Acronyms etc..

Ebeneezer9

Hello to all.
As a fairly new forum user I would appreciate someone posting a key to the acronyms and arcane terms used when discussing pension issues. 

Thank you in advance.

MX5huggy

Which ones in particular?

DC Defined Contribution (most normal pensions)
DB Defined Benefit (also known as final salary (FS), generally legacy pension in the private sector but common in the public sector although they are mainly CARE (career Average (revalued earnings) not FS)

SIPP Self Invested Personal Pension , a DC pension anyone can buy (invest in). 

Stakeholder Pension, an old type of DC pension that is not relevant these days.

Lifestyling - the process of moving investment from high risk to low risk automatically as you near retirement, not particularly useful these days as less people buy an Annuity.

Annuity, buying an annual income using a lump sum so you might get £3000 per year for the rest of your life of income by giving an insurance company £100k. 

AVC Additional Voluntary  Contributions, some DB schemes allow AVC’s along side to a match DC fund. 

LGPS Local Government Pension Scheme

USS 

Universities Superannuation Scheme

Anymore? 

Scallypud

SP - State Pension
LS - Lump Sum
TFLS - Tax Free Lump Sum
OP - Operator
OH - Other Half

ex-pat_scot

GPPS - group personal pension scheme
LTA - lifetime allowance (£1,073,100)
AA - Annual Allowance (was £40,000 until 5.4.23; now £60,000)
PCLS - pension commencement lump sum ("tax free cash")
MPAA - Money Purchase Annual Allowance. Now £10,000
SS - salary sacrifice
Ers/ Ees NI - employers' and employee's National Insurance contributions.
BR - Basic Rate
HR - Higher rate
CB - child benefit (in the context of clawback between £50,000 and £60,000 household earnings)
UFPLS -Uncrystallised Funds Pension Lump Sum
SOR(R) - Sequence of Returns (risk)

There are lots more...

cobson

Scallypud said:

OP - Operator

Though it normally means Original Poster, also:

CHOAM - Combine Honnete Ober Advancer Mercantiles

p00hsticks

Scallypud said:

OP - Operator

OP - Original Post or Original Poster

also 

nSP New State Pension (as introduced in April 2016)
SPA - State Pension Age 

Sarahspangles

CARE - Care Average Revalued Earnings, as used in recent LGPS and NHS schemes among others
R85 or Rule of 85 - a special rule applying to people with membership of LGPS schemes before 2008.

blobbyrob

Would be handy to have this thread stickied.

DullGreyGuy

GMP - Guaranteed Minimum Pension
NRA - normal retirement age
PR - Protected Rights


https://www.pinsentmasons.com/out-law/guides/glossary-of-pensions-terms-and-abbreviations 

Above has a very long list, with a couple of tongue in check ones too

Sarahspangles

SWR - Safe Withdrawal Rate
Trivial Commutation - Arrangement for paying out small pot as a lump sum

gm0

And some more

DB and DC upthread
DA - Defined Ambition (a new category of collective DC pension.  The first example of these is likely to be at Royal Mail

CDC - Collective DC (the same thing) - pots like a DC pension but death date pooling like a DB one (and other stuff)

ETF - Exchange traded fund - a tradeable unit which represents a bag of other stocks or whatever is in it which can get weird.

FSCS - Financial Services Compensation Scheme (apropos of what will you get from the government if the chancers you invest with prove criminally incompetent.

PPF - Pension Protection Fund (for DB pensions).  Protects existing pensioners from losing their income, and to 90% for the yet to retire, via a levy on DB schemes)

"85k" - shorthand - the FSCS limit for a consumer's holdings with a single business - a bank/savings account/a SIPP - the explicit government guarantee element).

UKRFS - UK reporting fund status - is something UK regulated or is it an "offshore" less UK regulated investment - affects tax treatment and perhaps also risk (sometimes)

OEIC - Open Ended Investment company (distinct from a "closed ended" in terms of what can be in it and how it is valued and traded)

KIID - Key Investor Information Document - a regulated format for describing a fund "factsheet"

Asset Allocation - how you choose to spread your money across different things

Active - of funds where you are trusting someone to make judgements on trading on your behalf to beat the market or avoid losses which will work out or not.  Act of faith. Opaque.

Passive - of funds which replicate an index i.e. a list of stocks or bonds - where there is a lot less judgement by a fund manager.  You get the market return (capital change and dividends - for that list - good or bad). Less opaque.  But still an act of faith that long term trends around economic growth and stock market long term rises after short term volatility evens out remains true.

SPIVA - S&P Indices vs Active - the index makers tracking data and scorecards (or propaganda according to "active" fund managers who want you to buy their thing) illustrates the problem with choosing stocks or active funds and their managers in the long term. It is hard to consistently "win" against average market (index return) - most of us can't do it. 
This underpins the passive is usually the best choice for the small non-professional investor ideology promoted by Warren Buffet, Jack Bogle, Lars Kroijier and others.  This does not make it true for all circumstances or possible futures. It's just one investment philosophy among many albeit one with a better evidence base than many of the others.

Goldbug - someone sufficiently worried about the financial situation arising where traditional investments and fiat currencies fail (lose value) badly enough that a large gold holding protects against that scenario and will likely spike in such a situation. 
So their asset allocation includes - quite a lot - of gold and similar things.  This is quite a rare scenario.
But has happened before.  So it is not an irrational choice - just a risk management one where a lot of "normal" financial risk and return is foregone to protect against that case.  High opportunity cost.  "Golden Butterfly" and similar asset allocation ideas implement it and are well documented on the web.  There are clearly a number of issues with holding gold so as with most of investing - there is no free lunch to be found here.  Just trade offs.

Survivorship bias - only the funds that don't fail and lose their customers are still around. So the SPIVA data underestimates how bad it really is in the fund management casino

LSE - London Stock Exchange
NYSE - New York Stock Exchange

S&P 500 - Standard and Poor 500 - list of big US stocks (older)
NASDAQ - National Association of Securities Dealers Automated Quotations - colloquially the more modern US index

FTSE - Financial Times Stock Exchage group aka FTSE Russell - index list maintainer and share information

FTSE100 - the biggest 100 stocks in the UK market

FTSE250 - the next 250 stocks (so a bit smaller and less multi-national)

FTSE All Share - all the UK traded stocks - by weighted by market cap

SA - often as "SA return" - self assessment tax return - income tax filing in UK
CGT - Capital gains tax - not due on pensions or ISAs but on growth of other assets not in those wrappers
ISA - Individual Savings Account - CGT exempt savings account of type cash or type "stocks and shares"HRB (higher rate band income tax - often referring the income level where this begins around circa 50k

FI - Fixed income - category label for most types of debt, deposit, interest bearing stuff

LIBOR the now defunct due to scandal london interbank overnight lending interest rate based on what bankers "said it was"
SONIA - has replaced LIBOR - based on trade data
Linkers - Inflation or index linked istruments - typically government bonds

Corporates or "corps" - bonds issued by companies

Gilts - government bonds issued by governments with terms from months to >40 years

Junk - corporate bonds with a a credit rating assessed below a certain level - in theory junk offering better rates as premium for risk taken - because of more risk of default (them not returning the capital loaned)

Custody - how interests in shares are held and recorded

Settlement - of trades - the delay after asking for an investment change and a trade being priced on an exchange before you get the money
REIT - Real Estate Investment Trust (Property investment inside a financial investment rather than just owning a building)
MTM - mark to market - of illiquid things - a periodic revaluation - such as with commercial or residential property such as in REITS
VAR - Value at risk - of trading strategies and a trade book which "owns" (long) or has borrowed and sold (short) stuff.  A financial calculation about the financial risk of the position.
Long - holding investments

Short - selling things you don't have with a view to buying them back later cheaper because you think prices are falling

Leverage - increasing your effective investment beyond 100% (a multiplier of the capital) via funds or other methods (trading on margin call with a credit line).  A very good way to be caught out by the unexpected and wiped out.

Physical (of funds / index replication - a fund holds the things it says it does - more or less)

Synthetic (of funds/ index replication) - a fund contracts with somebody for that calculated cashflow - so doesn't actually hold the list of things - very different risks (this is a credit or counterparty risk) - if the person contracted with goes bust then this is very bad.

Counterparty - the institution on the other end of buy or a sell trade be it simple or complex

Index/Indices - lists of stocks

Derivative - a contract for a calculated quantity - not just the buying and selling of a thing at a price.

Volatility - short term price movements overlaid on long term trends and returns by asset class

VIX - a US stock market "measure" of current volatility

CAPE - Cyclically Adjusted Price Earnings - long term average of price to earnings (company share price vs what they make).  An imperfect way of assessing whether markets are over or under valued vs the real world activity i.e how much is speculative about future growth.

Option - as in I agree with someone that I can optionally buy or sell something later for a price set now - "Call" or "Put". i.e. a bet on a future price of something being higher or lower.  I theory this would be a lovely way to protect a pension pot that is "long" in equities against a stock market major revaluation.  But in practice this does not work (cost effectively) for the street retail investor due the insurance cost being prohibitive

Market timing - attempting to buy or sell investments at a good time based on predicting what will happen next and when

Pound Cost Averaging - the opposite - buying investments at today's price - whatever happens this month. Sometimes you are lucky (buy low), sometimes not (buy high before a dip) - it averages out.

Swaps - of fixed interest - I want or don't want a fixed rate or a floating interest rate - and can have that by trading swaps with someone who wants the opposite. i.e. a bet on future interest rates.

Hedging (such as of currency in funds).  A bond fund hedged to £ doesn't carry risks around is the £ worth more or less this year.  Investing in anything overseas or $ (or euro or yen or anything else) unhedged means the price gets translated via the exchange rate.   So in 2022 - US equity markets dropped for a while. But so did the £ against the $. So it looked less bad than it was (nominal value). And yet the reduced purchasing power of those £ (for anything imported) made that loss just as real again.

Hedging (investments) - reducing value at risk by holding things which move in opposite directions for a given market event.  Investing in things which are negatively correlated.  Traditionally the argument for why a mixed stocks and bonds investment is smoother and less volatile for a pension.  The great interest rate turn around after the recent quantititave easing (money printing) era - just gave this idea a big reset.  Equities and bonds both moved down together. A 5% of the time event where 95% of the time the stocks and quality bonds together idea seems fair enough.

Correlation - how investment A relates in price trends to investment B - move together or move opposite ways.  Crucially - correlation is not fixed. It changes over time as with the bonds example (interest rate reversal and rapid rises was the event - yield up, capital value down) and with market sentiment and other factors.

WP or Wealth Preservation - a fund or investment trust category that sets objectives of protecting capital rather than maximising growth. Ruffer, CGT, RIT etc.  Active.  So based on trusting the investment manager to get it right.