Pension Jargons
To make it easy, let’s discuss the common terms related to Pension
1Pension Plan
An investment option for an income after retirement.
2Beneficiary (or Nominee)
The person/persons who benefit from the policy you take
3Fund Value
The amount due at the end of your investing period
4Annuity
A pension plan option that entitles you to a series of annual sums
5Investment Amount
The amount you invest in a policy Plan.
6Accumulation (or Investing) Period
The time period of your pension plan
7Lumpsum
An amount of money that is paid/invested in one large chunk on one occasion and based on availability, rather than several smaller payments.
8SIP
“Systematic Investment Plan”. It’s an investment strategy where a fixed amount is auto-debited from an investor’s account and invested at regular intervals.
9Vesting Age
The age at which you start receiving a pension
10Charges
There are certain charges you have to pay when you have a pension, which are usually taken at the time of investments. The charges are standard and nominal and will be levied by the relevant fund manager.
11Contributions
Money invested by you into your pension plan, it’s often referred to as ‘making a contribution’ or ‘making a pension contribution’.
12Income drawdown
Sometimes referred to as flexi-access drawdown (or simply ‘flexible income’), this is essentially a way of taking the money you’ve built up directly from your pension pot, as and when you need it. The money you haven’t yet taken out stays invested, so it has the potential to fall as well as rise in value. Overall you could get back more money than you would from an annuity, but your money could also run out during your lifetime, leaving you with no further income.