Glossary of pension terms

Choose a letter below to jump to glossary terms beginning with that letter.


1. A system under which the gratuity payable on retirement or death is reduced by an amount calculated by reference to the period during which a person has not contributed to a spouses’ and children’s pension scheme. Abatement is made even in respect of service before the introduction of such schemes, when it would not have been possible to contribute to them. In practice, abatement at retirement age is treated as a special contribution and relieved from tax.

2. The term ‘abatement’ is also used to describe a reduction in the pension of a public servant who becomes re-employed in the public service after their pension has commenced – they cannot receive more than the equivalent of a full-time salary from both sources combined.

Accrual rate

The rate at which pension benefit is built up as pensionable service is completed in a defined benefit scheme. Often expressed as a fraction of pensionable salary e.g., 1/60th for each year of service.

Accrued benefits (also known as ‘accrued rights’)

Benefits earned in respect of service up to a particular point in time, whether vested or not. These benefits may be calculated in relation to current earnings or projected earnings and allowance might also be made for increases provided for by the scheme rules or by legislation.

Active member

A member of a pension scheme who is in ‘reckonable service’, i.e., currently in the employment to which the scheme relates, and who is building up retirement benefits.

Actuarial assumptions

When putting a present value on all the future benefits payable from a defined benefit scheme, the scheme actuary will make assumptions about things like future inflation, salary increases, member mortality and the rate of investment return on the scheme’s assets. These assumptions form the basis of an actuarial valuation or other actuarial calculation. Actuarial assumptions are also used when projecting the value of a defined contribution pension fund at retirement, and the amount of pension that an individual might purchase with their pension fund.

Actuarial deficit/surplus

In the context of a defined benefit scheme, this is the difference between the value of a scheme’s assets and the present value of a scheme’s liabilities (i.e., future benefit payment obligations) under a particular set of valuation assumptions. The valuation assumptions will vary depending on the purpose of the actuarial valuation and on the date of the valuation, e.g., the valuation could be carried out for statutory funding standard purposes, to calculate the future rate of contributions required from the employer and members or in order to report the pension scheme surplus or deficit in the scheme sponsor’s accounts.

Actuarial funding certificate (AFC)

A certificate that trustees of a defined benefit scheme must submit to the Pensions Authority at least every three years. It is prepared and signed by an actuary. The certificate shows whether or not a scheme holds sufficient assets at a particular date to provide for the liabilities of the scheme in respect of accrued pensions, had the scheme wound up (terminated) on the date of the certificate. The liabilities must be calculated in accordance with the funding standard provisions of the Pensions Act.

Actuarial reduction

A reduction made to the accrued pension of a member to offset any extra costs or changes arising in relation to the payment of that pension (e.g., if the pension is to be paid earlier than expected) and/or to reflect a deficit in the statutory funding level of the pension scheme.

Actuarial valuation

An assessment by an actuary of the ability of a defined benefit pension scheme to meet its benefit obligations or benefit promises. An actuarial valuation may be carried out for the purposes of:

  • determining the future contributions required to pay the benefits promised and to prepare the actuarial valuation report required under section 56 of the Pensions Act (referred to as the ‘ongoing’ valuation);
  • assessing compliance with the statutory funding standard provisions of the Pensions Act and preparing an actuarial funding certificate (referred to as the ‘funding standard valuation’); or
  • reporting the pension scheme asset (surplus) or liability (deficit) in the company accounts of the scheme sponsor(s) (referred to as the ‘accounting valuation’).

Actuarial value

In relation to a pension scheme, it means the value placed on pension scheme benefits by the pension scheme actuary which involves estimating the amount and timing of the likely future benefit payments from the scheme (pensions and lump sums). The actuarial value is the present-day value of all future benefits payable to pension scheme members, factoring in assumptions about future salary increases, future inflation, future ill-health and mortality rates of members, as well as the expected investment return on pension scheme assets.


The individual appointed by the trustees of an occupational pension scheme to carry out actuarial valuations and advise on funding matters.

Added years

A provision of some defined benefit schemes for building extra pensionable service in return for additional contributions. Often called ‘purchasing notional service’ in public sector pension schemes.

Additional voluntary contributions (AVCs)

Additional contributions paid by a member of an occupational pension scheme in order to secure benefits over and above those set out in the rules of the scheme. Where an occupational pension scheme does not allow members to make AVCs, a standard personal retirement savings account must be offered by the employer for this purpose.

Administration contract

Pension scheme trustees must enter into a legally enforceable written agreement (contract) with each service provider of the pension scheme, clearly defining the rights and obligations of both the trustees and the service provider. The Pensions Authority’s Code of Practice for trustees lists specific items to be included in contracts with outsourced service providers and lists further specific items to be included where administration services are being provided. See also section 64AM of the Pensions Act.

Administration policy

Pension scheme trustees must approve and maintain a written administration policy. The Pensions Authority’s Code of Practice for trustees sets out the areas the administration policy must cover. Trustees must keep written evidence to demonstrate that the administration policy has been complied with and reviewed periodically and at least every three years. See also sections 64AB(5), (6) and (7) of the Pensions Act.

Advisory notice

An advisory notice is a notice from the Pensions Authority advising trustees of remedial actions they must take. An advisory notice will be issued by the Authority if:

(a) the Authority believes the trustees are failing in relation to their governance duties, the requirements relating to outsourcing and/or their duties under Part IIA of the Pensions Act, or

(b) the Authority has carried out a supervisory review of a pension scheme and believes that one or more weaknesses and/or deficiencies exist.

The advisory notice must contain specific information about the particular legal requirement(s) not being met or the weakness or deficiency that exists, the reasons why the Authority believes the trustees are failing, the remedial action required and the deadlines that apply. Advisory notices are a preliminary step before further possible enforcement. The Authority can still institute proceedings relating to a breach of legislation after an advisory notice has been issued. The Authority will withdraw an advisory notice where the trustees have taken remedial action. See also section 26M of the Pensions Act.

Age ground

Discrimination by reference to age is discrimination on the age ground.

Alternative arrangement

Many members of occupational pension schemes are eligible to participate in selecting their scheme’s trustees. The ‘alternative arrangement’ is one of the methods set out in regulations by which members can participate in the selection of trustees. Under this alternative arrangement, the employer nominates a person or persons they propose to appoint as trustee(s), and members are asked to approve the employer’s proposals. If the members reject these proposals, an election under the ‘standard arrangement’ takes place. For more information, please refer to the Pensions Authority’s guide ‘Member participation in the selection of trustees’, available here. For more detailed information about the legislation governing the process, please see the Pensions Authority’s guidance notes on ‘Member participation in the selection of persons for appointment as trustees’, available here.

Annual compliance statement (Part VIB compliance statement)

Trustees of pension schemes must prepare an annual compliance statement (ACS) no later than 31 January each year. The ACS must contain information specified by the Pensions Authority relating to Part VIB of the Pensions Act (governance activities).  The ACS must be certified for accuracy and completeness by at least two trustees. The ACS form is available on the forms section of the Authority’s website.

Annual report

The Pensions Act requires the trustees of pension schemes to communicate information about their scheme on an annual basis, such as the parties involved in running the scheme, the number of scheme members, the financial development of the scheme and a statement of the funding position/solvency of the scheme (if applicable). The content of the annual report is specified in the Occupational Pension Schemes (Disclosure of Information) Regulations, 2006, as amended.

Previously, small trust RACs were exempt from the requirement to prepare an annual report. However, the European Union (Occupational Pension Schemes) Regulations, 2021, removed this exemption. Small trust RACs are required to prepare an annual report from 2022 onwards.


A guaranteed retirement income for life paid at stated intervals until a particular event (usually the death of the person receiving the annuity). Annuities are normally purchased from a life assurance company at retirement in return for a lump sum payment (from your pension fund).

Annuity rate(s)

The level of retirement income you receive will depend on annuity rates at the time of your annuity purchase.

Appropriate back contributions

Appropriate back contributions in relation to a scheme means:

(a) in a case where the rules of the scheme so provide, the amount of member contributions due for the period
concerned, at the appropriate contribution rate applying during that period calculated by reference to the
salary applying at the time the contributions are being paid, or

(b) in any other case, the amount of contributions due, calculated in accordance with the rules of the scheme,
from the beginning of the period in respect of which admission to the scheme is granted.

Approved retirement fund (ARF)

An approved retirement fund (ARF) is a post-retirement investment fund typically used by defined contribution scheme members and personal retirement savings account holders at retirement to invest any retirement funds remaining after taking tax-free cash, as an alternative to purchasing an annuity. The funds transferred to an ARF can be drawn down in a flexible way during retirement. Further information about ARFs, e.g., who can access them, how withdrawals are taxed and what happens on the death of an ARF holder, can be requested from an ARF provider. For more information see the Revenue Pensions Manual.

Approved scheme

An occupational pension scheme which is approved by Revenue under Chapter I of Part 30 of the Taxes Consolidation Act, 1997 (previously Chapter II, Part I of the Finance Act, 1972).  See also ‘exempt approved scheme’.


The property, investments, cash and other items of which the trustees of a pension scheme are the legal owners.


An individual or firm appointed to report on the accounts of a company or other entity (such as a pension scheme).


This is when extra pension benefits are bought for a pension scheme over and above normal scheme entitlements. They are usually paid for by the employer or the pension scheme.

Authorised trade union

A trade union which has a negotiating licence under the Trade Union Acts and which represents members of the pension scheme.

Average earnings scheme (also known as ‘career average scheme’)

A defined benefit scheme where pensionable salary is defined by the average of your earnings throughout your career rather than the final years earnings.