maximum borrowing available.


Money purchase pension

 

Money purchase schemes are also known as defined contribution pension schemes. They provide benefits on retirement based on
  • the amount of money that has been paid in to the scheme
  • how long this money has been invested
  • the level of charges
  • and investment returns over this period.
Money purchase schemes cover a wide range of different pension plans. Some are provided by employersemployer-sponsored schemesand others are personal, or individual, schemes.

Monthly payments

The amount chosen to pay each month to cover all or some of the monthly interest amount on your Just For You Lifetime Mortgage.

No negative equity guarantee

A guarantee that is offered with most lifetime mortgages. It ensures that, when the property is sold after you die or move into long-term care, you or your beneficiaries will not have to repay more than the sale proceeds. This applies even if they are less than the amount owed.

Our lifetime mortgages include this guarantee as standard.


Normal retirement date

This is the date at which your pension scheme expects you to retire. This is often your 65th Birthday but it can vary from scheme to scheme. 

Open market option

The ability for you to shop around and buy an annuity from any annuity provider, not just the company that provides your pension. This option enables you to search for the best annuity rate for you.


Opting out

If an employee leaves an occupational pension scheme, or chooses not to join one, it is called opting out.


Overlap

Overlap is only relevant if you choose both a joint life option and a guarantee period option with your pension annuity. If you die within the guarantee period, the term with overlap means that your surviving spouse's, civil partner's or dependant's annuity income payments will start immediately and will be paid in addition to the annuity income payment due in the remaining guarantee period. Without overlap means that your surviving spouse's, civil partner's or dependant's annuity income payments will not start until after the guarantee period.

Payment frequency

You can choose to have your annuity income paid monthly, quarterly, half-yearly or yearly. The frequency of payments that you choose will depend upon your personal circumstances. 


Payment holiday

A pre-approved period of time during which you choose to stop making your monthly payments on your Just For You Lifetime Mortgage.

Any interest not paid during a payment holiday will be added to the loan and roll up for the lifetime of the mortgage.


Pension annuity

A pension annuity, often referred to simply as an annuity, is a product purchased with the proceeds of a pension plan which pays a guaranteed, regular income for life. The income payable from this type of annuity is not linked to the performance of investments. 


Pension Commencement Lump Sum (PCLS)

Another name for a tax-free lump sum. See: 'tax-free lump sum' for the full definition.


Pension fund

The fund built up over the years from pension contributions made by you and/or your employer, by tax relief that has been added to those contributions and by any national insurance contribution rebates. At retirement your pension fund is converted into retirement benefits such as an annuity. There is normally the option to take up to 25% of the fund as a tax-free lump sum.


Pension sharing order

As part of a division of assets following a divorce or dissolution of a civil partnership, a pension sharing order allows a percentage of one party's pension benefits to be transferred to the other party. The benefit transferred is known as a pension credit.    


Personal illustration

This is a quote tailored to your situation - showing you the potential costs and benefits of a financial product.


Personal pension

Personal pensions are pensions that you arrange yourself. The amount that your personal pension is worth when you retire will depend on how much you’ve paid into it and how your investments perform. Some employers offer personal pensions as workplace pensions.


PLA6

An HMRC tax form that allows the capital part of a purchased life annuity (PLA) to be paid, free of tax. This also confirms the income part of the PLA is taxable. 


Plan Protection

An option available with our Fixed Term Annuity which pays a lump sum death benefit should you die during the term of the plan, calculated by taking away any income already paid from your originally transferred pension fund. You can nominate any of your beneficiaries to receive this payment.  


Portability

The ability to transfer your equity release policy to another property providing it meets the lender's criteria. This will involve some costs on your behalf, such as a valuation fee and legal fees. You may also have to repay some of the amount owed.


PRA

The Prudential Regulation Authority (PRA) is responsible for the prudential supervision and regulation of banks, building societies, credit unions, insurers and investment firms. 


Probate

Probate is the name generally given to the process of administering someone’s estate when they die. It describes both the activity and the process that’s involved in finalising the affairs of someone’s estate and dividing it between their beneficiaries. It is usually necessary when someone has assets of £5,000 or more.  


Proportion

Proportion is only relevant if you choose to receive your annuity income payments in arrears. If you choose with proportion, a final proportionate payment will be made to cover the period between your last payment and the date of your death. If you choose without proportion, your final annuity income payment will be the last normal payment before you die. 


Protected rights

This is the part of a defined contribution pension fund which relates to contracting out of the State Earnings Related Pension Scheme (SERPS) and State Second Pension (S2P). Protected rights cease to exist from 6th April 2012. Former protected rights will be treated, after 6th April 2012, in the same way as ordinary pension funds. 


Purchase price

The price you paid for your property.  


Purchased life annuity

A type of annuity bought with savings, rather than your pension. It provides you with an income in a similar way to a pension annuity. They are sometimes purchased with money raised through an equity release scheme or using the tax-free lump sum from a pension. 

Redemption statement

A statement that outlines the monetary amount to be repaid if you wish to repay your mortgage. This figure will include the accrued interest and any early repayment charge that may apply. 


Regular payment

Pre-agreed annual or monthly cash advances made to equity release borrowers from the cash facility they have been granted; as part of their lifetime mortgage. 


Retail Prices Index (RPI)

This is a commonly used measure of inflation, published by the Office for National Statistics. When selecting annuity options, you can choose to link the income received from an annuity to this measure so that each year payments are adjusted to keep in line with inflation.


Roll-up Lifetime Mortgage

A roll up lifetime mortgage is where interest charged is added to the loan amount as well as interest that has accrued over previous months. There's no need to make any regular payments unless you want to. The mortgage is intended to last the lifetime of the policyholder/s and is designed repaid upon the death of the last surviving policyholder or, entry into long term care.

Also known as a defined benefit or final salary scheme. With this type of pension, the amount of retirement income an employee gets is set in advance. The amount of income you get is based on the number of years you have been a member of the scheme and your salary.


Scheme administrator

The person(s) who is responsible for the day-to-day running of the pension scheme.


Scheme pension

The pension provided by a registered pension scheme in the form of an annual income. It can be paid direct from the scheme or by an insurance company selected by the scheme. Defined benefit pensions are always paid as scheme pensions, but defined contribution schemes can also provide these.   


SHIP

Standing for Safe Home Income Plans, an organisation dedicated to the protection of consumers entering the equity release market. As of May 2012 SHIP became The Equity Release Council. Membership is voluntary but companies who are members of The Equity Release Council follow a statement of principles to ensure customers are treated fairly when entering into an equity release contract.


Small Pots

Pots of up to £10,000 each can also be taken from 55 as a lump sum (up to three such pots). 25% of each payment is tax free and the rest subject to income tax. 


Small Self Administered Scheme (SSAS)

Small Self Administered Schemes are occupational schemes usually with up to 11 members, generally set up for the controlling directors of a company. SSASs are subject to special rules surrounding investments and the benefits that can be taken from them. 


Stakeholder pension

A type of personal pension that has to meet certain standards set by government. Personal pensions can be taken out by an individual or through an employer.  


State benefits

The state provides some financial help for most situations. The amount of some state benefits (such as pension credits) is based on the amount of income received and capital held (such as property). Because of this, your state benefits could be affected if cash is released from your home. A financial adviser or the Department for Work and Pensions will be able to help you find out if this is the case. 


The State Earnings Related Pension Scheme is an additional State Pension for employees on top of the Basic State Pension. It was launched in 1978 and was replaced by the State Second Pension (S2P) in 2002. The amount payable depends on National Insurance contributions. 


State pension age

The age you have to reach to be entitled to draw your state pension. This is currently 65 for men. The age at which women qualify for the state pension rose from 60 to 65 in November 2018, with the exact date depending on when you were born. From 2019, the state pension age will increase for both men and women to reach 66 by October 2020. Please visit gov.uk/state-pension-age to calculate your state pension age.


State Second Pension

The State Second Pension is an additional State Pension for employees on top of the Basic State Pension. It replaced the State Earnings Related Pension Scheme (SERPS) in 2002. The amount payable depends on National Insurance contributions. You won’t get the Second State Pension if you reached State Pension age on or after 6 April 2016.


Surrender value

The cash amount offered to the policy owner by the insurance company upon cancellation of a policy outside of the cancellation period. Annuities do not normally have a surrender value.


Survey

An inspection of your property by a surveyor. It details the condition and value of the property and its suitability to lend against.  

Tax code

A tax code is used to calculate the amount of tax to deduct from your pay or pension. If you have the wrong tax code you could end up paying too much or too little tax. Tax codes are calculated by HMRC and if you think you have the wrong tax code, you should contact HMRC.    


Tax on death benefits

If you pass away, your beneficiary could be entitled to a lump sum or income from your pension. If you die before your 75th birthday, payments are usually tax free. If you die after your 75th birthday, payments are subject to tax at the marginal rate of income tax of the person receiving it.


Tax year

The tax year starts on 6 April and finishes on 5 April and is split up into 12 monthly periods with each month starting on the 6th and finishing on the 5th of the following month. 


Tax-free lump sum

You can normally take up to 25% of your pension fund as a tax-free lump sum. You may also hear this referred to as a Pension Commencement Lump Sum (PCLS), or tax-free cash.


The Equity Release Council

The Equity Release Council is the industry body for the equity release sector. Each member of the Council that provides equity release products is signed up to the Equity Release Council’s statement of principles which puts in place a number of safeguards and guarantees for consumers. Prior to May 2012 this organisation was known as Safe Home Income Plans (SHIP). 


Title deeds

These are the documents which prove who owns a property and under what terms.


Trivial commutation (Triviality)

If you’re aged 55 or over and the value of all of your pensions are £30,000 or less, you can usually take everything you have in your defined benefit pension as a ‘trivial commutation lump sum’. With this option, 25% is tax free.

UK registered pension scheme

A pension scheme that has been registered with Her Majesty's Revenue and Customs (HMRC). This ensures the scheme applies a strict set of tax rules and also benefits from certain tax advantages. 


Underwriting

Annuity providers assess the annuitant's life expectancy and it is the underwriting process that uses this information to determine how much income to provide.


Unused cash facility

The amount of money in the cash facility available to be taken as an additional advance after the initial advance has been taken. The amount is capped at £200,000.

Valuation

An estimation of the value of your property for lending purposes only, carried out by a professional valuer.


Valuation fee

A fee paid to the equity release provider for an independent valuation report of the property for lending purposes.


Value protection

This is sometimes known as annuity protection or capital protection. Value protection is an option that, if the annuitant dies without having received the full value of their pension fund, returns a lump sum (minus total gross payments made and tax). As a result, value protection gives the ability to protect up to 100% of the original pension fund.

Wake-up packs

A wake-up pack is the name given to the bundle of information that is sent to an individual by their pension company in the lead up to their retirement. It contains details of the size of their pension pot, the different types of annuity available, and the benefits of shopping around using the Open Market Option. It also contains information on other types of retirement income that are available (such as income drawdown) so that customers are aware of all of their options.