Occupational pension – a pension created by an employer for the benefit of employees.
Pension – an arrangement to provide people with an income when they are no longer receiving a regular income from employment, usually when they have retired.
Pension fund – money set aside and invested so that money is available to pay future pension liabilities.
Pension liability – the obligation to pay current and retired members of a pension scheme their defined benefits from the date of retirement until death. A total liability at any given time is valued using the set discount rate.
Pension shortfall is where an employer offering a defined benefit pension does not have enough money in the pension fund to meet the pension obligations to employees who will retire in the future. This happens when investments such as equities perform poorly or where estimated pension liabilities increase more than expected. This shortfall is usually met by an increase in employees’ and employers’ contribution rates.
Real terms – figures that have been adjusted for changes in inflation, the effect of inflation has been removed to allow any underlying changes to be shown clearly.