Glossary of pension terms

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Target or measure against which performance will be judged – used to assess the performance of a fund or investment portfolio.


A person who is entitled to benefits under a pension scheme or who will become entitled on the happening of a specified event (e.g., on the death of a member).

Benefit statement

A statement of the benefits payable in respect of an individual on the occurrence of specified events, e.g., death, retirement etc. From 2023/2024, members of occupational pension schemes (except members of unfunded public sector schemes) will receive what is formally called a ‘pension benefit statement’ annually. The pension benefit statement will show two different pension estimates for members of defined contribution schemes. Deferred members of pension schemes, i.e., those who have left employment but have not yet retired, will also be entitled to receive annual pension benefit statements from 2023/2024.

Board resolution

The directors or partners of the sponsoring employer can meet and pass a special board resolution to establish a pension scheme under trust. The resolution must be minuted and the overall content of the eventual trust deed and rules must also be recorded.

Book reserve scheme

Unfunded pension scheme which is accounted by a provision in the employer’s accounts. Common in some European countries.

Bridging pension

An additional pension benefit paid between the date of retirement and some later date when it will reduce or be discontinued. The most common type of bridging pension is paid in the interval between the date of retirement and the date an individual qualifies for a State pension where the calculation of the pension involves a State pension offset, but members retire before the State pension becomes payable.

Buy-out bond

Also known as a personal retirement bond, means an insurance policy purchased by the trustees of a pension scheme in the name of a member or beneficiary following termination of service, retirement, or the winding-up of a pension scheme. In such circumstances, a buy-out bond is bought in substitution of the members rights under the pension scheme. Under the Pensions Act, the purchase of such a bond after a member has left service may be at the option of the member or, in certain circumstances, at the option of the trustees.