Jargon Buster



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.


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


A business professional who analyses 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. If outside the cash facility, further advice is required and funds 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.  


The person who receives the income from an annuity.


An annuity is a product which pays a guaranteed 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.

Any lump sum payments made through annuity protection are tax free if you die before your 75th Birthday. If you die on or after your 75th birthday, the lump sum will be taxed at your beneficiary's marginal rate.


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.  


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 Payment Schemes Limited, previously known as Bankers' Automated Clearing System - a system for sending money electronically from one bank account to another. 


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 variable Early Repayment Charge.


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.


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.


Clearing House Automated Payment 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. 

Contracted-out benefits

These are benefits that individuals were allowed to ‘contract out’ of the State Earnings Related Pension Scheme (SERPS), to occupational Defined Benefit pension schemes between 6 April 1978 and 6 April 2016. Individuals were allowed to contract out of SERPS to Defined Contribution occupational pension schemes between 6 April 1988 and 5 April 2012. These benefits were known as ‘Protected Rights’. Between 6 April 2012 and 5 April 2016 Protected Rights stopped and contracted back into the state scheme (then renamed the State Second Pension or ‘S2P’), before contracting-out was abolished entirely on 6 April 2016.

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 their Fixed Term Annuity into any pension contract allowable under pension legislation or cash it in, 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. 

A Deed of Consent would be signed by Adult residents of a property, who are not party to the Lifetime Mortgage. It confirms that they consent to the Lifetime Mortgage and understand that they relinquish their rights of occupancy should the property need to be sold to pay off the Lifetime Mortgage or if the property needs to be 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 income paid is guaranteed for life. 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
  • the level of charges
  • how long this money has been invested
  • 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 such as a Self Invested Personal Pension (SIPP).


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

Pension providers and schemes may have different definitions for a dependant, but they could typically include your spouse or civil partner, your children (aged 23 or under) and anyone else who may be financially dependent on you. A pension providers definition of a dependant can be broad and you should check with them.

Dependant's income

An option when buying an annuity that means, 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 (or your legal spouse at the time that you die in the case of ‘contracted-out’ benefits or ‘protected rights’).

If you bought an annuity with Just and you separated or divorced, but did not remarry before you died, the income relating to any contracted-out benefits or protected rights would be paid to the person that was named as dependant on the policy when the policy was taken out. This can’t be changed, unless you had a new legal spouse before you died.

If you choose for your annuity to be paid to a dependant, they may be asked to prove that they are financially dependant on 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 needed. 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 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 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 loans 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. 

Equity Release Council

The Equity Release Council is the industry body which represents the equity release sector, and provides safeguards and guarantees for consumers. Each member of the Equity Release Council has signed up to their standards and principles, designed to encourage high standards of conduct and practice.

Escalation / inflation linking

This describes the way in which an annuity income can change each year. You may choose for the income to stay the same (level annuity) or increase each year at a fixed rate (say 3% per year). Or you may choose for the income to increase or decrease each year in line with a measure of inflation, usually the Retail Prices Index (RPI).


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. 


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, they are offered by employers. With this type of pension, the amount of retirement income is set in advance and guaranteed. 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, this means that the interest rate on each advance will never change throughout it's term. However, rates between different advances may vary.

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.


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 a document that’s issued by a 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 (at the discretion of Just). Any guarantee period must be selected at the time at the time of setting up the annuity and will result in a lower annuity income compared to an annuity where no guarantee period is selected.

Guaranteed maturity amount

The lump sum available at the end of the term of a Fixed Term Annuity. You can use this to purchase a lifetime annuity or another pension product available under pensions legislation at that time. Or we can pay it as a lump sum to you, subject to tax.

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. It's 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.


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)

A pension fund is transferred to an annuity provider's pension plan, 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. Some providers may offer another type of IVP where 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 to those who have significantly lower life expectancy due to an existing medical condition. All our annuities are individually underwritten and this information is used to determine how much income to provide.

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

Income drawdown is a way of getting pension income when you retire while your pension fund remains invested. You leave your money invested and take an income directly from the fund. If your investments do well, your pension fund can carry on growing. But remember, the value of your fund could also go down if your investments do badly.


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.


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 (all property, money and possesions). It can also be payable on certain gifts during your life.

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.


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.

Just do not provide an investment 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 may be considered ‘safer’ when there is a higher chance of you getting your money back. However, when something is considered to have a high investment risk, there is a higher 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 last surviving policy holder passes away or moves into permanent long term care.

With the Just For You Lifetime Mortgage, you can choose at outset whether you want to release a one off lump sum payment or take an initial lump sum 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.

We are also able to take health and lifestyle into consideration which could mean you could borrow more, or get a better interest rate to reduce borrowing costs.

Key facts document

A document that insurance and investment firms are required by the regulator to produce. It sets out the main features of a plan or product in a standard format so you can compare service, products 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 your health and welfare. It would need to be registered with The Office of the Public Guardian. Once registered, this legal document can be used should you lose your mental or physical capacity in future.

Lifetime allowance

The annual allowance is currently £1,073,100 (2023-2024). Prior to 6 April 2023 any pension funds in excess of this would have been subject to a Lifetime Allowance charge when benefits were taken, however these charges have now been removed. For the time being we’ll continue to test your benefits against the Lifetime Allowance and tell you the percentage of the Lifetime Allowance that you’ve used, however there’s a proposal to abolish the Lifetime Allowance entirely from 6 April 2024.

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 form of equity release, a lifetime mortgage is a loan secured on your home designed to be a long term commitment. No repayments are usually made until the last borrower dies or moves into permanent long term care, unless you choose to make interest payments.

Limited price index

This is a rate of increase applied to certain types of pension, 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. At Just the LPI is calculated with reference to the RPI.

Loan to value

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 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.  


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

A managed fund is where your money is pooled with 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, risk profile, 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 which may mean you could borrow more than on standard terms.

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 employers—employer-sponsored schemes—and others are personal, or individual, schemes such as a Self Invested Personal Pension (SIPP).

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's called opting out.


Overlap is only relevant if you choose both a dependant's income 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 has run out.

Payment frequency

You can choose to have your annuity income paid monthly, quarterly, half-yearly or yearly. Once your annuity is set up, you can't change how often you're paid.

Payment holiday

A pre-approved period of time during which you choose to stop making your monthly interest 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 can be 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.


An HMRC tax form that allows part of the income from a purchased life annuity (PLA) to be paid free of tax. This part is often called the capital element. The remainder of the annuity, often called the savings element, is taxed.

Plan Protection

An option that was available with our Fixed Term Annuity (no longer available). It pays a lump sum death benefit should you die during the term of the plan. The benefit is the originally transferred pension fund, minus the income already paid. You could nominate your beneficiaries to receive this payment.


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.


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


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 is an option on an annuity that would allow a payment that covers the period between the last regular income payment and the date of your death. It's only relevant if you choose to receive your income payments in arrears. If you chose without proportion, your final annuity payment would be the last regular income payment made before you died.

Protected rights

Protected Rights are the part of your defined contribution fund that relates to contracting out of the State Earnings Related Pension Scheme (SERPS) and State Second Pension (S2P). Protected Rights were abolished in 2012 and all former Protected Rights are now treated in the same way as ordinary defined contribution funds. You may still see references to Protected Rights on statements for pensions from before 2012.

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 a guaranteed 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. It measures the change in prices of a basket of retail goods and services over time. 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 'defined benefit' or 'final salary' scheme. With this type of pension, the calculation method to work out how much income you'll get when you retire is known in advance. The amount of income you get is based on the length of time you spend as a member of the scheme and your earnings.

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.   

Small Pots

If you have a pension pot worth up to £10,000 you can normally take this as a lump sum from age 55 (up to three such pots). 25% of the lump sum is tax free and the rest is 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. The current state pension age for men and women is 66. The government plans that this will gradually rise to age 67 for those born on or after April 1960. 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.


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

When 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.

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 capital value of all your pension benefits is £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 GDPR & Data Protection Act

UK GDPR and the Data Protection Act 2018 is the legislation designed to safeguard personal data. It gives individuals rights over their personal information, and any business or organisation who handles personal data must comply with a number of important principles.

UK registered pension scheme

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


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. 


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 payments already made including 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 their pension, including the value of their pension pot. It will make the customer aware of all the options available to them when they retire. This will include the different types of lump sum and retirement income (such as drawdown and annuity) available. It will also explain the benefits of shopping around using the Open Market Option.