Since October 2012, all employers have been required to offer a workplace pension scheme and automatically enrol eligible workers into it.
These are units which have a higher charge which were a common charging feature in older products which pension providers used to pay commission to your financial adviser.
Charges are paid by scheme members with the most common charge often referred to as the “annual management charge” (AMC). This is the price you pay for holding the product and is usually expressed as a % per year. If you have an AMC of 0.75% then this means that you’ll pay 75p a year for every £100 invested. Other types of charges may also apply, especially on older products
This is the maximum charge that can be applied to a default fund. A charge-cap of 0.75% per year was introduced in April 2015.
Means payments (sales commission) that are paid to financial advisers. Commission is now banned for all new pension schemes.
Scheme members who do not choose a particular investment fund or funds have their money invested in a default fund. The default fund will usually consist of a small number of funds which in combination, are sometimes referred to as a lifestyle strategy.
This is where a scheme member has left their employer and their pension policy is no longer part of their former employer’s workplace pension scheme.
Before the introduction of pension freedoms, everyone taking a pension had to buy an annuity – a regular monthly or annual income. People are now moving away from annuities and choosing drawdown which is a more flexible way of taking your pension. It means your pension savings remain invested and you can take your money when you need it rather than taking a fixed regular income.
ESG is a generic term used in capital markets and refers to three key non-financial factors determining the impact of an investment. It is a framework used by investors to evaluate corporate behaviour to determine the future financial performance of companies.
This refers to the practice of using one's ethical principles as the primary filter for the selection of securities. It depends on an investor's views. Ethical investing gives the individual the power to allocate capital toward companies whose practices and values align with their personal beliefs. Choosing an investment based on ethical preferences is not indicative of the investment's performance.
The FCA regulates financial firms providing services to consumers and maintains the integrity of the UK’s financial markets. It focuses on the regulations of conduct by both retail and wholesale financial services firms.
These are new investment solutions provided to give members who enter into drawdown without having taken advice. They will be launched in August 2020.
Sometimes referred to as “de-risking”, a Lifestyle strategy aims to reduce your exposure to risk in the run up to your retirement. It automatically moves your investment in growth assets like equities gradually into less volatile investments such as bonds and gilts which have far less exposure to financial market fluctuations.
These can take many forms and depend on the type of pension you have. Loyalty bonuses are usually paid upon your pension maturity date and provide you with some additional benefit which increases the value of your pension pot.
NPS or Transactional Net Promoter Score (TNPS) is a measure Aviva uses to gauge customer satisfaction. The question used to help determine this is “Based on your most recent experience how likely is it that you would recommend Aviva to a friend or colleague. Please use a scale of 0-10 where 0 is not at all likely and 10 is very likely”. The TNPS score is the number of customers who have given a score between 9 and 10 minus the number of customers that have given a score between 0-6. Scores between 7-8 are classed as passive and are not included in the TNPS score.
Pension freedoms, sometimes referred to as ‘pension flexibilities’ were introduced by the government to give you more choice over how you take your pension. You may choose an annuity (a fixed monthly or yearly payment paid when you retire), drawdown (where you can choose to take your money when you need it), or you can take all of your pension as a cash lump sum, although this may be subject to tax.
This is a charge which may be taken from your pension each month to cover the cost of administration.
Put simply, it’s a way of expressing the effect the total charges on a pension policy will have on its potential rate of growth. It’s a handy tool for comparing the cost of one policy with another. Here’s an example: Let’s say that your pension policy has a projected investment return (or ‘yield’) of 4% a year. If all the charges on that policy brought its projected return down to 3%, it would have a ‘reduction in yield’ of 1%.
Essentially this is you, as you are a member of a workplace pension scheme.
This is the term used to describe several costs which can occur when you invest in a fund or funds. These costs are important because the level of them impacts the overall return you receive on your investment. The costs are reflected in the value of the fund and are not taken from your pension.
This is the type of pension which your employer, or if you are a deferred member, your previous employer, has set up and which you are a member of.
