London Life - Jargon Buster

Use our Jargon Buster to cut through the complicated language financial services companies sometimes use, and find out what it really means. The list is in alphabetical order so you can scroll down to look up words and their meanings:

Active Member (of a pension scheme)
A member of a pension scheme for whom contributions are being paid, and/or pension benefits are accruing.
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Additional Bonus
A bonus that may be added when your product is cashed in or when it matures. Sometimes known as Final or Terminal Bonus.
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Additional Voluntary Contributions (AVC)
Extra contributions paid by a member of an occupational pension scheme to provide benefits in retirement, in addition to the main scheme benefits.
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Adviser
An adviser is someone who is authorised and regulated by the Financial Services Authority (FSA) to look at your circumstances and advise you on suitable products to meet your financial needs. An adviser can either sell products from one company, or a number of companies.
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Alternatively Secured Pension (ASP)
Until 6 April 2011, this was pension income drawn directly from a money purchase pension fund by someone aged 75 or over, whilst their fund remains invested. On 6 April 2011, it was replaced by drawdown pension.
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Annual Allowance (pensions)
The maximum amount of pensions savings (pensions input) allowed (excluding carry forward) by, and on behalf of, an individual each year, without giving rise to a tax charge.

It has been set at Ł50,000 for the 2011/12 to 2015/16 tax years .
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Annual Allowance Charge (pensions)
The tax charge on an individual if their pension savings (pensions input) exceed the annual allowance.

Tax is charged at the individual’s marginal rate.
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Annual Bonus
A sum that may be added to the value of your conventional with-profits product once a year. (Also known as reversionary bonus).
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Annuity
A product that provides a guaranteed regular income for a fixed number of years, or for the rest of your life. It is usually purchased using your pension fund.
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Annuity Protection
An option sometimes available on a lifetime annuity which provides for a lump sum to be paid to a beneficiary upon the death of the annuitant. The lump sum is subject to a tax charge, which for the 2011/12 tax year is 55%.

The maximum lump sum which can be paid equals the original purchase price of the annuity minus the annuity payments made prior to death.
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Annuitant
The person who receives the annuity for a specified term or for the remainder of their life.
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Annual Percentage Rate (APR)
A rate of annual interest used by lenders which takes account of the set up and continuing costs of the loan over its entire term.
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Asset Allocation
This is the proportion of a fund that is invested in each asset class.
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Asset Class
These are the different types of asset that are included in an investment fund. (E.g. Equities, Property, Gilts and Bonds, Cash).
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