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  • Annual allowance

    The annual allowance is the maximum contributions that benefit from tax relief. It is currently £60,000 per year. If you take a lump sum or income which is subject to tax, this reduces to £10,000 per year.

  • Annuity

    An annuity is a secure income for life provided by an external provider. Another term for a secure income. More information about annuities is provided on the Money Advice Service website www.moneyadviceservice.org.uk/en.

  • Beneficiary

    Beneficiary describes someone who is entitled to a benefit from the scheme. It can include relatives, dependants and other persons who benefit under the member’s will.

  • Cash balance scheme

    The With Profit Section of the Cheviot pension has been reclassified as a cash balance scheme. See the With Profits factsheet for more information.

  • Cheviot Lifeplan

    The Cheviot Lifeplan is how the Trustee invests your savings if you do not choose your own investment options. Most members are invested in the Cheviot Lifeplan.

  • Defined benefit scheme

    This is another term for a final salary scheme.

  • Defined contribution scheme

    This is another term for a money purchase scheme

  • Enhanced annuity

    This is a type of annuity or secure income which takes into account health issues. If you are eligible for an enhanced annuity, you generally get a higher income.

  • Expression of wishes form

    An Expression of Wishes form is how members tell the Trustee how they would like any death benefit distributed. It is not binding on the Trustee but is taken into account.

  • Flexible drawdown

    Flexible drawdown is a pension option where your fund remains invested and you draw an income directly from the funds when you need it.

  • Lifetime allowance

    The lifetime allowance is the cap on the total pension benefit you can receive without being subject to an excess tax charge. The standard lifetime allowance is currently £1,073,100. The 2023 budget reduced the excess tax charge to 0%. The government intend to abolish the lifetime allowance from the 2024/25 tax year.

  • Marginal tax rate

    Your marginal tax rate takes into account income from other sources when working out how much tax you need to pay. You may pay tax at a higher rate than usual.

  • Money Advice Service

    The Money Advice Service is a free and impartial advice service set up by the Government to help you to manage your money.

  • Money and Pensions Service (MaPS)

    Bringing together three financial guidance bodies: the Money Advice Service, the Pensions Advisory Service and Pension Wise. MaPs is an arm’s-length body sponsored by the Department for Work and Pensions.

  • Money purchase annual allowance

    This is the maximum contributions that benefit from tax relief once you have taken either a taxable lump sum or income which is subject to tax (even if you don’t pay tax). This is £10,000 and includes both your own contribution and any other contribution paid on your behalf to a money purchase/defined contribution scheme. You cannot bring forward any unused annual allowances from the previous tax years.

  • Money Purchase Section

    The money purchase or defined contribution section of the Cheviot Trust.

  • Net pay arrangement

    A net pay arrangement provides full tax relief through the payroll. The Cheviot pension is a net pay arrangement and if you do not pay tax, this might not be the right scheme for you as you will not benefit from tax relief on your contributions. See ‘relief at source’ below.

  • Normal Retirement Date

    Your Normal Retirement Date is usually when you would retire from your current employer. You may have a different Normal Retirement Date under each scheme you have, so you should check your statements. You can find your Cheviot pension Normal Retirement Date on your benefit statement.

  • Pension Commencement Lump Sum

    Your Pension Commencement Lump Sum is the tax-free lump sum you are entitled to receive when you start drawing pension benefits. You will normally have the option to take up to 25% of the value of your pension as a Pension Commencement Lump Sum (up to a maximum of 25% of the lifetime allowance, unless you have elected for protection). In certain circumstances, some people may be able to receive more than this. We will let you know when we provide you with a retirement quote.

  • Pension Protection Fund

    The Pension Protection Fund (PPF) looks after members of final salary pension schemes when the employer is unable to support them and the scheme is not able to provide PPF benefits (usually 90% of benefits).

  • Relief at source

    A relief at source arrangement allows pension providers to reclaim basic rate tax on behalf of members which is then paid into the pension. If you do not pay tax, you would still benefit from basic rate tax relief in a relief at source arrangement. Higher rate taxpayers claim the higher rate relief via their tax return.

  • Secure income

    Otherwise known as an annuity.

  • Small pot lump sum

    A lump sum available if your fund is less than £10,000. If you take a small pot lump sum, the annual allowance does not reduce to £10,000 for future contributions.

  • State pension

    Find out what your State pension will be at www.gov.uk/check-state-pension

  • State pension age

    Find out what date your State pension will start at www.gov.uk/calculate-state-pension

  • Target Retirement Date

    You set your Target Retirement Date which is when you plan to start accessing your pension savings. It is used to plan how your savings are invested. You can have a different Normal Retirement Date and can continue to work after your Target Retirement Date.

  • Tracing service

    The Government provides a tracing service to help you find previous pension schemes. www.gov.uk/find-lost-pension.

  • Trivial commutation

    This allows you to take all your benefits as a lump sum from a final salary scheme if the value of your benefits is less than £30,000.

  • Uncrystallised funds pension lump sum

    Often referred to as an UFPLS, this is a lump sum available from a money purchase scheme under the flexible retirement options.

  • With Profits Section

    See the With Profits factsheet.


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