Abatement

1. A system under which the gratuity payable on retirement or death is reduced by an amount calculated by reference to the period during which a person has not contributed to a spouses' and children's pension scheme. Abatement is made even in respect of service before the introduction of such schemes, when it would not have been possible to contribute to them. In practice, abatement at retirement age is treated as a special contribution and relieved from tax.

2. The term "abatement" is also used to describe a reduction in the pension of a public servant who becomes re-employed in the public service after his/her pension has commenced - he/she cannot receive more than the equivalent of a full-time salary from both sources combined.

Accrual rate

The rate at which pension benefit is built up as pensionable service is completed in a defined benefit scheme. Often expressed as a fraction of pensionable salary e.g. 1/60th for each year of service.

Accrued benefits (also known as "accrued rights")

The benefits earned in respect of service up to a particular point in time, whether vested or not. These benefits may be calculated in relation to current earnings or projected earnings and allowance might also be made for increases provided for by the scheme rules or by legislation.

Active member

A member of a pension scheme who is in "reckonable service‟, i.e. currently in the employment to which the scheme relates, and who is included in the scheme for a pension benefit.

Actuarial assumptions

In a defined benefit scheme the set of assumptions made by the actuary as to rates of investment return, inflation, increase in earnings, mortality, etc which form the basis of an actuarial valuation or other actuarial calculation.

Actuarial deficiency/surplus

The difference between the value of the assets and the value of the liabilities under the particular valuation method and assumptions being used.

Actuarial funding certificate

A certificate that trustees of a defined benefit scheme must submit to the Pensions Authority at least every three years. It is signed by an actuary. The certificate demonstrates that the scheme complies with the funding standard under the Pensions Act, stating whether the scheme is capable of meeting specified liabilities in a statutory order of priority in the event of it being wound up on the date of the certificate.

Actuarial reduction

A reduction made to the accrued benefits of a member in line with any extra costs arising in the payment of benefits and/or in line with a deficit in the funding levels of pension scheme assets.

Actuarial valuation

An investigation by the actuary into the ability of a defined benefit pension scheme to meet its benefit promise.  This is usually done to calculate the recommended contribution rate, which takes account of the actuarial value of the assets and liabilities of the fund.  The actuary also needs to conduct this investigation to complete a funding certificate.

Actuarial value

Actuarial value is a mathematical calculation, often of the financial condition of a pension plan. It includes the computation of the present monetary value of benefits payable to present members, and the present monetary value of future employer and employee contributions, factoring in mortality among active and retired members and also to the rates of disability, retirement, withdrawal from service, salary and interest. It is the value of cash, investments, and other property belonging to a pension plan, as used by the actuary for the purpose of an actuarial valuation. The actuarial value of assets may represent an average value over time, and normally differs from the amount reported in the financial statements, which is a measurement as of the date of the statement of net assets.

Actuary

The individual appointed by the trustees of an occupational pension scheme to carry out valuations and advise on funding matters.

Added years

A provision of some defined benefit schemes for building extra pensionable service in return for additional contributions.

Additional voluntary contributions (AVCs)

Additional contributions paid by a member of an occupational pension scheme in order to secure benefits over and above those set out in the rules of the scheme. Where an occupational pension scheme does not provide access to an AVC facility, a standard PRSA must be offered for this purpose.

Administrator

A person regarded by Revenue as responsible for the management of a pension scheme. In a less formal sense, it means the person or body which manages the day-to-day administration of the scheme.

Age ground

Discrimination by reference to age is discrimination on the age ground.

Alternative arrangement

One of the available methods of choosing member trustees under the Pensions Act regulations. Under this method, members are asked to approve the employer's proposals for putting member trustees into place. If the members reject these proposals, an election under the standard arrangement takes place.

Annual report

The Pensions Act requires the trustees of a pension scheme to communicate information about the scheme, its administration and its financial position on an annual basis. The content of the annual report is specified in the Disclosure of Information Regulations. A shorter annual report called an alternative annual report may be compiled by small DB and DC schemes with less than 100 members (including deferred members).

Annuity

A guaranteed retirement income for life paid at stated intervals until a particular event (usually the death of the person receiving the annuity). Annuities are normally purchased from a life assurance company at retirement in return for a lump sum payment (from your pension fund).

Annuity rate(s)

The level of retirement income you receive will depend on annuity rates at the time of your annuity purchase.

Appropriate back contributions

Appropriate back contributions in relation to a scheme means -

(a)   in a case where the rules of the scheme so provide, the amount of member contributions due for the period concerned, at the appropriate contribution rate applying during that period calculated by reference to the salary applying at the time the contributions are being paid, or

(b)   in any other case, the amount of contributions due, calculated in accordance with the rules of the scheme, from the beginning of the period in respect of which admission to the scheme is granted.

Approved minimum retirement fund (AMRF)

Approved minimum retirement funds are post retirement investment accounts which allow the member on retirement to re-invest their pension until he/she reaches 75 years in exchange for additional tax reliefs and potentially greater investment returns. They are similar to an ARF, except that the original investment may not be withdrawn until age 75. Only the investment income and gains may be withdrawn prior to that age.

Approved retirement fund (ARF)

An approved retirement fund is an investment contract for the proceeds of any defined contribution scheme, additional voluntary contributions, PRSA, RAC, buy-out bond (where the benefits from a defined benefit or defined contribution scheme were transferred into a buy-out bond) or in the case of a 5% Director other retirement benefits that are not taken in the form of a lump sum or pension on retirement. Certain qualifying conditions must be met to be eligible to take out an ARF. Money is invested with a qualifying fund manager and may be invested in any manner you wish and will accumulate tax-free. Income tax is payable on any withdrawals from the fund.  A minimum withdrawal is assumed for tax purposes even if no withdrawal is made.

Approved scheme

An occupational pension scheme which is approved by Revenue under Chapter I of Part 30 of the Taxes Consolidation Act, 1997 (previously Chapter II, Part I of the Finance Act, 1972).  See also "exempt approved scheme".

Assets

The property, investments, cash and other items of which the trustees of a pension scheme are the legal owners.

Atypical employment

Employment which is other than full-time and permanent; usually understood to embrace part-time, temporary, fixed-term contract and seasonal working.

Auditor

An individual or firm appointed to report on the accounts of a company or other entity (such as a pension scheme).

Augmentation

This is when extra pension benefits are bought for a pension scheme member over and above normal scheme entitlements. They are usually paid for by the employer or the pension scheme.

Authorised trade union

A trade union which has a negotiating licence under the Trade Union Acts and which represents members of the pension scheme.

Average earnings scheme (also known as "career average scheme")

A defined benefit scheme where pensionable salary is defined by the average of your earnings throughout your career rather than the final years earnings.