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Glossary - Making our communication clear

We have created this guide to explain some of the words and phrases you might come across in financial services.

As you read through, you will notice that some of the words are in bold. This means that the word or phrase has its own entry so for a full understanding you might find it useful to read that entry too.

We hope you find this guide useful. We have tried to make sure that we have accurately described the words and phrases however our explanations might be different to other interpretations used.

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Accounting date
Organisations prepare their annual accounts covering a period of 12 months. The last day of the period is called the accounting date.

Accrual rate
This is the rate a pension from an earnings-related occupational pension scheme builds up from one year to another. The rate is shown as a fraction or a percentage of the member's final yearly salary.

If something is accruing, it is building up day by day. If an organisation owes money for goods and services but has not received a bill up to the date it prepares its accounts, it will estimate what it owes. It will then include the debt in its accounts. This estimated liability is called an accrual.

Accrued income securities
These are securities (investments) which pays interest at regular intervals. When they are   sold, interest may have built up and this interest will be paid to the new owner. Interest built up like this is called accrued interest.

Accumulation date
This is the date when income will be credited to a unit trust. The unit trust reinvests its income (an accumulation unit), instead of paying the income out to the investors.

Accumulation unit
The type of unit trust which reinvests the income it earns, instead of paying it out immediately to the investors.

An actuary is an expert on pension scheme assets and liabilities, life expectancy and probabilities for insurance purposes (the likelihood of things happening).

Under Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) rules, Wesleyan has to employ an actuary to oversee the With Profits Fund. The actuary advises the company on operating and managing the with-profits business.

Wesleyan also has to employ an actuary to advise the company on:

  • the risks that the company faces; and
  • how much money is needed to support the business.

Adviser Charging (AC)
This replaces commission on investment policies and is the mechanism by which a client pays for investment advice.

Additional-rate taxpayer
People who earn over a certain amount have to pay extra tax on some of the money they earn.

Additional state pension
On top of the basic state pension, people can get an additional pension from the state. This is called the State Second Pension (S2P) but it used to be called the State Earnings Related Pension Scheme (SERPS). The main difference between the basic state pension and the additional state pension is that the additional pension is linked to the money that the person has earned.

Additional voluntary contribution (AVC)
People in occupational pension schemes can pay in extra money to increase their pension benefits. The extra money they pay in is an additional voluntary contribution.

Advance corporation tax
Until 1999 this tax was paid by companies on the dividends they paid. The advance corporation tax paid could usually be offset against the corporation tax due on the company's profits.

AER (Annual equivalent rate)
This stands for annual equivalent rate. It is quoted by financial institutions, such as banks, to show how much the interest rate would be if the interest was worked out just once a year. It is intended to make it easier for people to judge how much interest they pay (or receive) when it is being worked out more than once a year. It is also intended to make it easier to compare different financial products.

Allocation rate
When money is paid into a fund (such as a pension fund) the allocation rate is the percentage of the money left which can be invested after the initial charge has been taken out. For example, if the allocation rate was 98% and £100 was paid in, £98 of the money paid in would be allocated to the fund.

Annual accounts
These are the summary of an organisation's financial transactions during the year covered by their accounts, and a 'snapshot' of the assets and liabilities at the end of the year.

Annual allowance
The maximum amount that can be paid into a pension plan or plans that benefit from tax relief each year.

Annual bonus
A bonus which is sometimes added to our with-profits plans. For unitised with-profits plans, it's added gradually by increasing the unit price every day. For older plans, it's added once a year.

Annual general meeting (AGM)
This is the yearly meeting of the members of an organisation which must be held to meet legal conditions. The annual accounts are presented for approval at this meeting.

Annual management charge (AMC)
A yearly charge which may be taken to cover the expenses of running an investment fund and administering insurance and pensions products. The charge is a percentage of how much your fund is worth each year.

Annual payment
An annual payment is an amount paid out every year, such as an annuity. It may be split up into smaller amounts and be paid out more than once a year.

Annual percentage rate (APR)
This stands for annual percentage rate. It is intended to give people a more accurate idea of how much they are being charged when they borrow money.

An annuity converts money from a pension fund into a regular income for retirement (generally called a pension). It is paid for a specific period of time or until a particular event for example, when the person dies. The amount of money which is paid out depends on a number of factors including the person's age, the size of the lump sum which was used to buy the annuity and the type of annuity chosen.

Annuity rates
The annuity rate determines how much regular retirement income can be bought with a pension fund. It depends on a number of factors including how long the person is expected to live, what return is expected on the investment and the type of annuity which is chosen. Annuity rates offered by different providers vary and can change regularly.

Arrangement fee
This is an administration charge often made by lenders to their customers for arranging an overdraft facility or mortgage.

A company's articles set out its rules. The articles form part of the memorandum and articles of association.

These are things which are owned such as buildings, vehicles, stock and money in the bank.

Asset allocation
The breakdown of the different types of assets in an investment fund.

Asset share
An asset share is an assessment of a with-profits plan holder's fair share of the fund. It takes into account the payments that have been made, the actual investment returns made by the fund and any deductions, such as expenses, which have to be taken out.

This is the formal transfer of rights to something. For instance, a bank's customer may assign, to the bank, the right to receive the benefits from a life insurance plan to give the bank security for a loan.

An attorney is a person appointed to act for another person (such as when someone is unable to look after their own affairs). A formal document called a lasting power of attorney is used to appoint the attorney.

An audit is an independent examination of an organisation's records and financial statements (report and accounts) to make sure that:

  • the financial statements show a fair reflection of the financial position at the accounting date;
  • the income and spending is shown accurately;
  • the financial statements meet any legal conditions; and
  • the financial statements are drawn up clearly.

Auditing standards
The organisations which regulate auditors, such as The Institute of Chartered Accountants in England and Wales, set standards which have to be followed during an audit. These are called auditing standards.

Auditor's report
This is a report and opinion, by an independent person or firm, on an organisation's financial records.

Authorised pension providers
The Financial Conduct Authority authorises firms who can provide pensions.

Average weekly earnings
This is a measure of how much people in certain jobs earn each week in the UK. The details are published by the Office for National Statistics. 

BACS payment
BACS stands for Bankers Automated Clearing System which is a system for sending money electronically between banks. A BACS payment happens when money is sent electronically from one bank account to another.

Balance sheet
A balance sheet is a summary of an organisation's financial position. It lists the values, in the books of account on a particular date, of all the organisation's assets and liabilities. The assets and liabilities are grouped in categories, to paint a picture of the organisation's strengths and weaknesses.

Balloon payment
Some loan and finance agreements have lower repayments than normal in return for a high final payment. This is called a balloon payment.

If someone cannot pay their debts when they are due to be paid, a court may issue a bankruptcy order against them. This order takes ownership of the debtor's property away from the debtor and allows much of the property to be sold. The money raised is divided between the creditors following strict rules.

Base rate
The interest rate set by the Bank of England which is used by companies which lend money.

Basic-rate tax
Once you have used up all your personal allowance, you pay basic-rate tax.

Basic state pension
This is the retirement pension the Government pays to people who have paid enough national insurance contributions. Some people may receive a reduced basic state pension because they have not paid enough contributions.

The bearer of a document is the person who has it in their possession.

Beneficial interest
If something really belongs to a person, even though they do not legally own it, they have a beneficial interest in it. If, for instance, parents hold an investment on behalf of their child, they are the legal owners but the child is the beneficial owner of the investment.

This is a person(s) entitled to benefits from a will, a trust or a life insurance plan. 

Benefit date
This is the date the member chooses for when they may wish to start taking benefits from a pension plan. The date is not fixed and can be changed

Benefit statement
If employees are in an occupational pension scheme, they receive regular benefit statements which explain how much pension benefit they have earned.

Bid/offer spread
This is the difference between the bid price and the offer price.

Bid price
This is how much people receive for each unit when taking money out of a unit linked investment fund or a unit trust at any given time.

Bill of exchange
A bill of exchange is a signed written order, instructing the person it is addressed to, to pay an amount of money to someone. A cheque is a type of bill of exchange.

Bill of sale
A bill of sale is a document which transfers ownership of goods from one person to another.

A bond is simply an 'IOU' (or more technically a debt security) where an investor agrees to loan money to a company or government. Depending on the terms of the bond the company may have to pay the investor interest and also the original amount invested when the bond finishes.

An amount which may be added to plans.

Book debts
Book debts are the debts owed to a business, as recorded in the business's accounting records.

Books of account
These are the books which a business must keep to record its financial transactions accurately.

Book value
This is the value of a fixed asset, such as a building or machine, as recorded in an organisation's books. It is usually the amount paid for the asset less an amount for depreciation.

Each year, the Chancellor of the Exchequer presents to the UK parliament estimates of the Government's income and spending for the following year. The budget also sets out the financial policies the Government will follow.

Bulk annuity buy-out
Annuities for a group of people bought for example, by an occupational pension scheme or a life assurance company.

Buying charge
This is the charge made when you first invest in a fund such as an ISA, OEIC or unit trust

Cancellation period
The time you have after signing a contract for a financial product when you can cancel it without being charged anything. If you buy an investment product you might get less back less if the value of your investment falls during the cancellation period.

Cancelled from inception (CFI)
This phrase refers to a contract for an investment product (such as a personal pension) which has been cancelled within the cooling-off period.

Capital adequacy requirement
Banks and some other financial organisations have to have a certain amount of capital to make sure that there is enough money to support their business. It is called the capital adequacy requirement.

Capital charge
If a unit trust manager takes the management charges out of the fund's capital instead of the income it has generated, it is called a capital charge.

Capital commitment
If, before the end of its financial year, an organisation has agreed to spend money after the end of its accounting period on buying fixed assets, it is called a capital commitment. This is shown in the financial statements.

Capital expenditure
If you spend money buying or improving fixed assets, it is called capital expenditure.

Capital gain
You make a capital gain if you sell or dispose of a long-term asset (such as a building) for more than it cost you.

Capital gains tax
This is a tax charged on certain capital gains. Every tax year you can make a certain amount of money (your capital gains) without paying any tax. You don't have to pay capital gains tax on some of the gains you make. For example, when you sell your car and when you save in an Individual Savings Account (ISA). You don't have to pay capital gains tax when you sell your house as long as you meet certain conditions.

Capital growth
This is when the amount of money you have invested increases.

Capital receipt
This is money received from selling fixed assets, such as buildings or machines.

Capital transfer tax (CTT)
This was introduced in the 1970s to tax money and assets given away by people during their lifetime, as well as on the estates of people who died. Its name was later changed to inheritance tax.

This is the plastic credit card or cash card which banks give their customers to use.

This is a bank customer who has been given a credit card or cash card.

Cash card
A cash card can be used to draw money from automated teller machines (ATMs) commonly called cash machines.

Cash-in penalty
A penalty sometimes charged if any part of a plan is cashed-in in the first few years.

Cash-in value
If a plan holder cancels a plan early, the insurance company may pay the plan holder an amount of money called the cash-in value. This used to be called the 'surrender value'.

Cash ISA
A type of ISA where the investment is cash based. You can invest money in a cash ISA to earn tax-free interest.

Cash option (or commutation)
If you are in a pension scheme and take this option, you will receive a lump sum straightaway. However, you will then get a lower pension than if you had not taken the lump sum.

CAT standard
The Government has created a system to show which ISAs and stakeholder pension plans meet stated standards for charges, access and terms. The ISAs and stakeholder pension plans which meet these will have reached the CAT standard.

Chancellor of the Exchequer
The Chancellor of the Exchequer is a Government minister responsible for raising money for the Treasury, mainly through taxes, and for controlling money spent by the Government.

This stands for Clearing House Automated Payments System. It is a computer system which allows payments to be made electronically. The payment goes from the paying bank to the receiving bank on the same day.

Charge card
A charge card is a type of credit card. It is often issued by a store to its customers so that the customers can buy goods from the store on credit.

Chargeable asset
This is an asset on which capital gains tax may have to be paid, if it is sold or disposed of.

Chargeable event
A chargeable event is anything that happens which may create an income tax liability.
Certain events on life insurance plans can create chargeable events.

Charging clause
If this clause is written into a trust, trustees can charge the trust for their services.  

A cheque is a written order, addressed to a bank, instructing the bank to pay an amount of money to the person or organisation named on the cheque. The bank also has to take the amount from the relevant account.

Cheque card
This type of card was issued by a bank to a customer. It guaranteed that a cheque used with the card will be paid if the person issuing the cheque has kept to all the conditions. The cheque guarantee scheme stopped on 30 June 2011.

Chief rent
A chief rent is money charged regularly on land, but it is not rent.

Closed fund
A with-profits fund which is closed to new business. An example of a closed fund is the Medical Sickness Society (MSS) fund which closed after MSS merged with Wesleyan in 1997.

If there is a main security for a debt, such as a house securing a mortgage, any extra security supplied is called collateral.

Collector of taxes
After the inspector of taxes has worked out how much tax is owed, the collector of taxes sends tax demands for the money and collects it from the taxpayer.

Collective investments
A generic term for investment funds with many investors, for example unit trusts and investment trusts. These are managed by professional managers. By pooling their investments, investors can gain exposure to a wide number of underlying investments. At the same time, there is the opportunity to spread risk

Commercial paper

Large organisations which are seen as financially sound can borrow money for the short term without giving any security. The document which confirms the debt is known as commercial paper.

Company pension scheme
This is a pension scheme organised by the employer to provide pension benefits for the employees.

Compensation is money given to make up for damage or loss caused.

Compound interest
Compound interest is interest on the money lent. Interest also starts adding to any interest already added to the loan.

A condition is an essential part of an agreement. The agreement or contract may collapse if a condition is broken.

Consumer Credit Act 1974
This act sets out the rules which lenders must follow when they lend amounts of £15,000 or less to consumers.

Consumer Price Index (CPI)
A measure of the average price of goods and services bought by households in the UK.

Contingent annuity
This is an annuity which is paid to someone when someone else dies.

Contingent liability
This is money which might be owed if a particular event happens.

Continuous Mortality Investigation Bureau
This organisation carries out research into illness and death. They publish information which helps insurance providers decide how much to charge for insurance.

A contract is an agreement between two or more people (or groups) to do (or not to do) something. The agreement can be enforced by law.

Contract in
Someone who is building up an additional state pension.

Contract out
If a person is working and earning a certain amount then they could choose to leave the additional state pension and join a private pension scheme instead. This option was removed for Defined Contribution pension schemes in April 2012. Contracting out for Defined Benefit pension schemes will end in 2016 when State Pension reforms are due to come into force.

Contracted-out contributions
Any payments or tax relief received from the Government linked to contracting out of the additional state pension.

Cooling-off period
A cooling-off period is the time money is held by a management company in a bank account so that you can change your mind about buying insurance or other financial products or services. The investment is only made at the end of the cooling-off period. Cooling-off periods can vary.

Corporate body
This is a group of people acting together. The group has a separate legal identity to the individual members' identities. A company is an example of a corporate body.

Corporation tax
This is a tax companies pay on their profits.

Council tax
This is a tax charged locally on private houses. It provides some of the money to run local councils.

A coupon is a dated piece of paper attached to a bond. The coupon has to be surrendered (given back) to get the interest or dividend on the bond.

A covenant is a contract.

A credit is:

  • money received;
  • income from selling goods or services; or
  • an entry on the right-hand side in a double-entry bookkeeping system.

Credit agreement
This is a written contract between a bank or other lender and a customer. The bank allows the customer to borrow money under the terms and conditions in the agreement.

Credit card
A credit card is an identity card issued by a lender, such as a bank, to a customer. The card allows the customer to buy on credit.

Credit limit
This is the most a customer is allowed to borrow on their account.

Credit reference agencies
These are organisations which keep records of people's credit agreements and how well they keep to them. Banks and other organisations use these agencies to check on people before lending them money.

Credit scoring
This is a way of working out the risk of not being repaid if money is lent. Points are awarded for the answers given by the potential borrower to a series of questions. A high score means that the risk of them not being able to repay is low.

Credit transfer
A credit transfer involves transferring money from one bank to another.

This is someone who is owed money.

Critical illness cover
This is a type of insurance cover which pays out if the plan holder gets a serious illness such as heart disease or cancer.

If a share is sold cum-dividend, the buyer will receive the dividend declared just before they bought the share.

Current assets
These are short-term assets which are constantly changing in value, such as stocks, debtors and bank balances.

Current liabilities
These are short-term liabilities which are due to be paid in less than one year, such as bank overdrafts, money owed to suppliers and employees' PAYE.


Data Protection Act 1984
This act sets out the rules which an organisation has to follow when they store personal information about people.

Death benefit
A lump sum amount that is paid out when a person named on a plan dies. If it's a joint plan this death benefit will be paid either when the first or second person dies.

This is a document issued by a company which acknowledges that some or all of the company's assets are security for a debt (usually to a bank). It is also a name for certain long-term loans to companies.

A debit is:

  • a payment (such as out of a bank account);
  • the cost of buying goods or services; or
  • an entry on the left-hand side in a double-entry bookkeeping system.

Debit card
A debit card is an identity card issued by a bank to a customer which the customer can use to buy goods. The price of the goods is charged to the customer's bank account.

Debt securities
These are debts which can be bought and sold, such as debentures.

This is someone who owes money.

If someone defaults, they fail to do something which they had agreed to do.

Deferred taxation
This is tax which is expected to be paid at some time in the future but is not due in the short term. Payment has usually been postponed because of tax relief.

Defined benefit pension scheme
This is sometimes called a final salary pension scheme. It's a type of company pension where what someone gets when they retire depends on their pensionable earnings (usually what is earned each year sometimes including bonuses or overtime) and how long the scheme has been paid into.

Defined contribution pension scheme
In this type of pension scheme the amount of the pension which will be paid out depends on how much has been invested and how well the fund where the money has been invested has performed.

A dependant is someone who depends on someone else for financial support.

Deposit account
This is a bank account in which money is saved. It normally pays interest on the money invested.

Deposit rate
This is the rate of interest customers earn on money they keep in a bank deposit account.

Depreciation is the drop in value of an asset due to wear and tear, age and obsolescence (going out of date) as recorded in an organisation's financial records.

Depreciation provision
This is money set aside (or provided) in a set of accounts to reflect the drop in value of fixed assets caused by wear and tear, age and obsolescence (going out of date).

A derivative is anything that is valued based upon some other asset. In other words, it gets its value from something else. Derivatives are financial contracts which pay off if something else performs well such as shares, bonds or exchange rates. With derivatives you aren't buying part of a company or lending to a company. Instead you're making a bet or deal with a party where what you get back depends on what something else will do in the future.

Ending an agreement or contract is called determination.

Direct debit
This is a payment out of a bank account which is arranged by the organisation which receives the money.

Directors' report
Every year, company directors have to prepare a report for the company's members, to explain what the company has been doing and their plans for the future.

Discretionary trust
In this type of trust the trustees can decide who will benefit from the trust and how much they will get.

This happens when something is sold, transferred or given away.

If a company pays money (or other assets) to its shareholders, it is making a distribution. When a company pays a dividend it is making a distribution.

A payment made by a company to its owners (its shareholders). The company decides how much the dividend will be, and when it will be paid.

Your domicile is the country where your permanent home is, even if you are living somewhere else for now.

This means permanently based in a country.

In the case of a cheque, this is the bank who has been directed to pay the amount of the cheque

This is the person or organisation which has drawn a cheque.

Due date
The date which payments into a plan are due to be paid.

Duty is a levy charged by the Government, usually when things are bought, such as shares or buildings.


If something, such as a pension contribution, goes up in line with increases in earnings, it is described as earnings-related.

Effects not cleared (uncleared effects)
When cheques have been paid into a bank account, but the money for them has not yet been received from the banks they are drawn on, they are called uncleared effects.

These are your earnings and they include benefits in kind (such as company cars).

Employer's liability
Employers have to take out insurance cover, called employer's liability insurance, to cover claims by employees against the employer for damage caused to them while they are at work.

A document which shows any changes to the terms of a plan.

Endowment plan or policy
If you have this type of insurance plan, it will pay out a lump sum on a fixed date in the future, or when you die, if this happens earlier.

Enduring power of attorney (EPA)
This is a legal process where a person can hand over to someone else the power to decide what is done with their financial affairs and property. The EPA can start straight away or it can come into force in the future if the person is no longer capable (mentally unable) of managing their affairs. On 1 October 2007 EPA was replaced by two forms of Lasting Powers of Attorney. However an EPA signed before that date and not yet registered may still be registered, through the Office of the Public Guardian.

Enhanced annuity
An enhanced annuity pays out a higher annuity rate (more money) to those people with particular lifestyles or medical conditions. The main conditions that qualify for an enhanced annuity are smoking, diabetes, high blood pressure, The view is that these people won't live as long so providers can pay more out for the time the person is alive than those people with healthier lifestyles who are expected to live longer.

Equitable mortgage
When a person takes out this type of mortgage they still own the property which is security for the mortgage.

Equity is the value of something (such as a house) less money owing on it.

Estate (company)
A life assurance company's estate is how much the company's assets exceed the asset shares and other liabilities for the current existing plans. It is a measure of the company's financial strength.

Estate (personal)
A person's estate is all that they own at the date of their death.

These are cheques issued by banks in Europe which are used with a eurocheque card.

This is the amount by which someone has gone over their agreed overdraft facility. It is also the first amount of any claim an insurance plan holder has agreed to pay.

If an insurance plan does not provide cover for certain things, it will list them and call them exclusions.

If a share is sold ex-dividend the seller will receive the dividend declared just before it was sold.

This means to carry out a contract.

If a document is made valid (in the eyes of the law), such as by being signed or sealed, it is executed.

This is a man appointed in a will to deal with the estate, according to the wishes set out in that will.

This is a woman appointed in a will to deal with the estate, according to the wishes set out in the will.

If something is exempt from tax, no tax can be charged on it unless the law is changed. Zero-rate is not the same as exempt. The tax on something zero-rated is 0% at the moment. However, the Government could change it to another rate, such as 2% or 7%, without having to change the law. 

This is the agreed amount that a bank will allow a customer to borrow up to.

Final bonus
A final bonus may be added to with-profits plans when they are cashed in. A final bonus may also be added if a with-profits plan pays out because the plan holder dies.

Final salary pension scheme
See defined benefit pension scheme.

Financial Conduct Authority (FCA) and Prudential Regulation Authority
The FCA and PRA are independent financial regulators. They replaced the Financial Services Authority (FSA) in 2013.

Financial Services Authority (FSA)
The FSA was the independent financial regulator. In 2013 the FSA was be replaced by two new regulatory bodies - the Prudential Regulation Authority and the Financial Conduct Authority.

Financial statement
This is a statement which includes the annual accounts, directors' report and so on.

Financial year
This is the year covered by a set of annual financial statements.

This word is used to describe finances controlled by the Government.

Fixed asset
A fixed asset is one which is intended to be used for several years. Examples are buildings, machinery and vehicles.

Fixed interest rate
This is an interest rate which does not change during the life of a loan or savings product.

Flexi Access Drawdown (FAD)
This facility allows members to take an income from their pension fund with no limits.

Floating charge

A floating charge is used to provide security for money lent to a company. The charge is over the company's liquid assets (such as stocks and debtors) but it is only triggered by an event such as liquidation.

Franked investment income
This is a company's investment income which has tax credits relating to it.

Free-standing AVC
This stands for free standing additional voluntary contribution (FSAVC). They were used to top up employers' pension benefits as an alternative to AVC schemes and were arranged through investment firms. Since April 2006 tax-free lump sums have been available from FSAVCs so they work like personal pensions.

A fund puts together money from individuals and uses it to invest.

Fund allocation percentage
What percentage of the money invested will be allocated to each of the funds which are available. This is set out in the schedule.

Fund value
How much a fund is worth which is calculated by adding up how much its assets are worth.


A gift is a transfer of goods or property which is free of charge.

Gilt-edged securities
Gilt-edged securities are bonds issued by the UK Government with a fixed interest rate. They are seen as one of the safest types of investments.

When an amount of money is described as 'gross' it means that no tax has been taken off.

Gross interest
This is interest which has not had any income tax taken out of it.

Gross profit
Gross profit is the difference between the selling price of goods and what they cost to buy.

A guarantee is sometimes needed before a bank will lend money to a customer. Another person (the guarantor) pledges to the bank, in writing, that if the customer does not repay the debt then the guarantor will.

Guarantee costs
The costs arising from any minimum benefits guaranteed to with-profits plan holders.

Guarantee period
The retirement income from an annuity normally stops when the plan holder dies. However, they can opt for their annuity to pay out for a minimum number of years, usually five or ten years. If they die before this period ends, the annuity will continue to be paid, usually to their spouse or registered civil partner for the rest of the guarantee period. If the plan holder lives past the guaranteed period, the annuity will continue to be paid until he or she dies.

Guaranteed Annuity Rates (GARs)
A guaranteed minimum rate at which a retirement fund, built up under a pension plan is converted to an annuity.

Guaranteed minimum pension
This is the lowest level of pension which must be paid to a pensioner, as a condition of contracting out of the additional state pension (SERPS/S2P) via an occupational pension scheme.


Headline rate
This term refers to information which is easy to publish but which may be over-simplified and, as a result, possibly inaccurate. 

Higher-rate taxpayer
People who earn over a certain amount have to pay more tax on the money they earn.

Hire purchase
This is a form of credit which allows the purchaser to have possession of the goods shown in the hire purchase agreement. Ownership passes to the purchaser when they have paid all the instalments and any fee.

Her Majesty's Revenue and Customs (HMRC)
This is a Government department which is responsible for collecting taxes and paying some state support.

Holding company
This is a company which controls another company, usually by owning more than half of its shares.

Hourly Rate
An hourly rate charge is levied when a client is opted out of the Ongoing Advice Service (OAS) and receives review advice on investment products.


This happens when a person gives a bank authority to sell goods which have been pledged as security for a loan. 
A document produced for customers showing how much they might get back depending on how much they invest and the charges.

Incapacity benefit
Incapacity benefit is paid to people who are too ill to work.

Income and expenditure account
This account records an organisation's income and spending and shows the surplus or shortfall.

Income drawdown
This is an alternative to purchasing an annuity with a persons pensions fund. People are able to leave their pension invested and take a portion of the pension pot each year as income. This means that if the value of your investments fall or you find that you are withdrawing too much income then the pot may not last throughout your retirement. No new income drawdown arrangements can be started after April 2015, but some existing drawdown arrangements can carry on.

Income protection insurance
This is a type of insurance plan which pays an income if the plan holder suffers from a
illness or disability.

Income tax
You pay this tax according to how much income you receive.

Income unit
This is a unit trust which pays out the income it earns to the investors, instead of reinvesting it.

If someone promises to compensate someone else for loss or damage, it is called an indemnity.

Independent advice
Financial advisers that provide independent advice consider all types of investment products that may be suitable for a customer. They can also consider products from all firms across the market.

Independent financial adviser (IFA)
This is a qualified person or firm that can give people independent advice on life insurance and pensions and is not tied to a particular company.

This means making adjustments to allow for the effects of inflation.

Index linked
If something, such as a pension contribution, goes up in line with increases in inflation, as measured by an index such as CPI or RPI, then it is described as index linked.

Individual Savings Account (ISA)
ISA stands for individual savings account. This is a savings scheme set up by the Government. There are two types of ISAs - a Cash ISA and a Stocks and Shares ISA. For Cash ISAs the interest earned is free of tax. For Stocks and Shares ISAs the investments are held free of income and capital gains tax. For Stocks and Shares ISAs the investments are held free of income and capital gains tax. From  the 1 July 2014, the Government introduced  some changes to ISAs also referred to 'New ISA' (NISA). These changes included greater flexibility allowing customer to split their full allowance between Cash and a Stocks and Shares ISA as they please, and being able to transfer from Stocks & Shares to Cash, which was previously not allowed.

Industrial Business (IB)
Life assurance
plans where the premiums were originally collected door to door (under the Industrial Assurance Acts 1923 to 1958).

This is the name for how the price of products and services changes over time. This is usually measured by the Retail Price Index or the Consumer Price Index

Inheritance tax
This tax is charged on certain gifts, and on the value of the estate left by someone who has died.

Initial Advice Charge (IAC)
A charge levied for the initial advice provided by a financial consultant for the sale of a new investment product or top-up of an existing plan.

Initial Advice Service (IAS)
The service provided by a financial consultant for the sale of a new investment product or top-up of an existing plan.

Initial charge
A charge made by an investment provider to cover the cost of setting up an investment.

Input tax
This is the value added tax (VAT) you pay when you buy goods and services.

If debts cannot be paid when they are due for payment, the person or organisation owing the money is insolvent.

Inspector of taxes
This is a person who works for HMRC, dealing with tax returns and tax assessments. Tax inspectors check how much tax the taxpayers owe.

When plan holders buy insurance cover, the company receiving the money agrees to pay for the plan holder's loss if a certain event happens.

Intangible assets
Intangible assets cannot be touched. Examples are goodwill and patent rights.

Interest rate swaps
If you are earning variable interest on money you have deposited at your bank, but you are worried that interest rates will drop in the future, you can change your investment to earn a fixed rate of interest. This will protect you from falling interest rates and it is called an interest-rate swap.

Interim dividend
The directors of a company can review the company's performance part way through the financial year and declare a dividend. This is called an interim dividend.

This happens when someone dies without leaving a will. Their estate is divided up between their relatives following the rules set by law.

Investment/investment plan
Paying money into a fund or plan in the hope that the value goes up and it's worth more than was paid in.

Investment grade issuers
These are soundly based companies of the highest quality.

Investment trust
This is a company which is quoted on the stock exchange and which invests in other companies.


Joint lives
Some life insurance plans cover two people's lives and pay out on the first death.

Joint lives last survivor
This sort of life insurance plan covers two people's lives and pays out on the second death.


Key Features Document
This is a disclosure document which is required to be provided to customers before they purchase certain products (life policies, pensions, Investments and Cash ISAs).  These documents outline the main features and risks of the product or fund.

Key Investor Information Document (KIID)
EU regulations for retail investment funds (UCITS) require a standardised information sheet for investors. This document aims to simplify and highlight the crucial elements that an investor should consider before buying this type of fund. The document confirms the fund's objective, the risk and reward profile and any risks associated.


This stands for Life Assurance Premium Relief. Before 14 March 1984 there was tax relief on life insurance premiums paid by plan holders for plans which qualified. Plans which started before 14 March 1984 still qualified for tax relief on the money paid since 14 March 1984. From 6 April 2015 LAPR is to be abolished.

Lapse or lapsed plan
A plan where regular payments are due but haven't been received.

Lasting Powers of Attorney (LPA)
LPAs were introduced in October 2007 to replace EPAs. There are two types of LPA - Property and financial affairs LPA and Health and Welfare LPA.

The Property and financial affairs LPA allows individuals to make advance plans relating to future buying and selling of property, opening and closing of bank and building society accounts, claiming and receiving state benefits and allowances and other financial issues that relate to them..

Health and Welfare LPAs allows individuals to appoint a legally authorised person or persons to make decisions with regard to their health and welfare, including whether to give or refuse consent to medical treatment, should they become incapable of doing so themselves at some point in the future.

A legacy is a gift left to someone in a will, but it does not include land.

Legal mortgage
When a person takes out this type of mortgage the lender owns the property which is mortgaged, until the mortgage has been repaid.

Letter of credit
This is a letter one bank sends to a second bank asking them to pay money to a named person. However, certain conditions must be met.

Liability (liabilities)
This is a debt that a person or an organisation owes. 

Life assurance (or insurance) plan
This type of plan is a contract between the plan holder and the insurance company. The insurance company will normally pay out if the plan holder dies.

Life assured
This is the person whose life is assured under a life assurance plan.

Life cover
Pays out a lump sum amount when a person dies. This type of insurance can be set up as a joint plan so that it pays out when either the first or second person dies.

Life of another
If you take out assurance cover on another person's life, you have taken it out on the life of

Lifetime allowance
The total amount that can be built up in a pension plan or plans without paying a tax charge.

Lifetime allowance charge
A charge which has to be paid if the total amount saved in a pension plan or plans is more than the lifetime allowance.

Lower earnings limit
If you earn below this limit, you do not pay national insurance contributions

A bank's customer writes instructions on the mandate for the bank to follow when operating the customer's account.

Market value reduction
An adjustment made which reduces how much a with-profits plan is worth when it's cashed in at a particular time (for example, when share prices are generally low).

If an investment plan comes to the end of its life, it has reached maturity. When it gets to the specified date the plan benefits are paid.

Maturity value
What your plan is worth when it matures. A with-profits plan may have bonuses added when it finishes.

Medical Sickness Society (MSS)
This company merged with Wesleyan is 1997.

Wesleyan is a mutual organisation which means it doesn't have shareholders - it has members. It is owned by, and run for, the benefit of its members. There are a number of ways that customers become members of the Wesleyan including taking out products for a set length of time.

Memorandum and articles of association
The memorandum gives details of a company's name, objects (purposes) and share capital. It also sets out the limits of the shareholders' liability if the company has to be wound up.
The articles set out the members' rights and the directors' powers.

This stands for mortgage interest tax relief at source. This was income tax relief on mortgage interest paid (up to the limit allowed), and the mortgage repayments were reduced to allow for it. (It stopped in April 2000.)

Money purchase scheme
Includes personal pensions, stakeholder pensions and occupational pensions. Contributions are made by or on behalf of the member and invested. The income received depends on how much money has been put in, for how long and how well the investment has performed.

Money market
The money market is the market for short term loans and cash deposits, floating rate notes, commercial paper and other similar instruments.

Money Purchase Annual Allowance (MPAA)
An annual limit of £10,000 for contributions to money purchase schemes. This is triggered by a member when they take an income from their pension fund using Flexi Access Drawdown (FAD) or Uncrystallised Funds Pension Lump Sum (UFPLS).


A mortgage is using a property as security for a debt.

MSS Fund
The Medical Sickness Society (MSS) fund contains all the with-profits plans of Medical Sickness Society (MSS) that were in force when MSS merged with Wesleyan in 1997.

MSS Merger Scheme
A scheme which set out how the merger of Wesleyan and Medical Sickness Society (MSS) on 1 July 1997 should take place and how the open fund and the MSS fund should be managed after that. This scheme was approved by the Court.

Mutuals are organisations that are owned by, and run for the benefit of, their current and future members.

National insurance contributions
Most employees, employers and the self-employed pay national insurance contributions. The National Insurance Fund pays out benefits such as Jobseeker's Allowance, retirement pensions and Widow's Benefit.

Negotiable instrument
This is a document which:

  • is signed;
  • is an instruction to pay an amount of money;
  • can have its ownership changed by changing the name it is paid to; or
  • can have its ownership changed simply by being delivered to its new owner.

Net book value
This is what an asset cost, as recorded in the books of account, less all the depreciation taken off the asset for age and wear.

Net interest
This is interest which has had income tax taken off it.

Net profit
This is the profit left after all overheads have been taken off.

Net relevant earnings
These are the earnings of self-employed people or earnings of people who are not in an employer's pension scheme. Net relevant earnings are used to work out the highest amount which can be invested in a pension scheme and qualify for tax relief.

Non-profit plan
A life assurance plan where the amount paid out is fixed.

Non-protected payments
The part of a pension which isn't linked to contracting out of the additional state pension. This includes money which the plan holder and their employer have paid in.

A note is a document acknowledging that a debt exists and promising to repay that debt. 

Occupational pension scheme
This is a pension scheme organised by an employer to provide pension benefits for employees.

Offer price
This is how much people have to pay for each unit when buying units in a unit linked investment fund or a unit trust.

Ongoing Advice Charge (OAC)
A charge applicable to customers who opt in to receiving the Ongoing Advice Service (OAS).

Ongoing Advice Service (OAS)
An optional service provided by Wesleyan Financial Services to customers for their investment products, including an annual financial review. Customers can opt into and out of the OAS at any time.

Open ended investment companies (OEICs)
An OEIC is a pooled investment fund set up as a company. An OEIC is similar to a unit trust however OEIC investors own shares in the company rather than units in a unit trust. There is no difference between the bid price and the offer price. In other words the buying price and the selling price is always the same.

Open fund
A life assurance fund that is still open to new investment. 

Open Market Option (OMO)
The option to choose which insurance company to buy a pension annuity from and they have the right to 'shop around'. The plan holder doesn't have to buy their pension annuity from the same company that provides their pension plan. They can choose the pension annuity that best suits their needs.

Operating profit (or loss)
The profit (or loss) from a company's principal (main) trading activity.

Opting out
If an employee leaves an occupational pension scheme, or chooses not to join one, it is called opting out.

Under this sort of contract, paying an amount of money gives a right to buy or sell goods or services at a fixed price by a particular future date.

Orders not to pay
If a bank's customer asks the bank not to pay a cheque, the bank may write 'orders not to pay' on the cheque before it is sent back.

Ordinary resolution
If a resolution can be passed at a meeting by more than half of those voting agreeing to the resolution, it is an ordinary resolution.

Out of date
If a cheque is dated more than six months before the date when it is presented for payment, the bank may refuse to pay it.

Output tax
This is the value added tax (VAT) charged by a business registered for VAT, on the goods and services it sells.

Overdraft facility
If a bank agrees to let a customer borrow from the bank by taking out more than the customer has in the bank, an overdraft is created. The bank puts a limit on how much the customer can borrow and this is called the overdraft facility.

Paid 'gross'
This is the amount paid without any deductions taken off. 

Paid up
Plans are made 'paid up' if payments are missed and then not paid within a particular time.

An employer collects income tax and national insurance contributions from employees' pay and pays it to HMRC. This system is called Pay As You Earn (PAYE).

This is the person money is being paid to.

Payment countermanded
If a bank's customer asks the bank not to pay a cheque, the bank may write 'payment countermanded' on the cheque before it is sent back.

Payment protection insurance
This insurance covers people's finance agreement repayments if they cannot work because of illness or redundancy.

Pension benefits
The pensions and lump sums people receive from their private pensions are called pension benefits.

Pension date
The date a person chooses when they want to take their pension benefits.

Pension input amount
The amount a pension plan goes up in value over a particular period (usually a year).

Pension input period
This is a period of time when how much pensions have increased in value by are measured.

Pension mortgage
This is a mortgage which will be repaid out of the lump sum from a pension plan or retirement annuity.

Pensionable age
This is the age people have to reach to be entitled to draw their state pension.

This stood for personal equity plan. This was a way of investing in stocks and shares through a scheme set up by the Government. Since 6 April 1999 PEPs have been replaced by Individual Savings Accounts (ISAs).

Personal allowance
People do not have to pay income tax on all their income. Everyone gets a tax allowance which allows them to have some income that they do not have to pay tax on. However, the amount varies depending on personal circumstances.

Personal guarantee
This is a pledge by a person to a bank to repay a debt if the bank's customer fails to pay it.

Personal pension
An individual contract made under a personal pension scheme. Individuals or employers can pay regular monthly amounts or a lump sum to a pension provider who will invest it on their behalf.

This stands for personal identification number. It is a secret number given to an account holder to be used when they put their credit card or cash card into an automatic teller machine (ATM). If the number they use is correct, they will be allowed access to their account.

The contract between the company providing the plan and the person buying it (or someone working on their behalf).

Plan's cash value
The total value of a plan. This is worked out differently depending on what type of plan is held.

Please represent
If a bank has refused to pay a cheque because there was not enough money available in the customer's bank account, it may mark the cheque 'please represent'. It will do this if there is likely to be enough money to pay the cheque in a few days time.

If a cheque is written with a date in the future, it is 'post-dated'.

Post-dated (no represent)
If a cheque is returned unpaid with this written on it, the bank will not honour it if it is represented.

Prepayment (prepaid)
In a set of accounts this means something which has been paid out which covers a period after the end of the accounting period. You may have paid an insurance premium for the year to 30 September. If your accounting year ends on 30 June, 3 months of your premium will be prepaid.

When a bank sends a cheque it has received to the bank which has to pay it, it is 'presented' for payment.

Principal activity
This is a company's main trading activity.

Principles and practices of financial management (PPFM)
Detailed information about how the 'with-profits' funds are managed. Wesleyan has two PPFMs - one for the open fund and one for the MSS Fund.

Pro rata
This means in proportion to. For example, if ten items cost £100, you would expect three items to cost £30, if they were pro rata.

When someone dies, the executors of the dead person's estate apply to the court for authority to deal with the estate. This authority is called probate.

Profit and loss account
A profit and loss account shows the money a business has earned from selling goods and services, less the money spent on goods, services and overheads.

Protected payments
The part of a pension fund which has built up directly or indirectly from the plan holder contracting out of the additional state pension

When accounts are being prepared and an amount needs to be set aside for liabilities which are known to exist, but which cannot be measured accurately, the amount set aside is called a provision.

This is a person appointed by a member to go to a members' meeting (for example, the annual general meeting) on their behalf. The proxy can vote at the meeting on the member's behalf.

Proxy form
If a proxy form is delivered to the company at least 48 hours before the members' meeting, the person who is the proxy will be able to vote at that meeting.

Prudential Regulation Authority (PRA)
The Prudential Regulation Authority ( PRA ) formed as one of the successors to the Financial Services Authority (FSA). It is part of the Bank of England and is responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers and major investment firms

Public liability
This is a type of insurance cover to protect people and businesses from claims made by members of the public.

Public limited company (PLC)
A public limited company can offer its shares to the public and is often listed on the stock exchange.

Purchased life annuity
A person can buy this type of annuity from an insurance company directly by paying a lump sum. This differs from standard or enhanced annuity which is purchased using a pension pot. 

Put option
A right (but not an obligation) to sell a security at specified price for a limited period of time.


Qualifying plan
This is a plan which can pay its proceeds, free of tax, if the conditions have been met.

In statistics the quartile point is the spot where one quarter of the items in a series is on one side and three quarters are on the other side. For example, if a series of numbers was 1, 3, #, 4, 5, 7, 10, 20 and 30, the quartile point (#) would be between 3 and 4.

A quorum is the lowest number of qualifying people needed for a meeting to be valid. 

Redemption means paying off all the money borrowed under an agreement.

Refer to drawer
A bank writes 'refer to drawer' on a cheque which it will not pay. The bank sends it back (returns it) to the branch of the bank with the account the cheque was paid into.

Refer to drawer-please represent
If this is written on a cheque which is returned, the bank sending the cheque back expects that there may be enough money available in the bank account to pay the cheque when it is presented again.

Registered pension scheme/plan
A pension scheme/plan needs to be registered with HMRC to get tax benefits.

Related party
This is someone, or an organisation, which controls or significantly influences another organisation.

Rent is the term used to describe a payment for using land, buildings or equipment.

These are facts borrowers give to lenders about themselves when they apply to borrow money.

These are amounts set aside in one year's accounts, which can be spent in later years. Some types of reserve can only be spent if certain conditions are met.

Restricted advice
An adviser who gives restricted advice can only offer advice on products provided by certain investment companies.

Retail Distribution Review (RDR)
The Retail Distribution Review which came into force in December 2012 changed the rules that apply to firms which give advice on investment products (for example stocks and shares ISAs or unit trusts). The RDR has changed the rules about the type of investment advice which is available (restricted advice or independent advice), how the investment advice is paid for and the professional standards which can be expected of financial advisers.

Retail Price Index
The Retail Price Index (RPI) measures inflation (how much the cost of goods and services has changed over certain periods). It's published monthly by the Office for National Statistics.
Retirement annuity
Retirement annuities are still in existence though none have been started since June 1988. They allowed self-employed people or employed people who were not in an employer's pension scheme to save for their retirement.

Retirement date
This is the date that you choose to retire at.

Risk is the chance that an activity (for example investing in a plan) will lead to a loss. 

The document which shows specific details about the plan.

Schedule D
Refers to Acts of  legislation for income tax. Self-employed people's income tax was previously worked out using the rules in Schedule E. This no longer exists and has been replaced by Pay As You Earn (PAYE).

Schedule E
Refers to Acts of leglislation for income tax. Employees' and directors' income tax was previously worked out using the rules in Schedule E. This no longer exists and has been replaced by Pay As You Earn (PAYE).

Pension and investment funds are grouped by the Association of British Insurers (ABI) into different sectors. Each sector is based on a fund's investment strategy and objectives. Dividing funds into sectors makes it easier to make comparisons between similar funds.

This term is used for stocks, shares, debentures and so on where there is a right to receive interest or dividends from the investment.

This is something of value which is pledged to a bank by a borrower. If the borrower fails to repay the debt, the bank can sell the security and repay the debt out of the proceeds of the sale.  

This is a system for taxpayers to work out the tax they have to pay. However, if they send their tax returns to HMRC in good time, HMRC will do the calculations.

Self-Invested Personal Pension (SIPP)
A type of personal pension where the individual or their financial adviser takes responsibility for the type of investment their money is invested in, often offering a much wider choice than a standard personal pension.

Show of hands
If voting is on this basis, each person who can vote has one vote only.

Small Pension Pots
If you have pension plans that are valued at less than £10,000 you may be able to take them as a small pension pot lump sum. You can also take up to 3 personal or stakeholder pensions of less than £10,000 as cash payments, no matter how much you get from other pensions.


This is a method used by with-profits funds to reduce the ups and downs of the value of an investment. It works by holding onto some of the profits made by the fund during good investment years and using them to pay bonuses in the poor years. Losses made in poor investment years can also reduce the bonuses paid in good years. This system reduces the chance that there will be sharp rises or falls in the value of investments. Sometimes smoothing can't fully protect the value of investments. This can happen when there is a large fall in the value of the assets owned by the fund or returns on investments are lower than expected.

Sort code
Each bank branch is given an identification number which is called a sort code. The sort code is used on cheques and other bank documents to identify the bank branch.

Stakeholder pension scheme
A defined contribution pension scheme that meets the CAT Standards and other conditions to be registered as a Stakeholder pension scheme.

Stamp duty
Stamp duty is a tax on the transfer documents for certain types of transaction. Examples are the buying of shares, patent rights and properties.

Standing order
This is an instruction by a bank's customer to the bank, to pay an amount of money regularly to another bank account.

State earnings related pension scheme (SERPS)
The State Earnings Related Pension (SERPS) was the name of the government's additional pension scheme until April 2002. It was related to earnings, so the amount people will get at state pension age will vary. If you earned enough and paid employees' national insurance contributions, you were automatically a member of SERPS. (Replaced by the State Second Pension).

State Pension scheme
The Government pays a basic State Pension to everyone who has paid the minimum national insurance contributions.

State Second Pension (S2P)
This is an additional pension benefit paid as a top-up to the basic state pension (see state pension scheme).  Entitlement to the S2P is based on how much a person earns each year and where the level of earnings falls on the Government's earnings scale.

Statutory accounts
Statutory accounts are company accounts which have been filed with the Registrar of Companies.

Statutory audit
By law, certain companies have to have their accounts audited by suitably qualified accountants. This is called a statutory audit.

Statutory books
By law, companies must keep books of account to show and explain all their transactions. These are called statutory books.

Statutory Sick Pay
Employers have to pay this to employees who are off work because of sickness. The Government sets Statutory Sick Pay rates.

Stock exchange
A stock exchange is a market for stocks and shares. Organisations can raise capital by selling securities through a stock exchange.

A subsidiary is a company controlled by another company. The control is normally a result of having more than 50% of the voting rights.

Sum assured
In a life assurance plan, the 'sum assured' is the minimum amount which will be paid to the plan holder's dependants when he or she dies.

This is a regular contribution to a pension plan by an employee.

This is an extra charge banks make if a customer does not keep to their agreement with the bank. It is also a penalty charged if tax is not paid on time.

A surety is someone who takes responsibility for someone else's debts or promises, and guarantees that they will be paid or undertaken.

Surrender value
See cash-in value.

Switch charge
An amount sometimes charged to plan holders who switch their investment between different funds

Tangible assets
If an asset can be physically touched, it is a tangible asset.

Tax allowance
Taxpayers are given tax allowances to reduce the amount of tax they have to pay. The allowances are taken off their income before the tax is worked out.

Tax avoidance
Reducing tax bills by using legal means is called tax avoidance.

Tax code
work out the allowances for each taxpayer. The total allowances are converted into a code number which is used with tax tables to work out how much tax should be taken from the income.

Tax credit
When companies pay dividends they send each shareholder a dividend warrant. The warrant shows the amount of the dividend and also a figure for a tax credit. For basic-rate tax payers the tax credit covers the income tax due on the dividend.

Tax evasion
Breaking the law to reduce tax bills (such as by hiding income) is called tax evasion.

Tax-free cash sum or Pension Commencement Lump Sum (PCLS)
A one-off amount of cash that people can take tax-free from their pension fund when they start taking retirement benefits. This is usually up to 25% of the fund value.

Tax month
The tax year is split up into 12 monthly periods. The first tax month starts on 6 April and finishes on 5 May and the other 11 months start on the 6th and finish on the 5th of the following month.

Tax point
The tax point is the date when value added tax (VAT) arises on goods or services supplied (or made available) to a customer. The tax point should be displayed on invoices.

Tax relief
The Government encourages people to save for their retirement by giving tax relief on what is put into the pension. Tax relief reduces how much tax has to be paid or increases the pension fund.

Tax return
HMRC sends these forms out to taxpayers each year. Income and gains for the year are declared on the form and certain allowances are claimed. There are fines and penalties charged by HMRC if the returns are sent in late, incomplete or incorrect.

Tax week
The tax year is split up into 52 tax weeks. The first tax week starts on 6 April and finishes on 12 April and the other 51 weeks follow in order.

Tax year
The tax year starts on 6 April and finishes on 5 April the following year.

If a plan is described as tax-efficient it means that it has been set up to minimise how much tax the plan holder has to pay.

Tax-free cash sum
A one-off amount of cash that people can take tax-free from their pension fund when they start taking retirement benefits. This is usually up to 25% of the fund value.

If an organisation asks firms to send in tenders to supply something, they are asking for written offers to do the work to an agreed standard and at a stated price.

A term is any of the clauses which form part of a contract. Term may also refer to a set period of time.

Term assurance (or temporary assurance)
This is life insurance cover for a fixed period of time.

Term deposit
This is money deposited with a bank for a fixed period of time.

Term loan
Banks offer these loans to companies for a fixed time period.

This stands for Tax Exempt Special Savings Account. It is a special savings account with banks, building societies and so on and the interest is free of tax if you keep to any rules about withdrawals. TESSAs were withdrawn following the introduction of the ISAs.

Title deeds
These are the documents which prove who owns a property and under what terms.

Tracker fund
Tracker funds invest in the same shares and in the same proportions as those reflected in the financial index they are tracking (such as the FTSE 100 index).

Trading account
A trading account is the part of a profit and loss account which records money due from selling goods, less what those goods cost. This gives the gross profit on those goods.

Trading profit
The trading profit is the profit from selling goods and services before taking off overheads. The trading profit less the overheads gives the net profit.

Transferable securities
These are securities, such as debentures, which can have their ownership changed.

This is the person something is transferred to.

This is the person who transfers something to someone else.

Transfer payment
The payment from one pension provider to another, on the plan holder's instructions, of the value of their pension plan. 

Transfer value
This is how much a pension plan is worth when it is transferred to another pension provider.

Treasury bill
This is an unconditional written promise by the Treasury to repay money it has borrowed for the short term, to pay for the Government's spending.

True and fair view
When auditors examine an organisation's accounting records and annual accounts they have to decide whether the accounts present a fair and honest picture of the organisation's trading and finances. The audit report has to say whether the accounts show a true and fair view.

A legal concept where property is held by one or more persons (the trustees) for the benefit of other (the beneficiaries). This is set out in the trust deed. The trustees may also be beneficiaries.

Trust corporation
A company which acts as a trustee and holds the trust's assets is called a trust corporation.

Trust deed
This is a legal document which is used to:

  • create a trust;
  • change a trust; or
  • control a trust.

A person or organisation which manages and invests assets on someone else's behalf for their benefit.

A business's turnover is the total value of its sales over a particular period.


Uncleared cheque
This is a cheque which has been paid into an account, but the payment for it has not yet been collected from the bank which will pay the cheque.

Uncrystallised  Funds Pension Lump Sum (UFPLS).
An UFPLS allows a member to take their uncrystallised pension savings as a lump sum, either in one go, or in instalments. The first 25% of each payment will usually be tax free with the remainder being taxed at the member's marginal tax rate.

Undertakings for Collective Investment in Transferable Securities (UCITS).
Provides a single European regulatory framework for an investment vehicle which means it is possible to market the vehicle across the EU without worrying which country it is domiciled in

Under trust
An arrangement which allows property or money to be held by named people for someone else.

To guarantee against financial risk by assuming that risk.

When the public is invited to subscribe for (ask for) shares in a company the directors may ask an investment firm, such as a bank, to agree to buy any unsold shares. This is called underwriting the issue of shares.

Unincorporated body
This is a group of people acting together but who do not form a separate legal body (such as a company).

Unitised with-profits plan
The money which is paid into a unitised with-profits plan buys units in the with-profits fund at the current unit price.

Unit linked funds
A unit linked fund combines money from investors and buys units in a fund. The value of the units rise and fall in line with the assets held in the fund.

Unit trust
A unit trust is a collective investment which means that a number of people put their money together in a fund that buys and sells shares, or bonds, on their behalf. The idea is that by pooling their money and investing in a range of shares or bonds, investors spread the risk.

Unpaid item
This is an item such as a cheque, standing order or direct debit which a bank refuses to pay.

Unpresented cheque
This is a cheque which has been sent, but which has not yet appeared on the bank account which will pay it.

Unsanctioned overdraft
This is an overdraft which has been run up without the bank's permission.

Upper earnings limit
This is the highest amount of earnings on which employees pay national insurance contributions

Valuation point
This is the date and time when the fund manager revalues the investments in a fund, such as a unit trust.

Value added tax (VAT)
VAT is a tax that's charged on most goods and services that VAT-registered businesses provide in the UK. Most traders in the UK are registered for VAT. This means that registered traders have to charge their customers value added tax on any goods and services they supply which are not exempt. The VAT collected (less VAT they have been charged) is later paid to HMRC.


Waiver of premium
If a plan includes this benefit and the plan holder becomes seriously ill or disabled and cannot pay their premiums, the insurance company will pay the premium for them. This is called waiver of premium.

Whole-life assurance
This is life assurance cover which lasts the lifetime of the person whose life is covered.

A will is a legal document which people use to bequeath (leave as a gift) money and property when they die.

Winding up
Winding up a company is done by paying the company's creditors, and then distributing any money left (if any) among the members.

With-profits bonus
An amount that is added to a with-profits plan. Bonuses may be added during the plan, at the end of the plan or both.

With-profits plans
With-profits plans are a type of investment. The money that's put in is pooled with other investors' money and invested in a mixture of shares, bonds, property and cash. If the investment performs well, investors may get an annual bonus. There may also be a final bonus when the plan finishes. 

Working days
The days a business is open. So for Wesleyan this is Monday to Friday except bank holidays in England.


A measure of how much return an investment has given compared to the price paid for it. This is normally shown as an annual percentage.

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'WESLEYAN’ is a trading name of the Wesleyan Group of companies.

Wesleyan Assurance Society and Wesleyan Bank Ltd are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Wesleyan Financial Services Ltd, Wesleyan Unit Trust Managers Ltd, Practice Plan Ltd and DPAS Ltd are authorised and regulated by the Financial Conduct Authority.  Advice about investments, insurance and mortgages is provided by Wesleyan Financial Services Ltd.

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