This is the rate at which a final salary pension will grow, often based on a percentage or a fraction for the length of time an employee works for a company. Therefore the longer someone works for a company, the more their pension will grow.

People who are in a defined benefits pension scheme can make additional contributions into their pension to increase the pot.

The maximum a person can contribute to their pension every year tax free. As of 2018 the annual allowance is £40,000.

An insurance which someone may choose to take out on their pension which pays a set amount of money to them every year, either until they pass away (lifetime annuity) or a short fixed term (temporary annuity).

The rate at which pension income is measured on a annual basis. Some people may choose to opt for a fixed rate, which means a provider must offer that ratel

The government workplace pension scheme which is compulsory, although employees can opt out, employers have to offer the scheme to everyone they hire.

The value of a pension should someone wish to transfer to another company or scheme.

Often referred to as final salary pension scheme, it is a specific type of pension in which an employer/sponsor will agree to pay a specific amount of money to an employee upon their retirement until they pass away. The amount agreed could be based on a number of factors, such as a percentage of income, a lump sum, bonus or simply a specific figure. Often there will be determining factors such as, length of time within a company, position held, age and much more. Once someone begins to draw their defined benefits pension they are not allowed to transfer it.

A pension scheme which an employer will pay into but is based on contributions, unlike defined benefits pension, which is based on length of service, income or other factors.

Should someone not wish to purchase an annuity or take their full pension in one lump sum, they can invest it into a drawdown scheme. This will allow them to take their pension when they wish and the pot may still grow because it’s invested in the stock market, although there is also the risk it could fall.

Someone may choose to cap how much they can drawdown from their pension each year, or they could opt for the flexible drawdown option which allows them to take as much as they wish. To be eligible for the flexible option however, a person will need to have a pension income of £12,000 from other sources.

A savings fund which a person adds to while working, with the intention of drawing it to support their retirement. There are many different types of pensions funds which available and they all function differently.

Moving a pension from one company to another is called a pension transfer. There are a number of reasons people may choose to transfer their pension, including, moving jobs, releasing a 25% tax free lump sum, a better pension scheme and much more.

The totally amount of money a person has saved into a pension is called a pension pot. This could be spread over different pension schemes and companies.

The amount that can be withdrawn from a pension over it’s lifetime without incurring tax. Similar to annual allowance except it’s not restricted to 1 year.

An employee may agree to sacrifice part of their salary for certain benefits from their employer, including increased pension contributions.