Explore answers to commonly asked questions about pensions.
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In the context of a defined contribution (DC) pension scheme, a platform is an investment structure established by a pension provider (eg an insurance company) which offers a wide range of investment funds. These normally comprise both the provider’s own (“in-house”) funds as well as third party (“external”) funds. Members of pension schemes which are on the platform will then have access to some or all of the available funds, with details of the precise fund offering depending upon those responsible for the pension scheme – eg the trustees in the case of a trust based arrangement and the company in the case of a contract based (such as a Group Personal Pension or a Stakeholder Pension) arrangement.
The "silver dividend" refers to the potential economic benefits that can come from an aging population, particularly as people live longer and healthier lives. Instead of seeing older people only as a cost or burden, the idea is that if they stay active, keep working longer, volunteer, or support their families and communities, they can continue contributing to society.
In simple terms, a SPAC is a listed company with no commercial operations that exist purely to raise capital from investors and to use that capital to acquire privately-held companies and to help those companies grow through investment in the business, increasing brand awareness and/or acquisition and then ultimately to take the business public. SPACs have two years to complete a transaction, else they must return the raised funds to investors.
This is the entity that supports a pension scheme, primarily through the payment of contributions to meet some or all of the specified scheme benefits. Sponsors are most commonly private sector employers, or the government/local authorities in the case of public sector arrangements.
A stakeholder pension is a type of defined contribution (DC) personal arrangement, with certain distinguishing features, such as a legal cap on the level of investment management charges that can be levied and low minimum contribution levels. Both individual and group stakeholder pension schemes exist.
This is a document – normally referred to as the “SIP” – which the trustees of most occupational pension schemes are required to produce. Legislation details minimum SIP requirements although many SIPs go beyond this and are designed to provide an overview of the trustees’ overall investment policies and arrangements. Trustees need to take written advice (normally from their investment adviser) on their SIP when first drafted and on any subsequent changes, and must consult the sponsor on the SIP contents before it is finalised. In any event, the SIP needs to be reviewed at least every three years.
This version of the additional state pension was introduced in 2002-03 as a modified version of the SERPS (state earnings related pension scheme) system, which had been in place since 1978-79.
A superfund is a type of pension scheme designed to consolidate multiple defined benefit (DB) pension schemes into a single, larger fund. This approach can be used when a pension scheme has no realistic prospect of securing a full buy-out with an insurer in the foreseeable future.
The difference between a given swap rate/return and the return on an equivalent government bond. The spread reflects the relative creditworthiness of the swap counterparty and the government, but in practice is also influenced by supply and demand factors. For example, a pension scheme may have entered into an interest rate swap to receive fixed interest payments (from say an investment bank) and make floating interest payments. Assume that the fixed rate is set at 4.8% pa. If an equivalent government security delivers only 4.5% pa, then the swap spread in this instance is 0.3% pa. If the counterparty meets its side of the swap, then the pension scheme benefits from this additional return.
A collective investment vehicle in which money from a number of investors is pooled together and invested collectively in a spread of investments such as UK equities or bonds. Each investor owns a number of units, the value of which depends on the overall value of the trust’s investments and the total number of units. An authorised unit trust can be sold to the general public. An unauthorised unit trust cannot be sold to the general public and is marketed to institutional investors such as pension scheme trustees.
The term used to describe the rules and principles applied by investors, in particular shareholders, in managing their relationships with the companies in which they invest, including voting powers where relevant. Also used to describe the framework used by company directors in running a business.
A self-regulating business model that helps a company be socially accountable — to itself, its stakeholders and the public. It considers all aspects of society including the economic, social and environmental. It is also known as corporate citizenship and corporate responsibility.
