Defined in the particular pension scheme and calculated in a specified way (e.g. averaged over a limited period prior to the normal retirement date (or earlier date of leaving) or the actual final salary). The pension scheme definition is usually more restrictive than the IR’s final remuneration definition. See FINAL SALARY SCHEME.

IR definition, more generous than scheme definitions, provides that the final remuneration should be not greater than either: (a) the average total earnings liable to Schedule E tax over three or more consecutive years in the 10 preceding retirement; or (b) basic annual pay of an employee liable to Schedule E tax for any one year of the five preceding retirement plus certain bonuses and commission averaged over a period and benefits in kind. Adjustments can be made using dynamisation. The limit affects how much of a member’s earnings can be taken into account when IR calculates the maximum benefit available under an approved scheme.

The main type of defined benefit scheme. The pension is a proportion of final salary based on an accrual rate, e.g. onesixtieth, for each year of scheme membership plus any added years. Forty years produces the maximum allowable pension. Scheme trustees must ensure that contribution levels are sufficient to deliver the pensions promised. Members can commute part of their rights into a tax-free lump seem equal to 1.5 times the final salary. See FINAL PENSIONABLE SALARY; FINAL REMUNERATION.

CII qualification. The only broad-based qualification specifically designed for administrative staff working in life and pensions offices.

Person appointed by an independent intermediary or appointed representative to provide a range of financial services. If they advise on or arrange certain types of investment (pensions, life insurance, unit trusts and shares) they and the companies they represent must be FSAauthorised. Financial advisers just advising on loans, most mortgages, general insurance or bank/building society accounts do not have to be FSAauthorised until October 2004 in the case of mortgage advisers and January 2005 in the case of general insurance and term insurance advisers. Some financial advisers sell the products of a single firm while others, independent financial advisers, base their advice on all products in the market.

Covers loss from specific financial transactions and guarantees that investors in debt portfolios receive timely payment of principal and interest or guarantees in the event of default by the debtor or obligor. Financial guarantee insurances include: mortgage indemnity insurances; performance bonds; residual value insurance. Financial guarantee cover originated in suretyship.
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A surety bond, insurance policy or, when issued by an insurer, an indemnity contract and any guaranty similar to the foregoing types, under which loss is payable upon proof of occurrence of financial loss to an insured claimant, obligee, or indemnitee.

A wide range of insurances developed for the financial services industry. These include bankers’ blanket bond insurance, mortgage impairment insurance, rogue trading, operational risk and organisational liability.

a contract which is in form a contract of insurance or reinsurance and under which the insured ultimately recovers the premiums paid plus the interest earned on their investment less an amount designed to cover the insurer’s or reinsurer’s expenses and profit, the time value of money thus entering explicitly into the calculation of the premiums charged; the financial element of such contracts often does not involve the transfer of any underwriting risk so there is doubt whether they are in law contracts of insurance (see also finite risk insurance).