Glossary of pension terms

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


Capitalisation refers to the requirement for trustees of defined contribution (DC) master trusts to hold sufficient capital to cover the running costs of the master trust for a minimum period of time, as well as specified wind-up costs, in order to protect member funds in the event of the master trust winding up. The capitalisation requirements are set out in the Pensions Authority’s Code of Practice for trustees. Where trustees of a DC master trust are in breach of the capitalisation requirement, they must make an immediate report to the Authority and take steps to remedy the situation.

Career average scheme

An alternative term for an average earnings scheme.

Cash option

An alternative term for commutation.

Certificate of existence

A document confirming that a person in receipt of a pension is still alive.

Civil Partnership and Certain Rights and Obligations of Cohabitants Act, 2010

The Civil Partnership and Certain Rights and Obligations of Cohabitants Act came into force on 1 January 2011. It extends marriage-like benefits to same sex couples in registered civil partnerships in the areas of property, social welfare, succession, maintenance, pensions and tax. It also establishes a financial redress scheme for opposite sex and same-sex cohabiting couples who meet certain conditions.

Civil status ground

One of the nine discriminatory grounds set out in the Pensions Act in the context of the principle of equal pension treatment. Discrimination by reference to civil status is discrimination on the civil status ground. Civil status means being single, married, separated, divorced, widowed, in a civil partnership or being a former civil partner in a civil partnership that has ended by death or been dissolved.

Closed scheme

A pension scheme that does not accept new members.

Collective investment undertaking

In the context of the investment rules for pension schemes, a collective investment undertaking is defined in section 59AB of the Pensions Act and, provided it satisfies the requirements of the definition in that section, includes:

  • unit trusts,
  • common contractual funds, and
  • undertakings for collective investment in transferable securities (UCITS) and alternative investment funds (AIFs) situated in a Member State.

Commutation (sometimes known as ‘cash option’)

The replacement of a series of future pension payments by an immediate lump sum.

Commutation factors

The mathematical factors used by the trustees to determine the amount of pension which needs to be given up in order to provide a given lump sum benefit.

Competent authority (national competent authority)

A competent authority (or national competent authority) is an organisation with a supervisory or regulatory role. The Pensions Authority is the Irish competent authority with regard to the supervision of IORPs (pension schemes).

Compulsory purchase annuity

An annuity that must be purchased on retirement for a member of an insured pension scheme or for the holder of a personal retirement bond.

Concentration of investment

The placing of a significant portion of the assets of a pension scheme in any single investment or category of investment. This is subject to disclosure under the Pensions Act and may also impact the scheme’s ability to meet the funding standard under the Pensions Act.

Conflicts of interest policy

Trustees of pension schemes must have a written policy on conflicts of interest for themselves as trustees and for the key function holders (KFHs) they engage. The policy must provide details of how the trustees will identify, monitor and manage conflicts of interest. The Pensions Authority’s Code of Practice for trustees sets out the areas the conflicts of interest policy must cover. Trustees must review compliance with the policy at least once annually and the policy must be reviewed by the trustees at least once every three years.

Note that section 64AH(7) of the Pensions Act sets out the requirement for a written protocol on conflicts of interests where a KFH performs the same function for the pension scheme and the employer.

Contingent benefits

Benefits payable from a pension scheme in the event of the death of the member during the employment (or self-employment) to which the scheme relates.

Continuity plan

Defined contribution (DC) master trusts must develop a continuity plan that includes projections of income and expenditure for at least three years, to demonstrate the viability of the DC master trust to the Pensions Authority. Further details regarding the requirements for DC master trusts can be found in the Authority’s Code of Practice for trustees (the Code).

In relation to pension schemes generally, the Code also specifies that contracts between trustees and outsourced service providers must include information about business continuity arrangements.

Contribution holiday

A term used to describe a period under which employers’ and/or members’ contributions are suspended. This usually happens when the fund is in surplus.

Contributory earnings

The earnings on which contributions are calculated. See also ‘pensionable earnings’.

Contributory occupational pension scheme

An occupational pension scheme to which employees are required to contribute (usually a fixed percentage of their pensionable pay) in order to meet part of the cost of the benefits.

Controlled funding

A funding plan which has regard for the liabilities of a defined benefit scheme as a whole, rather than for those of individual members.


A term used in the public sector to indicate that the benefits payable under the social welfare system are taken into account in the occupational pension scheme. Co-ordination is generally required as a matter of policy where social welfare retirement benefits are payable. However, the calculation of the gratuity payable on retirement or death is not normally affected by co-ordination.  See also ‘integration’.

Corporate trustee

A company which acts as a trustee.

Critical review

A critical review is an in-depth review conducted by pension scheme trustees of a service provider’s performance. The critical review forms the basis for the trustees’ decision to retain or replace the current service provider.  The reasons for this decision must be documented in the critical review.

Details of the Pensions Authority’s expectations of trustees in relation to critical reviews of administrators and investment managers can be found in the Authority’s Code of Practice for trustees.

Cross-border schemes

A scheme established in one EU Member State, which authorises an employer to operate a cross-border scheme and to accept members and contributions from an employee located in another EU Member State.

Custodian trustee

A trustee responsible for holding the assets of a trust, with the other trustees being responsible for the management of the trust including the investment decisions.