Jargon Buster

P

PAYE - Pay As You Earn
Where income tax and National Insurance contributions are collected from your salary, before it is paid to you, by your employer and passed to the Inland Revenue.

Pension Forecast
A service provided by the Department of Social Security which tells you what your pension is worth.

Pensions Ombudsman
An independent arbitrator for pension disputes with statutory power to enforce his or her decisions.

PEP - Personal Equity Plan
Tax-efficient savings plans replaced by ISAs in 1999. You can no longer invest in a new PEP but you can still transfer your existing PEP into an ISA.

Personal Pension Scheme
A pension scheme for those who are self-employed, or, if employed, are not members of an occupational scheme and so make their own pension provision.

Phased Retirement
The facility to use small segments of your pension to buy annuities as and when you need more income rather than buying one annuity annually with your whole fund.

PHI - Permanent Health Insurance
Insurance that pays a level of income in the event of long term sickness or disability

PLC - Public Limited Company
Any company with a share capital of at least a fixed amount.

PMI - Private Medical Insurance
Insurance which will pay for the cost of medical treatment in accordance with the policy cover.

Portfolio
A collection of shares owned by an investor.

Price/Earnings Ratio
Calculated by dividing the market price of a company's ordinary shares by its earning-per-share figure as an indicator of the company's performance potential.

Q

Qualifying (life policy)
A type of insurance policy that can have tax benefits.

Quartile
Most UK funds are grouped into sectors and each sector is divided into four quartiles with the best performing funds being in the top quartile.

R

Return
The amount by which the value of your investment increases.

Rights Issue
New shares sold by a company to raise capital.

Risk
Refers to the fact that the value of your savings and investments can fall as well as rise.

RPI - Retail Price Index
The official measure of inflation calculated by weighting the costs of goods and services to approximate a typical family spending pattern.