transfer value

The amount of money whicha scheme will pay to anotherpension arrangement in lieu of benefits which have accrued to a member. Sometimes referred to as a CETV (cash equivalent transfer value).

trigger

1. Used to describe the particular situation which puts a scheme into wind up. It enables trustees to pinpoint the precise moment when this occurs, which becomes the 'as at' date for calculating benefits.
2. A feature of a scheme's recovery plan which will cause the regulator to check that members' benefits are not unduly threatened.

trivial commutation

The conversion of a pension, which is below a prescribed level, into a cash sum (commutation).

trustee

An individual or company appointed to carry out the purposes of a trust in accordance with the provisions of the trust instrument and general principles of trust law.

unsecured pension arrangement

An arrangement which allows a DC scheme memberof retirement age to defer the purchase of an annuity and instead invest the fundin assets of his choice. The member may or may not draw down an income, subject to certain limits.
This arrangement can usually only be maintained up to the age of 75.

value manager

A type of manager who aims to achieve results by investing in companies that offer high income returns in relation to the price of the shares (ie shares with a low price/earnings ratio).
Value managers tend to do relatively well in falling markets because shares with a low price/earnings ratio (cheap shares) tend to hold their value better than others, eg growth managers.

SRI Socially responsible investment.

Investments that comply with any social, environmental and ethical principles which may be adopted by the trustees.
Occupational pension schemes are required to disclose the extent to which, if at all, social, environmentalor ethical considerations are taken into account in the selection, retention and realisation of investments.

sponsoring employer

The employer with responsibility for meeting the liabilities of a DB pensionscheme.
In DC schemes, typically the employer who sets up and/or assumes responsibility for the running of the scheme, and meets the expenses.

statutory funding objective

The requirement for an ongoing scheme to have sufficient and appropriate assets to cover its technical provisions, or a recovery plan to reach that position.

statutory independent trustee

An independent trustee, appointed at the discretion of the regulator to a scheme where the employer has become insolvent. The independent trustee must be chosen from the regulator's register of approved independent trustees.

statutory independent trustee

An independent trustee, appointed at the discretion of the regulator to a scheme where the employer has become insolvent. The independent trustee must be chosen from the regulator's register of approved independent trustees.

statutory objectives

The three specific objectives set for The Pensions Regulator in the Pensions Act 2004:
*. to protect the benefits of members of work-based pension schemes
*. to promote good administration of work-based pension schemes
*. to reduce the risk of situations arising that may lead to claims for compensation from the Pension Protection Fund

stock lending

A temporary transfer of securities (for example, equities) by an owner (typically a pension scheme) to a borrower (usually a fund manager). The borrower undertakes to return those securities to the lender at pre-agreed time.

strategic investment

Carried out by trustees as part of the preparation of their SIP, it is the practice of making long term decisions on asset allocation so that they are able to pay pension benefits as they fall due.

superannuation

The pension paid to retired members of an occupational pension scheme.

swaps

Arrangements by which one type of income stream is swapped for another (eg an income stream at a variable rate of interest may be swapped for an income stream at a fixed rate of interest). Such an arrangement is often made through an investment bank.
Interest rate swaps are the most frequently used but there are types of swaps available, eg to offset the riskof inflation or longevity.

tactical investment

Day to day investment decisions (eg stock selection)for which the function and the responsibility may be delegated to the fund managers.

registrable information

The scheme specific information required by The Pensions Regulator and heldon the register of occupational pension schemes.

risk premium

The extra yield of an investment (over the gilt yield) demanded by investors to compensate them for the higher risk.
Sometimes used in the calculation of expected investment returns on equities, when selecting an assumption for the discount rate.

risk register

A document listing potential risks, their consequences to the scheme, and controls in place for mitigating those risks.