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An occupational pension scheme which is approved by the Revenue Commissioners as providing benefits within the Revenue limits. However, in order to gain all the tax advantages available, an occupational pension scheme must be exempt approved. See Exempt Approved.


This is an insurance policy issued by a life assurance company where, in return for a lump-sum payment, the life company guarantees to pay an income for the remainder of the life of the individual insured by the policy.


A short name for Additional Voluntary Contribution. This is a means by which an employee who is a member of an occupational pension scheme can top up their pension scheme benefits by making their own contributions. An AVC can be part of the occupational pension scheme or maybe set up as a separate scheme, and a PRSA can be used as an AVC.


The amount of money that your risk cover insures you for.

Bid Price

The price at which units of a unit fund are encashed (sold). Typically the Bid Price on a particular day will be about 95% of the corresponding Offer Price.

Bid/Offer Spread

The % difference between the Bid and Offer Prices of a unit fund on a particular day. Typically the Bid/Offer spread is about 5%, but some life companies may maintain a lower Bid/Offer spread, e.g. 3% or possibly nil in some cases.

Buy-Out Bond

The purchase of pension policy in lieu of entitlement to benefit from an occupational scheme, following the termination of the member’s pensionable service.

Cease Age

The age at which a benefit will cease being paid to you.

Central Bank

Life Offices / Pension providers are regulated by the Central Bank.

Children’s Death in Service

This refers to the benefit payable to a child if their parent dies while employed by his or her employer.


A term which refers to a benefit being calculated and paid out in the event of death, leaving the scheme, Illness or retirement.


Money/Premiums paid into a pension arrangement by or on behalf of that individual.

Contribution Type

Identifies where and what kind of contributions are received e.g. employer or employee contributions, regular payments or one-off payments.

Death in Service

A term used to describe the death of an individual while employed by his or her employer. Also referred to Term Life Assurance (TLA).

Death Benefit

The benefit payable from the scheme if a person dies while in the service of the employer. Also known as Life Assurance Benefit

Declaration of Trust

The pension scheme is established when the trustees sign this document. This document outlines the powers and duties of the trustees. The second section of the Declaration of Trust, known as the Rules, outlines the benefits available under the scheme.

Default Investment Strategy

A pension schemes’ default investment strategy is the way in which members automatically have their contributions invested unless they make an active investment choice from one or more of the other funds offered by the scheme.

Deferred Period

 The period under an Income Protection Insurance policy for which the insured must be unable to work due to sickness or disability before the benefit becomes payable by the Life Assurance Company. The deferred period is typically 13, 26 or 52 weeks.

Defined Contribution Pension

A type of pension arrangement where the retirement benefits provided for an individual, is determined by the accumulated value of the contributions made to the arrangement by or on behalf of that individual. No promise is given in advance as to the level of retirement benefit that may be provided.

Dependants Pension

This term refers to a benefit payable to a dependant if the member dies in service or retirement. The pension is paid to a member’s spouse; civil partner; cohabiting partner or dependent children.

Effective Date

The date from which the effect of a change is applicable and not the date the change was made.

Enhanced Annuity

An enhanced annuity is an annuity, where the income provided, is based on your health circumstances. If you qualify for an enhanced annuity the income provided will be higher than that provided under a standard annuity.


This refers to the rate at which a benefit increases each year.

Exclusive of Fund

A term used to describe an associated Section 785 or pension term policy, i.e. sold in conjunction with a Pension Plan, where the cover on the policy is specified to be exclusive of the value of the Pension Plan at the date of death, e.g. if the policy cover is €100,000 and the Pension Plan value at the date of death is €20,000, then €100,000 is payable under the associated Section 785 or pension term policy, to give a total payout of €120,000 on death.

Exempt Approved

A term to mean that an approved occupational pension scheme has been set up under an irrevocable trust. The benefits of an exempt approved scheme include tax relief on employer and employee contributions made to the scheme, no Benefit In Kind for the employee in respect of any employer contributions to the scheme, and tax-free investment returns.

Funding Rate

A contribution rate, expressed as a % of annual remuneration, which is estimated will provide certain benefits in the future, assuming assumptions made regarding investment returns and growth in remuneration are realised.

Fund Switch

See Switching.

Free cover Limit

See Non-Medical Limit.

Guaranteed  Period.

The “guaranteed period” for an annuity is the initial period for which the annuity is guaranteed to be paid regardless of whether or not the individual dies during that specific period of time. The standard guarantee period is 5 years but it can also be pushed out to 10 years.

Inclusive of Fund

A term used to describe an associated Section 785 or pension term policy, i.e. sold in conjunction with a pension plan, where the cover on the policy is specified to be inclusive of the value of the Pension Plan at the date of death, e.g. if the policy cover is €100,000 and the Pension Plan value at the date of death is €20,000, then €80,000 is payable under the associated Section 785 or pension term policy, to give a total payout of €100,000 on death.

Income Protection (IP)

A type of insurance coverage that pays out a regular income benefit if the insured is unable to work due to illness or injury, lasting longer than a deferred period. The benefit is payable until the individual is deemed fit to return to work, the benefit cessation age, or in a number of other situations as listed in the policy document. It’s sometimes called Salary Protection (SPP) or Permanent Health insurance (PHI).

Investment Strategy

An Investment Strategy is any decision made in relation to the investment of your fund throughout the life of your policy. An example of an Investment Strategy is Life tyling,  whereby the pension provider/investment manager will gradually change the risk profile of your fund as you get closer to retirement. The strategy aims to protect the value of an investor’s fund as they get close to retirement while at the same time maximising investment growth.

Initial Units

A type of unit used in a unit-linked pension plan which carries a higher level of management charge than normal units and is subject to an early encashment charge if encashed (sold) before the expected maturity date of the plan.

Last Risk Renewal Completed

The latest annual renewal completed on a stand-alone group risk scheme.

Letter of Wishes

It’s a request to the trustees or scheme administrator of your pension scheme, setting out who you’d like to receive any death benefits payable on your death. It’s not binding on the trustee or scheme administrator, but they would take your wishes into consideration when making their decision.

Lifestyle Investment

Lifestyle aims to gradually reduce the risk of the funds you are invested in as you approach retirement.  This should protect the fund gains in earlier years. Most Pension Fund managers use Lifestyling as their default investment strategy.


A term used to describe an individual who is included in an occupational pension scheme. A current or active member is an individual who is currently an employee.

Member Booklet

Once a member joins a pension scheme or when a pension scheme is set up, each member will get a member booklet outlining information in relation to their pension scheme, such as the benefits available.

Member Type

This specifies the members purpose for being in a pension scheme e.g. risk only member or Single Premium (SP) only member.

Multinational Pooling

Multinational Pooling (MNP) is a service offered internationally through a group of insurers operating together as a network. It allows Multinational companies to co-ordinate benefits across subsidiaries and share in profits generated from worldwide positive insurance results.

Next Rate Review Date A unit rate is generally fixed for three years, after which period the rate is reviewed and a new rate is struck based on the current membership profile at that time. 

Nomination Form

See Letter of Wishes

Non-Medical Limit

A non-medical limit is the maximum sum assured that an insurer will underwrite on an individual without seeking medical evidence subject to certain criteria. Many schemes benefit from a non-medical limit.

Normal Retirement Age

The Scheme Rules will specify the normal retirement age, it can be any age between 60 and 70.

Occupational Pension Scheme (OPS)

An arrangement set up by an employer to provide retirement and/or other benefits for employees.

Offer Price

The price at which units of a unit fund are allocated by the life company to an investor or plan holder. Typically the Offer Price on a particular day will be about 105% of the corresponding Bid Price.

Paid Up

A term used to describe a pension plan or occupational pension scheme where no further contributions are being paid, but the value of the plan or scheme is left to accumulate. A deferred or retained benefit in a plan or scheme might be referred to as a ‘paid-up’ benefit.

Pension Adjustment Order

A court order made on or following a decree of divorce or judicial separation which orders the trustees of a pension arrangement to pay part of a specified benefit to a beneficiary of the order, in certain circumstances.

Pensions Authority

This is the main regulatory body responsible for ensuring that all pension schemes are compliant with the Pensions Act 1990.

Permanent Health Insurance (PHI)

See Income Protection.

Personal Accident

Lump-Sum benefit paid in the event of an accident.

Personal Retirement Bond (PRB)

A PRB is used to buy retirement benefits for former members of a pension scheme. The value of your pension when you leave is invested in the bond. At retirement, you can then use the bond to provide retirement benefits.

Personal Retirement Savings Account (PRSA)

The self-employed and employees in non-pensionable employment can choose to contribute to PRSA. An employer can contribute to a PRSA, but such a contribution is a Benefit In Kind for the employee who can then claim tax relief as if he or she had paid the employers contribution themselves.

Premium Protection

A  benefit that can be included in addition to an Income Protection benefit. It is payable under the same circumstances and is used to pay one or more of: employee’s pension contribution, employer’s pension contribution, death in service premium costs for as long as the main Income Protection benefit is also payable.

Processing Date

The date on which changes are made but not the date the changes are effective from.


A shortened name for a Personal Retirement Savings Account. See Personal Retirement Savings Account.


A shortened name for Pay Related Social Insurance, under which individuals who earn an income pay related contributions to the Social Insurance Fund, and in return are covered for certain Social Insurance benefits, e.g. Social Welfare Old Age Contributory Pension.


A shortened name for ‘Paid Up Pension’, which refers to a deferred or retained pension payable under a previous pension plan or scheme.

Renewal Date

Also known as the scheme anniversary date or review date. This refers to the date on which changes such as increases in salaries and risk benefits take place.

Retained Benefits

A Revenue term used to describe benefits, whether deferred or already in payment, provided for an individual under another occupational pension scheme or retirement annuity which relates to prior employment or period of self-employment.

Revenue Limits

The maximum benefits that may be provided by an occupational pension scheme, if the scheme is to be treated as exempt approved by the Revenue Commissioners. The maximum benefits are set out in the Revenue Pensions Practice Manual. See Maximum approvable benefits.


A Product type offering either Group Life insurance, Income Protection, Specified Illness cover for company-sponsored schemes.

Risk Type

This indicates the type of cover for which the member is insured for e.g. life cover, dependants cover, income protection and specified illness etc.

Rules Category

A scheme can have different rules for various categories of eligible employees, employees with different Normal Retirement Age, levels of cover and premium protection funding rates. This information is received through the group risk application form and any subsequent benefit change requests.

Standard PRSA

A Personal Retirement Savings Account (PRSA) with capped charges of 5% of contribution + 1 % of the fund per annum.


The exchange of units in one unit fund for units of equivalent value in another unit fund. For example, an individual might switch his unit holding in a Pension Managed Fund for units in a Pensions Cash Fund if he or she felt that the outlook for equity markets in the immediate future was not good.

Salary Protection

See Income Protection.


A ‘once-off’ contribution paid to a pension arrangement paid by an employer or employee.

Spouses’ Death in Service

This term refers to a benefit payable to a spouse if their husband/wife/Civil Partner dies while employed by his or her employer.

Standard Fund Threshold (SFT)

The Standard Fund Threshold (SFT) is the maximum pension an individual is allowed at retirement for tax purposes. This is a lifetime limit and includes all pension benefits taken since 7 December 2005. The Standard Fund Threshold is currently €2,000,000.


Term Life Assurance, another word for life cover.


The processing activity on a policy e.g. the application of premiums, fund switches, deduction of life cover premium, a claim etc.

Terminal Bonus

A bonus added to a with-profit pension plan at retirement. Some plans may provide a partial or reduced terminal bonus on encashment prior to retirement, e.g. in the 5 year period prior to retirement.

Transfer Value

A lump-sum payment made by the trustees of an occupational pension scheme to a Buy Out Bond or to another occupational pension scheme to provide retirement benefits for an individual, in lieu of maintaining a retirement benefit in the scheme for that individual.


A person who is legally responsible for the assets of a trust. To be an exempt approved scheme, and qualify for the maximum tax relief, an occupational pension scheme must be held under an irrevocable trust, and hence the scheme trustees legally hold the scheme assets. The trustees must apply the scheme’s assets in accordance with the rules of the scheme, to provide benefits for members and generally act in the best interest of the scheme members.


Underwriting is the assessment of the level of risk a life company is prepared to insure.

Underwriting Loading

An additional premium levied by underwriters on a type of cover where the underwriters cannot accept the benefits at standard rates also known as Extra Premium.

Unit Funds

Unit funds are a form of collective investment, i.e. many different investors pool their funds into one investment fund which is then managed by the life company.


Units funds (see above) are divided into separate units of equal value, the value of units goes up and down in line with the fluctuating value of the unit fund’s assets.

Unit Rates

A unit rate is a group risk premium rate that is based on the overall scheme membership profile. Typically the rate is set for 3 years and then updated for membership changes and claims experience. If membership changes by more than 25% in one year the unit rate may be reviewed earlier.

Unit Type

A member’s portfolio of units is usually made up of initial, initial and premium or premium units only. Initial units are usually subject to an early encashment charge if encashed (sold) before the selected retirement age. Premium units are not subject to any early encashment charge.

Vested Rights

A term used to describe an entitlement to a deferred retirement benefit under an occupational pension scheme on leaving service. In some cases, vested rights may apply after a minimum period of membership of the scheme or service with the employer. The Pensions Act provides for automatic vested rights for employees leaving service after 1st June 2002, where the individual has completed at least 2 years qualifying service in the occupational pension scheme.

Voluntary Risk

Voluntary Risk products are offered to unions, representative bodies and large employers with at least 800 members or employees. The product range includes Life Assurance, Income Protection and Specified Illness.

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