Glossary of pension terms

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

Objective justification

It may be possible to justify fixing different levels of age or qualifying service (or both) as a condition in relation to the accrual of benefits under a defined benefit scheme or the level of contributions to a defined contribution scheme by reference to a legitimate objective of the employer. Legitimate employment policy, labour market and vocational training objectives are examples of legitimate objectives specified in the Pensions Act. Similarly, it is a defence to a claim of indirect discrimination to show that the rule complained of was implemented to achieve a legitimate aim of the employer, and that the rule is an appropriate and necessary way of achieving that aim. See section 72 of the Pensions Act.

Occupational benefit

Occupational benefits, as defined in the Pensions Act, include payments in the form of pensions, payable in respect of:

  • retirement, old age or death,
  • interruptions of service by reason of sickness or invalidity,
  • accidents, injuries or diseases arising out of or in the course of a person’s employment,
  • unemployment, or
  • expenses incurred in connection with children or other dependants.

Occupational benefit scheme

This is formally defined in section 65 of the Pensions Act, in relation to the principle of equal treatment, as a scheme or arrangement for providing occupational benefits to employees and the self-employed. This definition includes certain occupational pension schemes and pension contracts, and also includes permanent health insurance arrangements.

Occupational pension scheme

A scheme set up for employees which provides either or both of the following benefits:

  • retirement benefits for members,
  • death benefits for the dependant(s) of members.


An amount of salary which is disregarded under the rules of a pension scheme, to take account of a social welfare pension. It can also be applied to a deduction from the member’s pension to take account of a social welfare pension. See also ‘integration’.

One-member arrangement

A pension scheme which is established for one person only and that one person will always be the only member, and that member has discretion as to how the resources of the pension scheme are invested unless it is subject to a pension adjustment order, in which case it may also include the person(s) referred to in that order.

On-the-spot fines (or notice of intention to prosecute)

Instead of prosecuting through the courts for a breach of certain specified offences of the Pensions Act, the Pensions Authority may notify a person in writing that it is alleged that a summary offence has been committed and that if, within 21 days of the notice, the person has remedied the offence to the satisfaction of the Authority and paid the appropriate fine, the prosecution will not proceed. These fines are known as ‘on-the-spot fines’. Further information is available on the fines and penalties page of the Pensions Authority website.


The trustees of a pension scheme may enter into an arrangement to assign any activity, such as a key function or the administration of the scheme, to a third-party service provider. All outsourcing arrangements must be subject to written and legally enforceable contracts between the trustees and the service provider. Trustees have a duty to notify the Pensions Authority of their outsourcing arrangements. Where the trustees of a scheme outsource an activity, they remain responsible for ensuring compliance with their obligations under the Pensions Act in respect of that activity and must be satisfied that the outsourcing arrangement is not detrimental to the pension scheme. See section 64AM of the Pensions Act.


An arrangement under which a dependant’s pension comes into immediate payment on the death of a pensioner, while a minimum guaranteed period of payment of the main pension is still running.

Overriding legislation

The application of statutory requirements to pension schemes by means of provisions which expressly override the pension scheme’s rules. All the provisions of the Pensions Act and its regulations are overriding legislation.

Own-risk assessment (ORA)

The trustees of a pension scheme must carry out and document an own-risk assessment (ORA) for their pension scheme at least once every three years, and without delay following any significant change in the risk profile of their pension scheme. They must take account of the ORA when making a strategic decision in respect of their pension scheme. The Pensions Authority may request a copy of an ORA from the trustees. For further information see the Authority’s Code of Practice for trustees and section 64AL of the Pensions Act.