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the Jargon

Administration fee

Cheviot charges an administration fee for additional services, including some of the new flexible options.

Annual Allowance

is the maximum contributions that benefit from tax relief. It is currently £40,000 per year. If you take a lump sum or income which is subject to tax, this reduces to £4,000 per year.


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


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.

Benefits statement

A statement or estimate of benefits payable in respect of an individual's membership of a pension scheme. These are normally issued annually.

Carry Forward

You may be able to use unused Annual Allowance from the previous three tax years if you think you are going to exceed the Annual Allowance or want to maximise your contributions. Click here for more information.

Cash balance scheme

The With Profit Section of the Cheviot pension has been reclassified as a cash balance scheme. Member and employer contributions grow by a guaranteed amount. At retirement, the accumulated fund can be used to secure an income with an external provider. A cash balance scheme is subject to the Scheme Specific Funding requirements. Click here for more information.

Cheviot online account

Members can log in to a secure system and see their account details, including contributions, fund choices and fund values and make changes to these. To request a new password click here.

Cheviot pension

comprises of three sections: the With Profits Section, the Money Purchase Section and Life Cover Only Section.

Contracting Out

Opting out (in exchange for lower National Insurance contributions) of the second tier top up pension, which is based on your earnings and is provided in addition to the Basic State Pension. Your occupational or personal pension provides an extra pension instead.

Defined Benefit Scheme

is another term for Final Salary Scheme.

Defined Contribution Scheme

is another term for Money Purchase Scheme.

Enhanced annuity

is a term applied to an annuity, or a secure income, which is enhanced because you have some health problems. If you are eligible for an enhanced annuity, you generally get a higher income.

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.

Final Salary Scheme

is a scheme which provides benefits based on your salary at retirement or when you left the scheme. The amount of income at retirement is known. If you leave the scheme before retirement, the pension will usually increase from the date you leave to the date you take your benefits. A final salary scheme is sponsored by an employer who pays the balance of cost of providing the benefits. Final salary schemes are sometimes called defined benefit schemes.

Flexi access

see 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. Sometimes called flexi access.

Key Information Document

The Key Information Document shows details of your account including your Target Retirement Date, your pensionable salary, your contribution levels and your invest choices.

Lifetime Allowance

is the cap on the total pension benefit you can receive without being subject to further tax and continues to apply up to age 75. It is currently £1,055,000 for the tax year 2019/20.

Lump sum from a pension arrangement

is also called an uncrystallised funds pension lump sum.
See also Pension Commencement Lump Sum and Stand Alone Lump Sum.

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

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

Money Purchase annual allowance

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 £4,000 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 Scheme

is a scheme which provides a fund at retirement rather than a guaranteed income. The level of income is not known and will vary depending on which options you choose. If you choose to access your fund early, it is likely to be smaller. Money purchase schemes are sometimes called defined contribution schemes.

Money Purchase Section

is a Section of the Cheviot pension. Most members are invested in the Money Purchase Section, which used to be called the Unit Linked Section.

Net Pay Arrangement

A net pay arrangement provides full tax relief through the payroll. If members do not pay tax, they do not benefit from tax relief on their contributions.

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 key information sheet with your benefit statements.

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.

The Pensions Advisory Service

(or TPAS) , provides free, professional, independent and impartial help with pensions. Click here for more information.

Pension Input Period

is the period over which the amount of pension saving (pension input amount) under an arrangement is measured. The pension input period is between 6th April to 5th April, now aligning with the tax year. This includes both contributions to money purchase or defined contribution schemes or the value of additional pension earned in a final salary or defined benefit scheme. Click here for more information.

Pension Protection Fund

The Pension Protection Fund was established by Government to pay compensation to members of eligible defined benefit pension schemes, when there is a qualifying insolvency event in relation to the employer and where there are insufficient assets in the pension scheme to cover Pension Protection Fund levels of compensation (usually 90% subject to a benefits cap). More information about the Pension Protection Fund is available at

Pensions Wise

is the free Government Service that helps you understand your options.


is usually an insurance company or other financial institution. Benefits with a financial institution, including an insurance company, are protected by the Financial Services Compensation Scheme.

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 members do not pay tax, they still benefit from basic rate tax relief. Higher rate tax payers claim the higher rate relief via their tax return.

Secure income

is often called an annuity.

Small pot lump sum

is available if your fund is less than £10,000. If you take a small pot lump sum, the Annual Allowance does not reduce to £4,000 for future contributions. Not available from the Cheviot Pension.

Stand Alone Lump Sum

is only available if you were entitled to take your entire fund at 6 April 2006 as a tax free lump sum. We will let you know when we provide you with a retirement quote. Benefits taken in this way are completely tax free but will trigger the Money Purchase annual allowance.

State Pension

is the pension you get from the State in respect of National Insurance contributions.

State Pension Age

is the date when you start to receive your State Pension.

Target Retirement Date

is the date when you plan to start to access your pensions savings. It does not need to be the same as your Normal Retirement Date or the date you stop working.

Tax relief

under current legislation, you and your employer get tax relief on any contributions you make to a pension arrangement, subject to the Annual Allowance. In some circumstances this limit is reduced to £4,000 per year. See Annual Allowance.
If you don't pay tax, the Cheviot Pension may not be an appropriate scheme for you, as you will not benefit from tax relief on your contributions.

Tracing service

the Government provides a tracing service to help you find previous pension schemes.

Trivial commutation

is when you can take all your benefits as a lump sum from a final salary scheme if the value of your benefits is less than £30,000. The new flexibilities mean this is no longer relevant under a money purchase scheme.

Uncrystallised funds pension lump sum

is a lump sum from a money purchase scheme available under the new flexibilities.

With Profits

is a Section of the Cheviot pension which closed to new contributions at the end of 2002. Many members will have benefits in both the With Profits and Money Purchase Sections. Contributions in the With Profits Section receive a guaranteed rate of return each year up to your Normal Retirement Date, or earlier retirement. The new regulations mean these can be treated separately at retirement. The With Profits Section is no longer a money purchase scheme following a change in legislation in 2014. It now provides cash balance benefits, which include guaranteed rates of return.

The information on this page is provided in good faith but is not legal or financial advice or binding on the Trustee. The trust deed and rules will override in the event of any inconsistency.

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