Retirement Jargon Buster

Our Retirement Jargon Buster is a quick guide to some of the terms you may come across when planning your retirement. Take a look and if you need any more help, you can speak with a Retirement Adviser on 0345 266 9375 or book a free My Review at your local branch of Skipton.


An annuity is a financial product that lets you convert your pension pot into a regular retirement income. How it works: you give all or part of your pension savings to a provider and in return they give you a retirement income and guarantee to pay you a set regular amount for the rest of your life.

Annuity rate

Your annuity rate dictates the level of income you’ll receive from your annuity. When you’re offered a rate, simply multiply your pension pot by that rate to see how much retirement income you’ll receive each year. For example, if you have £100,000 in your pension fund and the provider’s annuity rate is 4%, you’ll receive £4,000 a year for life. Remember to shop around for the best annuity rates.


When considering Inheritance Tax or planning your legacy you’ll need to list all of your assets. Assets are items that you own with a monetary value, your main asset may be your home, but savings, shares and jewellery are all classed as assets.

Defined contribution

Defined Contribution schemes have no guaranteed income in retirement. You and your employer pay contributions while you’re working – topped up with tax relief from the government – which are then invested. The amount that you receive as a retirement income depends on how much you have been able to save in your pension pot and how it has grown via investments. It is important to remember that the value of your investment could go down or up.


This is where your funds are invested, so you can benefit from any potential future growth, and you can choose to take an income or make withdrawals as needed from time to time. The fact your pension fund is invested means its value can fall and rise, which could reduce the amount of income you receive.


Your estate is everything you own, including property, assets, savings, investments - minus any debts.

Estate administrator/executor

When you make a Will you’ll also need to appoint someone to carry out your wishes, this person is known as the estate administrator, or executor. They’ll oversee the distribution of any assets and gifts listed in your Will.

Financial Adviser

A Skipton Financial Adviser offers face-to-face financial advice and is qualified to Chartered Insurance Institute Diploma level (or equivalent). You can meet with a Financial Adviser in every Skipton Building Society branch - you can also arrange for a one to visit you at home.


Inflation is the increase in prices of goods and services over a period of time, and results in the value of your money reducing in real spending terms.

Inheritance Tax (IHT)

Inheritance Tax at 40% is payable on any assets above your IHT threshold as well as any assets not held in trust or gifts made within 7 years of death.

Your threshold depends on your circumstances - it’s £325,000 if you’re single or divorced, and £650,000 if you’re married or in a civil partnership. If you’re widowed, it’s £650,000 minus any allowance used when your partner passed away.

Lump sum

You can currently take up to 25% of your pension pot as a tax-free lump sum when you reach the age of 55 (rising to 57 from 2028). As of April 2015, you are able to withdraw all of your pension fund as a lump sum, the first 25% will continue to be tax-free and the remainder will be subject to tax at your marginal rate.

Legacy Planning

Legacy Planning is setting out how you wish your estate to be passed on after your death. It involves Will writing, Inheritance Tax planning, choosing executors and more. It’s a legal process and legacy planning advice is available.

Pension fund

Your pension fund is the total amount that you’ve built up over the years through contributions. Depending on whether it’s an individual pension or a workplace pension; the contributions may have been made by yourself or your employer. At retirement you can convert your pension pot into a retirement income, such as an annuity.

State Pension

The State Pension is paid to you by the government. Everyone is entitled to the State Pension when they reach State Pension age so long as they have paid or been credited with National Insurance contributions. The full Basic State Pension is currently £115.95 a week, but the amount you receive will depend on your National Insurance contributions.
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