Resources
Private Pension Glossary
Private Pensions:
OECD Classification and Glossary
| Term | Definition | Related terms | Identical terms |
| 1. Accrual factor | ➔ | Accrual rate | |
| 2. Accrual rate | The rate at which pension benefits builds up as member service is completed in a defined benefit plan. | Defined benefit plan | Accrual factor |
| 3. Accrued benefits | The amount of accumulated pension benefits of a pension plan member on the basis of years of service. | Accrued rights | |
| 4. Accrued rights | ➔ | Accrued benefits | |
| 5. Accumulated assets | The total value of assets accumulated in a pension fund. | Accumulated contributions | |
| 6. Accumulated Benefit Obligation (ABO) | The actuarial present value of benefits, vested and non-vested, attributed to the pension formula to employee service rendered to a particular date, based on current salaries. | Projected Benefit Obligation (PBO) | |
| 7. Accumulated contributions | ➔ | Accumulated assets | |
| 8. Active member | A pension plan member who is making contributions (and/or on behalf of whom contributions are being made) and is accumulating assets. | Pension plan member | |
| 9. Actuarial assumptions | The various estimates (including assumptions related to changes in longevity, wage, inflation, returns on assets, etc.) that the actuary makes in formulating the actuarial valuation. | Actuary, Actuarial valuation | |
| 10. Actuarial deficiency | In a situation when the actuarial value of a pension fund’s assets is less than the actuarial liability, the measure of this value. | Actuarial surplus, Actuarial valuation | Deficiency |
| 11. Actuarial increase | The amount of benefit increase the pension fund member receives – calculated based on actuarial assumptions – in case of deferred retirement. | Actuarial assumptions, Deferred retirement | |
| 12. Actuarial liability | The amount calculated based on actuarial assumptions that represents the present value of the pension benefits accrued in a pension plan. | Actuarial valuation | |
| 13. Actuarial reduction | The amount of benefit decrease the pension plan member receives – calculated based on actuarial assumptions – in case of early retirement. | Actuarial assumptions, Early retirement | |
| 14. Actuarial report | The report prepared by the actuary following the actuarial valuation that describes the financial position of the pension fund. | Actuarial valuation | |
| 15. Actuarial surplus | In a situation when the actuarial liability is less than the actuarial value of a pension fund’s assets, the measure of this value. | Actuarial deficiency, Overfunding, Actuarial valuation | Surplus |
| 16. Actuarial valuation | A valuation carried out by an actuary on a regular basis, in particular to test future funding or current solvency of the value of the pension fund’s assets with its liabilities. | Actuarial deficiency, Actuarial surplus | Valuation |
| 17. Actuary | The person or entity whose responsibility, as a minimum, is to evaluate present and future pension liabilities in order to determine the financial solvency of the pension plan, following recognised actuarial and accounting methods. | ||
| 18. Administration | The operation and oversight of a pension fund. | ||
| 19. Annual pensions estimate | ➔ | Benefit statement | |
| 20. Annual report | A report prepared each year by the pension fund, which informs of its operation, and other information whereby the trustees of pension funds inform all interested parties. | ||
| 21. Annuitant | The person who is covered by an annuity and who will normally receive the benefits of the annuity. | Annuity | |
| 22. Annuity | A form of financial contract mostly sold by life insurance companies that guarantees a fixed or variable payment of income benefit (monthly, quarterly, half-yearly, or yearly) for the life of a person(s) (the annuitant) or for a specified period of time. It is different than a life insurance contract which provides income to the beneficiary after the death of the insured. An annuity may be bought through instalments or as a single lump sum. Benefits may start immediately or at a pre-defined time in the future or at a specific age. | Annuity rate | Pension annuity |
| 23. Annuity rate | The present value of a series of payments of unit value per period payable to an individual that is calculated based on factors such as the mortality of the annuitant and the possible investment returns. | Unisex annuity rate, Unistatus annuity rate | |
| 24. Asset allocation | The spread of fund investments among different investment forms. | ||
| 25. Asset management | The act of investing the pension fund’s assets following its investment strategy. | Asset manager | |
| 26. Asset manager | The individual(s) or entity(ies) endowed with the responsibility to physically invest the pension fund assets. Asset managers may also set out the investment strategy for a pension fund. | Asset management | |
| 27. Assets | ➔ | Liabilities | Pension assets |
| 28. Auditor | A qualified individual or entity endowed with the task of conducting audit. | ||
| 29. Average earnings scheme | A scheme where the pension benefits earned for a year depend on how much the member’s earnings were for the given year. | Career average scheme | |
| 30. Basic pension | ➔ | Basic state pension | |
| 31. Basic state pension | A non-earning related pension paid by the State to individuals with a minimum number of service years. | Basic pension | |
| 32. Beneficiary | An individual who is entitled to a benefit (including the plan member and dependants). | Pension plan beneficiary | |
| 33. Benefit | Payment made to a pension fund member (or dependants) after retirement. | Pension benefit, Retirement benefit | |
| 34. Benefit statement | A statement of the pension benefits an individual has earned (in a defined benefit plan) or a prediction of what the final pension might be (in a defined contribution plan). | Annual pension estimate | |
| 35. Book reserved pension plans | Sums entered in the balance sheet of the plan sponsor as reserves or provisions for occupational pension plan benefits. Some assets may be held in separate accounts for the purpose of financing benefits, but are not legally or contractually pension plan assets. Most OECD countries do not allow this method of financing. Those that do usually require these plans to be insured against bankruptcy of the plan sponsor through an insolvency guaranty arrangement. | Funded pension plans, Unfunded pension plans | |
| 36. Career average scheme | ➔ | Average earnings scheme | |
| 37. Closed pension funds | Funds that support only pension plans that are limited to certain employees. (e.g. those of an employer or group of employers). | Open pension fund | |
| 38. Company pension plan | ➔ | Employer’s pension plan, Occupational pension plan | |
| 39. Contribution | A payment made to a pension plan by a plan sponsor or a plan member. | Pension contribution | |
| 40. Contribution base | The reference salary used to calculate the contribution. | ||
| 41. Contribution holiday | A period when the contributions to a pension scheme are put on hold, the most common reason for this being a situation of overfunding. | Overfunding | |
| 42. Contribution rate | The amount (typically expressed as a percentage of the contribution base) that is needed to be paid into the pension fund. | Contribution base | Funding rate |
| 43. Contributory pension scheme | A pension scheme where both the employer and the members have to pay into the scheme. | Non-contributory, pension scheme | |
| 44. Corporate trustee | A company that acts as a trustee. | Trustee | |
| 45. Custodian | The entity responsible, as a minimum, for holding the pension fund assets and for ensuring their safekeeping. | ||
| 46. DB system | ➔ | Defined benefit plans | |
| 47. DC system | ➔ | Defined contribution plans | |
| 48. Deferred pension | A pension arrangement in which a portion of an employee’s income is paid out at a date after which that income is actually earned. | Deferred pensioner, Deferred retirement | |
| 49. Deferred pensioner | An individual who draws the pension benefits later than their normal retirement age. | Deferred pension, Deferred retirement | |
| 50. Deferred retirement | A situation when an individual decides to retire later and draw the pension benefits later than their normal retirement age. | Deferred pension, Deferred pensioner, Early retirement | Late retirement, Postponed retirement |
| 51. Defered member | A pension plan member that no longer contributes to or accrues benefits from the plan but has not yet begun to receive retirement benefits from that plan. | Inactive member | |
| 52. Deficiency | ➔ | Actuarial deficiency | |
| 53. Defined benefit (DB) occupational pension plans | Occupational plans other than defined contributions plans. DB plans generally can be classified into one of three main types “traditional”, “mixed” and “hybrid” plans. | “Traditional” DB plans, “Hybrid” DB plans, “Mixed” DB plans, Defined contribution (DC) occupational pension plans | |
| 54. “Traditional” DB plan | A DB plan where benefits are linked through a formula to the members’ wages or salaries, length of employment, or other factors. | Defined benefit (DB) occupational pension plans, “Hybrid” DB plans, “Mixed” DB plans, Defined contribution (DC) occupational pension plans | |
| 55. “Hybrid” DB plan | A DB plan where benefits depend on a rate of return credited to contributions, where this rate of return is either specified in the plan rules, independently of the actual return on any supporting assets (e.g. fixed, indexed to a market benchmark, tied to salary or profit growth, etc.), or is calculated with reference to the actual return of any supporting assets and a minimum return guarantee specified in the plan rules. | Defined benefit (DB) occupational pension plans, “Traditional” DB plans, “Mixed” DB plans, Defined contribution (DC) occupational pension plans | |
| 56. “Mixed” DB plans | DB plans that has two separate DB and DC components but which are treated as part of the same plan. | Defined benefit (DB) occupational pension plans, “Traditional” DB plans, “Hybrid” DB plans, Defined contribution (DC) occupational pension plans | |
| 57. Defined contribution (DC) occupational pension plans |
Occupational pension plans under which the plan sponsor pays fixed contributions and has no legal or constructive obligation to pay further contributions to an ongoing plan in the event of unfavourable plan experience. | Defined benefit (DB), Occupational pension plans, “Traditional” DB plans, “Hybrid” DB plans, “Mixed” DB plans | |
| 58. Dependant | An individual who is financially dependent on a (passive or active) member of a pension scheme. | ||
| 59. Dependency ratio | Typically defined as the ratio of those of nonactive age to those of active age in a given population. | System dependency ratio | |
| 60. Disclosure regulations | The rules the pension plan must follow when providing information on the plan operation to its members and the supervisory authority. | ||
| 61. Early retirement | A situation when an individual decides to retire earlier later and draw the pension benefits earlier than their normal retirement age. | Deferred retirement | Early leaver |
| 62. EET system | A form of taxation of pension plans, whereby contributions are exempt, investment income and capital gains of the pension fund are also exempt and benefits are taxed from personal income taxation. | TEE system, ETE system | |
| 63. Employer’s pension plan | ➔ | Occupational pension plans, Company pension plans | |
| 64. ETE system | A form of taxation whereby contributions are exempt, investment income and capital gains of the pension fund are taxed and benefits are also exempt from personal income taxation. | EET system TEE system |
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| 65. Fair value | The price at which an asset would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. | Market value | |
| 66. Final average earnings | The fund member’s earnings that are used to calculate the pension benefit in a defined benefit plan; it is typically the earnings of the last few years prior to retirement. | ||
| 67. Final earnings scheme | ➔ | Final salary scheme | |
| 68. Final salary scheme | A type of defined benefit plan, whereby the pension benefit is typically based on the last few years’ earnings before retirement. | Defined benefit plan, Final average earnings, Flat rate scheme, Earnings related pensions, Final earnings scheme | |
| 69. Flat rate scheme | A type of defined benefit scheme, whereby the pension benefit is only based on the length of membership in the scheme and is not affected by earnings. | Defined benefit plan, Final salary scheme | |
| 70. Fund member | An individual who is either an active (working or contributing, and hence actively accumulating assets) or passive (retired, and hence receiving benefits), or deferred (holding deferred benefits) participant in a pension plan. | Active member | Member, Pension plan member, Pension fund member, Plan member |
| 71. Funded pension plans | Occupational or personal pension plans that accumulate dedicated assets to cover the plan’s liabilities. | Pay-As-You-Go (PAYG) plan, Unfunded pension plans, Book reserved, pension plans | |
| 72. Funding | The act of accumulating assets in order to finance the pension plan. | ||
| 73. Funding level | The relative value of a scheme’s assets and liabilities, usually expressed as a percentage figure. | Overfunding, Underfunding, Funding ratio | Level of funding |
| 74. Funding plan | The timing of payments of contributions with the aim of meeting the cost of a given set of benefits under a defined benefit scheme. Possible objectives of a funding plan might be that, if the actuarial assumptions are borne out: a) a specified funding level should be reached by a given date; b) the level of contributions should remain constant, or should after a planned period be the standard contribution rate required by the valuation method used in the actuarial valuation. |
Actuarial valuation | |
| 75. Funding rate | ➔ | Contribution rate | |
| 76. Funding ratio | The funding level expressed as a fraction. | Funding level | |
| 77. Funding rules | Regulation that requires the maintenance of a certain level of assets in a pension fund in relation to pension plan liabilities. | ||
| 78. Governing body (of the pension fund) | Governing body (of the pension fund): this is the person(s) ultimately responsible for managing the pension fund with the overriding objective of providing a secure source of retirement income. In cases where operational and oversight responsibilities are split between different committees within an entity, the governing body is the executive board of the entity. Where the pension fund is not a legal entity, but managed directly by a financial institution, that institution’s board of directors is also the governing body of the pension fund. | Administrator | |
| 79. Gross rate of return The rate of return of an asset or portfolio over a specified time period, prior to discounting any fees of commissions. | Rate of return Net rate of return |
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| 80. Group pension funds | Multi-employer pension funds that pool the assets of pension plans established for related employers. | Collective pension funds, Related member funds, Individual pension funds, Industry pension funds, Multi-employer pension funds, Single employer pension funds | |
| 81. Guarantee | ➔ | Pension guarantee | |
| 82. Guaranteed annuity | An annuity that is paid until the death of the annuitant. If this occurs prior to a certain date, the annuity is then paid to their dependants until that date. | Annuity | |
| 83. Inactive member | ➔ | Deferred member | |
| 84. Income replacement rate | ➔ | Replacement rate | |
| 85. Indexation | The method with which pension benefits are adjusted to take into account changes in the cost of living (e.g. prices and/or earnings). | Price indexation, Wage indexation, Mixed indexation | |
| 86. Individual pension funds |
A pension fund that comprises the assets, of a single member and his/her beneficiaries, usually in the form of an individual account. | Group pension funds, Collective pension funds, Related member funds | |
| 87. Industry pension funds | Funds that pool the assets of pension plans established for unrelated employers who are involved in the same trade or businesses. | Collective pension funds, Related member funds, Individual pension funds, Group pension funds, Multi-employer pension funds, Single employer pension funds | |
| 88. Late retirement ➔ Deferred retirement Postponed retirement |
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| 89. Level of funding | ➔ | Funding level | |
| 90. Liabilities (value of) | Value of liabilities. | Assets | |
| 91. Mandatory contribution |
The level of contribution the member (or an entity on behalf of the member) is required to pay according to scheme rules. | Voluntary Contribution | |
| 92. Mandatory occupational plans |
Participation in these plans is mandatory for employers. Employers are obliged by law to participate in a pension plan. Employers must set up (and make contributions to) occupational pension plans which employees will normally be required to join. Where employers are obliged to offer an occupational pension plan, but the employees’ membership is on a voluntary basis, these plans are also considered mandatory. | Occupational pension plans, Voluntary occupational pension plans | |
| 93. Mandatory personal pension plans |
These are personal plans that individuals must join or which are eligible to receive mandatory pension contributions. Individuals may be required to make pension contributions to a pension plan of their choice normally within a certain range of choices or to a specific pension plan. | Personal pension plans, Voluntary personal pension plans | |
| 94. Market value | The price at which an asset would change hands if it sold on the open market. | Fair value | |
| 95. Member | ➔ | Active member | Fund member, Pension plan member, Plan member, Pension fund member |
| 96. Minimum benefit | ➔ | Minimum pension | |
| 97. Minimum pension | The minimum level of pension benefits the plan pays out in all circumstances. | Minimum benefit | |
| 98. Mixed indexation | The method with which pension benefits are adjusted taking into account changes in both wages and prices. | Wage indexation, Price indexation | Swiss indexation |
| 99. Money purchase plan | A pension plan providing benefits on a money purchase basis (ie the determination of an individual member’s benefits by reference to contributions paid into the scheme in respect of that member, usually increased by an amount based on the investment return on those contributions) | Defined contribution plan | |
| 100. Mortality table | A chart showing rate of death at each age. | Unisex mortality table | |
| 101. Multi-employer pension funds | Funds that pool the assets of pension plans established by various plan sponsors. There are three types of multi-employer pension funds: a) for related employers i.e. companies that are financially connected or owned by a single holding group (group pension funds); b) for unrelated employers who are involved in the same trade or business (industry pension funds); c) for unrelated employers that may be in different trades or businesses (collective pension funds). |
Group pension funds, Individual pension funds, Industry pension funds, Multi-employer pension funds, Related pension funds, Single employer pension funds | |
| 102. Net rate of return | The rate of return of an asset or portfolio over a specified time period, after discounting any fees of commissions. | Rate of return, Gross rate of return | |
| 103. Non-contributory pension scheme |
A pension scheme where the members do not have to pay into the scheme. | Contributory pension scheme | |
| 104. Normal pension age | ➔ | Normal retirement age, Retirement age | |
| 105. Normal retirement age | Age from which the individual is eligible for pension benefits. | Normal pension age, Retirement age | |
| 106. Occupational pension plans | Access to such plans is linked to an employment or professional relationship between the plan member and the entity that establishes the plan (the plan sponsor). Occupational plans may be established by employers or groups thereof (e.g. industry associations) and labour or professional associations, jointly or separately. The plan may be administered directly by the plan sponsor or by an independent entity (a pension fund or a financial institution acting as pension provider). In the latter case, the plan sponsor may still have oversight responsibilities over the operation of the plan. | Mandatory occupational pension plans, Voluntary occupational pension plans | Company pension plans, Employer’s pension plans |
| 107. Open pension funds | Funds that support at least one plan with no restriction on membership. | Closed pension funds | |
| 108. Overfunding | The situation when the value of a plan’s assets are more than its liabilities, thereby having an actuarial surplus. | Funding level, Actuarial surplus, Underfunding | |
| 109. Oversight committee | ➔ | Supervisory body | |
| 110. Participant | ➔ | Fund member | |
| 111. Pay-As-You-Go (PAYG) plan | ➔ | Funded pension plans | Unfunded pension plans |
| 112. Pension | ➔ | Benefit | |
| 113. Pension annuity | ➔ | Annuity | |
| 114. Pension assets | All forms of investment with a value associated to a pension plan. | Liabilities | |
| 115. Pension benefit | ➔ | Benefit Retirement benefit |
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| 116. Pension contribution | ➔ | Contribution | |
| 117. Pension funds | The pool of assets forming an independent legal entity that are bought with the contributions to a pension plan for the exclusive purpose of financing pension plan benefits. The plan/fund members have a legal or beneficial right or some other contractual claim against the assets of the pension fund. Pension funds take the form of either a special purpose entity with legal personality (such as a trust, foundation, or corporate entity) or a legally separated fund without legal personality managed by a dedicated provider (pension fund management company) or other financial institution on behalf of the plan/fund members. | ||
| 118. Pension fund administrator | The individual(s) ultimately responsible for the operation and oversight of the pension fund. | Governing body | |
| 119. Pension fund governance | The operation and oversight of a pension fund. The governing body is responsible for administration, but may employ other specialists, such as actuaries, custodians, consultants, asset managers and advisers to carry out specific operational tasks or to advise the plan administration or governing body. | ||
| 120. Pension fund managing company | A type of administrator in the form of a company whose exclusive activity is the administration of pension funds. | ||
| 121. Pension fund member | ➔ | Member, Pension plan member | |
| 122. Pension insurance contracts | Insurance contracts that specify pension plans contributions to an insurance undertaking in exchange for which the pension plan benefits will be paid when the members reach a specified retirement age or on earlier exit of members from the plan. Most countries limit the integration of pension plans only into pension funds, as the financial vehicle of the pension plan. Other countries also consider the pension insurance contract as the financial vehicle for pension plans. | Pensions funds | |
| 123. Pension plan | A legally binding contract having an explicit retirement objective (or – in order to satisfy tax-related conditions or contract provisions – the benefits can not be paid at all or without a significant penalty unless the beneficiary is older than a legally defined retirement age). This contract may be part of a broader employment contract, it may be set forth in the plan rules or documents, or it may be required by law. In addition to having an explicit retirement objective, pension plans may offer additional benefits, such as disability, sickness, and survivors’ benefits. | Pension funds | Pension scheme |
| 124. Pension plan administrator | The individual(s) ultimately responsible for the operation and oversight of the pension plan. | ||
| 125. Pension plan administrator | ➔ | Administrator | |
| 126. Pension plan administrator | ➔ | Administrator | |
| 127. Pension plan beneficiary | ➔ | Beneficiary | |
| 128. Pension plan member | ➔ | Fund member Member Pension fund member Plan member |
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| 129. Pension plan sponsor | An institution (e.g. company, industry/employment association) that designs, negotiates, and normally helps to administer an occupational pension plan for its employees or members. | Plan sponsor | |
| 130. Pension regulator | A governmental authority with competence over the regulation of pension systems. | Pension supervisor | |
| 131. Pension scheme | ➔ | Pension funds | Pension plan, Retirement plan |
| 132. Pension supervisor | A governmental authority with competence over the supervision of pension systems. | Pension regulator | |
| 133. Pensionable age | ➔ | Normal retirement age | |
| 134. Pensionable service | ➔ | Service period | |
| 135. Individual pension plans | ➔ | Personal pension plans |
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| 136. Personal pension plans | Access to these plans does not have to be linked to an employment relationship. The plans are established and administered directly by a pension fund or a financial institution acting as pension provider without any intervention of employers. Individuals independently purchase and select material aspects of the arrangements. The employer may nonetheless make contributions to personal pension plans. Some personal plans may have restricted membership. | Mandatory personal plans, Voluntary personal plans | Personal plans |
| 137. Phased retirement | A situation when an individual is allowed to retire and receive retirement benefits while continuing to work (usually part-time) and contributing towards the retirement scheme. | ||
| 138. Plan member | ➔ | Member, Pension fund member | |
| 139. Plan sponsor | ➔ | Pension plan sponsor | |
| 140. Postponed retirement | ➔ | Deferred retirement, Late retirement | |
| 141. Price indexation | The method with which pension benefits are adjusted taking into account changes in prices. | Wage indexation | |
| 142. Private pension funds | A pension fund that is regulated under private sector law. | Public pension funds | |
| 143. Private pension plans | A pension plan administered by an institution other than general government. Private pension plans may be administered directly by a private sector employer acting as the plan sponsor, a private pension fund or a private sector provider. Private pension plans may complement or substitute for public pension plans. In some countries, these may include plans for public sector workers. | Public pension plans, Pension plans | |
| 144. Projected Benefit Obligation (PBO) | The actuarial present value of vested and non-vested benefits attributed to the plan through the pension benefit formula for service rendered to that date based on employees’ future salary levels. | Accumulated Benefit Obligation (ABO) | |
| 145. Protected pension plan | A plan (personal pension plan or occupational defined contribution pension plan) other than an unprotected pension plan. The guarantees or promises may be offered by the pension plan/fund itself or the plan provider (e.g.deferred annuity, guaranteed rate of return). | Unproted pension plan | |
| 146. Public pension funds | Pension funds that are regulated under public sector law. | Private pension funds, Pension funds | |
| 147. Public pension plans | Social security and similar statutory programmes administered by the general government (that is central, state, and local governments, as well as other public sector bodies such as social security institutions). Public pension plans have been traditionally PAYG financed, but some OECD countries have partial funding of public pension liabilities or have replaced these plans by private pension plans. | Private pension plan, Pension plan | |
| 148. Qualifying period | ➔ | Waiting period | |
| 149. Rate of return | The income earned by holding an asset over a specified period. | Gross rate of return, Net rate of return | |
| 150. Regulatory authority | ➔ | Supervisory authority | Pension regulator |
| 151. Related member funds | Pension funds that comprise the assets of a limited number of related members who are all in the governing body of the pension fund. | Collective pension funds, Group pension funds, Individual pension funds | |
| 152. Replacement rate | The ratio of an individual’s (or a given population’s) (average) pension in a given time period and the (average) income in a given time period. | Income replacement rate | |
| 153. Retirement age | ➔ | Normal retirement age, Normal pension age | |
| 154. Retirement benefit | ➔ | Benefit, Pension benefit | |
| 155. Retirement plan | ➔ | Pension plan, Pension scheme | |
| 156. Separate accounts | A pension fund that is legally segregated from both the plan sponsor and a financial institution that acts as the manager of the fund on behalf of the plan member. | Pension fund, Plan sponsor, Plan member | |
| 157. Service period | The length of time an individual has earned rights to a pension benefits. | Pensionable service | |
| 158. Single employer pension funds | Funds that pool the assets of pension plans established by a single sponsor. | Collective pension funds, Related member funds, Individual pension funds, Industry pension funds, Multi-employer pension funds, Group pension funds | |
| 159.Superannuation | ➔ | Pension | |
| 160. Supervisory authority | ➔ | Regulatory authority | Pension supervisor |
| 161. Supervisory board | The individual(s) responsible for monitoring the governing body of a pension entity. | Oversight committee | |
| 162. Surplus | ➔ | Actuarial surplus | |
| 163. Swiss indexation | ➔ | Mixed indexation | |
| 164. System dependency ratio | Typically defined as the ratio of those receiving pension benefits to those accruing pension rights. | Dependency ratio | |
| 165. TEE system | A form of taxation of pension plans whereby contributions are taxed, investment income and capital gains of the pension fund are exempt and benefits are also exempt from personal income taxation. | EET system, ETE system | |
| 166. Termination | ➔ | Winding up | |
| 167. TPA (Third Party Administrator) | An entity other than a plan sponsor, that is responsible for administering an occupational pension plan. | ||
| 168. Trust | A legal scheme, whereby named people (termed trustees) hold property on behalf of other people (termed beneficiaries). |
Trustee | |
| 169. Trustee | A person or a company appointed to carry out the tasks of the trust. | Corporate trustee, Trust | |
| 170. Underfunding | The situation when the value of a plan’s assets are less than its liabilities, thereby having an actuarial deficiency. | Funding level, Actuarial deficiency, Overfunding | |
| 171. Unfunded pension plans | Plans that are financed directly from contributions from the plan sponsor or provider and/or the plan participant. Unfunded pension plans are said to be paid on a current disbursement method (also known as the pay as you go, PAYG, method). Unfunded plans may still have associated reserves to cover immediate expenses or smooth contributions within given time periods. Most OECD countries do not allow unfunded private pension plans. | Funded pension plans | PAYG plan |
| 172. Unisex annuity rate | Annuity rates that are the same for men and women. | Annuity rate | |
| 173. Unisex mortality table | Mortality table where the rate of death is equal for males and females. | Mortality table | |
| 174. Unistatus annuity rate | Annuity rates which are the same for both men and women and for all family status. | Annuity rate | |
| 175. Unprotected pension plan | A plan (personal pension plan or occupational defined contribution pension plan) where the pension plan/fund itself or the pension provider does not offer any investment return or benefit guarantees or promises covering the whole plan/fund. | Protected pension plan |
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| 176. Valuation | ➔ | Actuarial valuation | |
| 177. Vested Benefit Obligation (VBO) | The actuarial present value, using current salary levels, of vested benefits only. | ||
| 178. Vested benefits | ➔ | Vested rights | |
| 179. Vested rights | Deferred pensions for deferred pensioners, benefits accrued to active members and benefits of passive members. | Vested benefits | |
| 180. Voluntary contribution | An extra contribution paid in addition to the mandatory contribution a member can pay to the pension fund in order to increase the future pension benefits. | Contribution, Mandatory Contribution | |
| 181. Voluntary occupational pension plans | The establishment of these plans is voluntary for employers (including those in which there is automatic enrolment as part of an employment contract or where the law requires employees to join plans set up on a voluntary basis by their employers). In some countries, employers can on a voluntary basis establish occupational plans that provide benefits that replace at least partly those of the social security system. These plans are classified as voluntary, even though employers must continue sponsoring these plans in order to be exempted (at least partly) from social security contributions. | Occupational pension plans, Mandatory occupational pension plans | |
| 182. Voluntary personal pension plans | Participation in these plans is voluntary for individuals. By law individuals are not obliged to participate in a pension plan. They are not required to make pension contributions to a pension plan. Voluntary personal plans include those plans that individuals must join if they choose to replace part of their social security benefits with those from personal pension plans. | Personal plans, Mandatory personal, pension plans | |
| 183. Wage indexation | The method with which pension benefits are adjusted taking into account changes in wages. | Price indexation | |
| 184. Waiting period | The length of time an individual must be employed by a particular employer before joining the employer’s pension scheme. | Qualifying period | |
| 185. Winding-up | The termination of a pension scheme by either providing (deferred) annuities for all members or by moving all its assets and liabilities into another scheme. |
NOTE: In order to develop a common understanding and vocabulary, under the aegis of the Working Party on Private Pensions (WPPP), ongoing work on the “ OECD Pensions Glossary ”* includes an expanded list of terms, proposed definitions and related vocabularies. Some of the definitions are extracted from the OECD Secretariat document “Revised taxonomy for pension plans, pension funds and pension entities”. For further information, please contact Jean-Marc Salou, Financial Affairs Division, Directorate for Financial and Enterprise Affairs, Organisation for Economic Cooperation and Development (OECD) at jean-marc.salou@oecd.org.
* We are grateful to Zoltan Vajda (from the Hungarian Financial Authority, “Pénzügyi Szervezetek Állami Felügyelete”), who in 2002 prepared a first version of this glossary under the WPPP’s programme of work.
ISBN 92-64-01699-6
Private Pensions: OECD Classification and Glossary
Les pensions privées : Classification et glossaire de l’OCDE © OECD/OCDE 2005