Glossary of pension terms

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

Ill-health early retirement

Retirement on medical grounds before normal retirement age. The benefit payable on ill-health early retirement may be greater than that paid to a member retiring early in normal health. The qualification criteria and benefits payable will be set out in the trust deed and rules of a pension scheme.

Immediate annuity

An annuity which commences immediately or shortly after its purchase.


Inability to continue working due to ill-health or disability. Its precise meaning in practice is determined by the rules of each individual pension scheme.

Income continuance plan

One of the terms used to describe a prolonged disability insurance scheme.


A system whereby pensions in payment and/or preserved benefits are increased automatically at regular intervals by reference to a specified index of prices or earnings.

Indirect discrimination on grounds of gender

A form of sex discrimination, usually unintentional, which is deemed to exist if conditions are applied to a group of workers which, though not expressly related to sex, are more likely to be met by one sex than the other.

Individual arrangement

A pension scheme with only one member whose documents relate only to that member. Also called a ‘one-member arrangement’. The term individual arrangement can also refer to an individual contract-based retirement savings such as a personal retirement savings account (PRSA) and a retirement annuity contract (RAC).

Institution for occupational retirement provision (IORP)

IORP is an EU law term to cover the diverse range of entities in the Member States that provide retirement benefits but in Ireland IORPs are occupational pension schemes or trust retirement annuity contracts.

Insured scheme

A pension scheme where the sole long-term investment medium used by the trustees is an insurance policy. All of the benefits are provided by an insurance company with whom the trustees have taken out a contract to pay regular premiums.


The system of designing scheme benefits to take into account all or part of the benefits payable by the State under the social welfare arrangements. This is known in public sector schemes as ‘co-ordination’.

Interim trust deed

A form of trust deed commonly used to establish a pension scheme on broadly stated terms leaving the detailed provisions and rules to be provided later by a definitive trust deed.

Internal audit function

The internal audit function assesses the adequacy and effectiveness of a pension scheme’s internal controls and other elements of the pension scheme’s governance system, including trustee oversight of outsourced activities. The scope and detail of the internal audit function should be proportionate to the size and internal organisation of the scheme and the size, nature and complexity of the activities of the scheme. Further details about the scope of the internal audit function are set out in the Pensions Authority’s Code of Practice for trustees. See also section 64AJ of the Pensions Act.

Internal audit policy

The trustees of a pension scheme must establish, approve and apply a written internal audit policy. This document should provide a framework within which the internal audit function can work to provide objective and independent assurance and advice to the trustees. Further details can be found in the Pensions Authority’s Code of Practice for trustees. See also section 64AB of the Pensions Act.

Internal control system

The trustees of a pension scheme must put in place an effective internal control system to include administrative and accounting procedures, an internal control framework and appropriate reporting arrangements at all levels. The internal control system should provide reasonable assurance that a pension scheme is compliant with legislation, properly administered and managed, and has appropriate reporting systems in place. See the Pensions Authority’s Code of Practice for trustees for further details about the internal control system requirement and the Authority’s expectations of what the internal control framework should include. See also section 64AB of the Pensions Act.

Internal dispute resolution (IDR)

An arrangement for resolving a complaint or dispute which is subjected to a resolution process within the pension scheme or PRSA in which it arises. Complaints or disputes typically pass through the pension scheme’s/PRSA’s IDR procedure before they are submitted to the Financial Services and Pensions Ombudsman, if necessary.


In relation to a pension scheme, the process by which contributions and net income of a scheme are used with a view to increasing the value of pension scheme assets by means of the purchase and sale of equities, bonds, property and other assets directly or through collective investment undertakings. The investment of pension scheme assets is subject to:

  • the trust deed and rules of the pension scheme,
  • the investment rules contained in the Pensions Act, and
  • the Occupational Pension Schemes (Investment) Regulations, 2021 and the Trust RACs (Investment) Regulations, 2021.

Investment manager

A person or body to which the investment of the whole or part of the assets is delegated by the trustees in accordance with the provisions of the trust document.

Investment manager contract(s)

The trustees of a pension scheme must enter into a legally enforceable written agreement (contract) with each service provider, clearly defining the rights and obligations of both the pension scheme and the service provider. The Pensions Authority’s Code of Practice for trustees lists specific items that must be included in all such contracts and specifies further additional items that must be included in contracts with investment managers. See also section 64AM of the Pensions Act.

Investment performance measurement

The comparison of the rate of return of a given pension fund with the notional return of a hypothetical fund, or the actual rates of return of other funds, over the same period.

Investment regulations

The investment regulations are formally named the Occupational Pension Schemes (Investment) Regulations, 2021 and the Trust RACs (Investment) Regulations, 2021. All previous investment regulations have been revoked and most of the content of the previous regulations now appear in section 59AB of the Pensions Act. The investment regulations provide that pension schemes may borrow money but only for liquidity purposes and only on a temporary basis. The investment regulations also outline the information that should be included in a statement of investment policy principles and the rules on how this information should be presented. See also investment rules.

Investment rules

Investment rules contained in the Pensions Act set out certain investment and borrowing rules that trustees must comply with when investing the assets of a pension scheme. These include the requirement to:

  • invest prudently, in the best interests of members and beneficiaries, and predominantly on regulated markets,
  • properly diversify investments so as to avoid excessive reliance on any particular asset, issuer etc., and
  • invest in a manner as to ensure the security, quality, liquidity and profitability of the portfolio as a whole.

IORP II Directive

The IORP II Directive is the second EU pensions directive which sets out common rules for occupational pension schemes across Member States aimed at protecting members and ensuring that pension schemes are well run by means of:

  • new governance, including ‘fit and proper’ requirements,
  • new risk assessment/risk management requirements for schemes,
  • rules to improve communications to members, and
  • enhanced powers for supervisors, among other new measures.

The IORP II Directive builds on the first EU pensions directive of 2003 (IORP I). EU countries were required to transpose the IORP II Directive into national law. The formal title of the directive is ‘Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (IORPs)’.