Glossary of pension terms

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

Early leaver

A person who ceases to be an active member of a pension scheme, other than on death, without becoming entitled to an immediate retirement benefit.

Early retirement

The retirement of a member, with immediate retirement benefit, before normal pensionable age.  The benefit may be reduced because of early payment.  See also ‘ill-health early retirement’.

Earmarked contributions

In the context of the family law acts, contributions paid by or for a person under a defined contribution scheme during a period specified by the court.

European Insurance and Occupational Pensions Authority (EIOPA)

The European Insurance and Occupational Pensions Authority (EIOPA) is one of three European Supervisory Authorities. EIOPA was established by regulation No. 1094/2010/EU of the European Parliament and of the Council of the European Union.


The conditions which must be met for a person to be a member of a scheme or to receive a particular benefit. These may, for example, relate to age, service, status and type of employment.


A person of any age engaged under a contract of employment, i.e., a contract of service or apprenticeship expressed orally, in writing or implied.


The person or body with whom the member of a pension scheme has a contract of employment relevant to that scheme.

Environmental, social and governance (ESG) factors

There are several references to environmental, social and governance (ESG) factors in the Pensions Act relating to the investment of pension scheme assets:

  • The Pensions Act allows trustees of pension schemes to take account of the potential long-term impact of their investment decisions on ESG factors when investing pension scheme assets in accordance with the ‘prudent person rule’.
  • The trustees’ risk management system must cover ESG risks relating to pension scheme investments where applicable, and, where ESG risks are considered in investment decisions, the trustees’ own-risk assessment must include an assessment of new or emerging ESG risks.
  • The pension scheme’s governance system must include consideration of ESG factors related to assets in investment decisions.
  • Trustees are also required to disclose how their investment approach takes account of ESG factors, if at all, in the statement of investment policy principles and in the information provided to new and prospective pension scheme members.

Furthermore, disclosure obligations for trustees under the Sustainable Finance Disclosures Regulation have been inserted into section 59 of the Pensions Act.

Equal access

Identical entry conditions for men and women. The Pensions Act requires this.

Equal treatment

The principle requiring one sex to be treated no less favourably than the other, as embodied in EC Council Directive 86/378 and Part VII of the Pensions Act, which also requires equal treatment on grounds other than sex.


A system whereby pensions in payment and/or preserved benefits are increased regularly at a fixed or variable percentage rate. The percentage increase applied may be limited to the increase in a specified index. Escalation may be promised and paid for in advance of or may be granted on a discretionary basis after the pension has commenced.

Exchange of letters

A method of creating a pension scheme trust, in which a letter from the employer constitutes all or part of the documentation of an individual pension arrangement. A copy of the letter is signed by the employee to acknowledge its terms.

Exempt approved scheme

An approved scheme which is established under irrevocable trusts, giving rise to the tax relief allowed for in the Finance Acts.

External report

The Pensions Authority may require the trustees of a pension scheme to provide an external report examining a pension scheme’s compliance with one or more governance requirements under Part VIB of the Pensions Act.

A request by the Authority for an external report can arise on foot of:

  • a supervisory review by the Authority,
  • the submission of a section 26L stress-test, or
  • a Part VIB compliance statement.

External report reviewer

In certain circumstances the Pensions Authority may require the trustees of a pension scheme to have an external report prepared by an external report reviewer concerning the scheme’s compliance with one or more governance requirements under Part VIB of the Pensions Act. An external report reviewer must have the necessary skills, specialised knowledge, competence, capability and sufficient detachment to prepare an objective report on the matters concerned. See also section 26O of the Pensions Act.