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Please see below for an explanation of some key technical terms which are are used in connection with pensions and your Rothesay policy.


A professional person who is qualified to calculate risks and probabilities relating to insurance and pensions.


An annuity (also called lifetime annuity or pension annuity) provides guaranteed regular income for the rest of your life. Generally, you cannot change or cash in your annuity. The pension you could receive from your Rothesay policy is a lifetime annuity.

Additional Voluntary Contributions (AVCs)

Any defined contribution or cash balance pension savings that were transferred from your previous pension arrangement to Rothesay with your defined benefit pension benefits. Rothesay offers a selection of unit-linked funds which are managed on our behalf via an arrangement with BlackRock. Your AVCs are invested in one or more of these funds. You may ask Rothesay to make changes to the way your AVCs are invested within the choices available at any time. The value of your AVC funds is not guaranteed and may increase or decrease in line with the performance of the underlying unit-linked funds which they are invested in. Your AVCs can be used to provide additional benefits when you take the other benefits from your policy.

Contracted out

Contracting out means opting out of the State Second Pension (S2P) which, before 2002, was known as the State Earnings-Related Pension Scheme (SERPS). It means that you pay less National Insurance. Contracting out ceased to exist when the single tier State Pension was introduced in 2016. Any time spent contracted out will be deducted from your State Pension entitlement, but it is possible to rebuild this entitlement.

Death benefits

Any benefits payable to your spouse or other dependant after your death.

Defined benefit (DB)

A type of pension arrangement where the pension benefits you receive depend on your pensionable earnings and years of membership of that pension arrangement. Final salary pension arrangements are DB arrangements and your Rothesay policy provides DB benefits.

Defined contribution (DC)

A pension arrangement that provides benefits based on the amount of money paid in and investment growth on this money. DC pension arrangements are sometimes referred to as money purchase arrangements.


Someone who is financially reliant on you, such as a child, wife, husband or civil partner.

Expression of Wish

There may be a lump sum payable from your policy when you die. If so, Rothesay has discretion regarding who to pay this to. You can complete an ‘Expression of Wish’ to let us know who you would like to receive any lump sum payable on your death, via our online service or a paper form.

Financial Conduct Authority (FCA)

The FCA regulates the conduct of 50,000 firms in the UK, including Rothesay, to ensure that our financial markets are honest, competitive, and fair. For more information, please visit the FCA’s website:

The FCA's website

Flexi-access drawdown

In a DC pension arrangement, you can leave your money invested and take an income from it. Any money that remains invested may grow, but it may also go down in value. A quarter of your pension pot can be taken tax-free, and any other withdrawals will be taxable. Rothesay does not offer any flexi-access drawdown arrangements.

Guaranteed Minimum Pension (GMP)

People who were contracted out of the State Earnings Related Pension Scheme (SERPS) at any time between 1978 and 1997 were entitled to Guaranteed Minimum Pension, which meant that there were certain conditions on how the pension was paid. If you were contracted out in your previous pension scheme, your GMP in that scheme would have transferred to your Rothesay policy.

Increasing annuity

A type of annuity that pays income which increases in line with an inflation index, or to increase at an agreed fixed rate each year. (Also known as index-linked annuity or inflation-linked annuity).

Level annuity

A type of annuity that pays you the same amount of regular income from when you start taking your benefits until the end of any guarantee period, or until you die.

Lifetime allowance (LTA)

The lifetime allowance (LTA) used to be overall limit on the value of your pension benefits from all sources (except the State Pension and any benefits you are receiving as a dependant) before a tax charge was applied. This was known as the ‘lifetime allowance charge’.

The LTA in 2023/24 is currently £1,073,100. However, on 6 April 2023, the tax charge was removed and any pension income relating to pensions or cash lump sums that exceed the LTA were taxed as income. The LTA may still affect the maximum one-off lump sum you can receive free of income tax when you take your benefits.

The LTA will be abolished from 6 April 2024.

LTA protection

When the LTA was introduced and later when changes were made, individuals were given the opportunity to apply for protection against the LTA so that they would reduce or eliminate the effect of the lifetime allowance charge when they take their benefits.

There are four types of protection against the LTA: Primary Protection, Enhanced Protection, Fixed Protection (2012, 2014 and 2016), and Individual Protection (2014 and 2016). If you have applied for any protection, please ensure that we are made aware of this as it may affect your benefits.

Lump sum

This refers to a single payment made at a particular time, rather than a series of smaller payments.

Normal retirement date (NRD)

The date defined as your NRD in your policy document, but you do not have to take your benefits at this date. If you take your benefits before your NRD, your pension will generally be reduced as it will be paid for a longer period. If you take your benefits later, it will generally be increased as it will be paid for a shorter period.


The options available to you regarding how and when you take your pension benefits from your policy.

Pension benefits

The sums of money you get from your pension arrangements plus any sums of money your dependants receive on your death.

Pension Commencement Lump Sum (PCLS)

This is the tax-free lump sum that is usually available when you first take your pension benefits. If you were previously contracted-out of part of the State Pension, we may need to adjust your pension so that it does not fall below your Guaranteed Minimum Pension (GMP).

Policy document

The document(s) detailing the terms of your policy which was issued to you when your pension benefits first transferred to Rothesay or a previous insurer.

Previous scheme

Unless your Rothesay policy was transferred to us from another insurer, your benefits in your Rothesay policy originated in a company pension arrangement. We refer to this pension arrangement as your ‘previous scheme’.

Prudential Regulation Authority (PRA)

The Bank of England prudentially regulates and supervises financial services firms through the Prudential Regulation Authority (PRA). Rothesay is authorised and regulated by the PRA. For more information, please visit PRA's website:

The PRA's website

Receiving scheme

When transferring to another pension arrangement, the ‘receiving scheme’ is the pension arrangement you nominate to receive your transfer value.

Small pot lump sum

If the value of your pension benefits from your policy is less than £10,000, you may be able to exchange the benefits under your policy for a one-off lump sum. This is known as a ‘Small pot' lump sum.

State Pension

The government pays a basic State Pension to everyone who has paid the minimum National Insurance contributions.

Click here for more information 

State Pension age (SPA)

The earliest age you can start receiving your State Pension. This may be different to your age at NRD. Your State Pension age depends on when you were born. To check your SPA and for details of the effect of delaying your State Pension, please click on the link below.

Check your State Pension age


State Pension date (SPD)

The date you reach your SPA and can start to receive your State Pension.

Transfer value

This is the value of your pension benefits under your policy. Instead of receiving benefits directly from Rothesay, you can choose to have your transfer value paid to another pension arrangement and choose from the options available from that arrangement.

Trivial commutation

If the value of your pension benefits from all sources (except the State Pension and any pension you are receiving as a dependant) is less than £30,000, you may be able to exchange the benefits under your policy for a one-off lump sum. This is known as ‘trivial commutation’.

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The key terms explained