Pensions Glossary - D

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D...

Data Protection Act 1984. Established rules for storage and disclosure of personal details by computer.

Dawn Raid. In financial terms a surprise purchase of a large number of shares in a single company. Generally taken as a forewarning of a takeover bid.

De Facto. Existing as a matter of fact, rather than a right, as in e.g. de facto government, rather than, say, the elected government.

De Minimis Limit. The level below which a funding rate check is not required in respect of defined contribution occupational pension schemes, excluding FSAVCs.

Dealing. Name given to transactions in stocks, shares unit trusts, commodities and other financial instruments.

Death Duties. Tax charged on property on the death of the owner. See 'Inheritance Tax'.

Death in Service Benefits. Generally refers to one or more of life assurance, spouses' and dependants' pensions, return of personal contributions, as provided by a pension scheme, on a member's death in service before retirement.

Debenture. Long term loan to a company, usually at a fixed rate of interest and for a specific term. Debenture holders are creditors of the company. In the event of liquidation debenture holders have a preferential claim on the assets. Debentures are marketable securities.

Debit. Entries on the left hand side of an account. A charge against or deduction from an account. Debt. Something (money, services, favour) owed by one individual to another for services rendered by that other person. Debtor. Anyone who owes money or services to a company or individual.

Decision Trees. A series of guides issued by the FSA. Their aim is to assist members of the public who are considering whether to invest in stakeholder pensions.

Declaration of Trust. Written statement to the effect that certain property is to be held in trust. No specific form is required, provided the intention is clear.

Decreasing Term Assurance. An assurance policy where the sum assured decreases yearly. Often used as a mortgage protection policy - as the mortgage is paid off the need for assurance diminishes. See Level Term Assurance Decree.

A court order. Deed. A document which is signed, sealed and delivered. Deed of Variation. A legal document which offers the terms of a will after death.

Deed of (Family) Arrangement. A formal document used to override the directions of a will after death.

Deep Discount Bonds. An investment bond issued at a large discount. The bond does not pay interest, but is repaid at par.

Default Investment Option. Term used to describe the investment fund into which contributions paid to a stakeholder pension will be placed, if the contributor fails to specify an investment fund.

Default Notice. A notice served by a creditor on a debtor when the debtor has broken an agreement. The notice must contain details of the breach, what must be done to put the matter right, any compensation due if the matter is not resolved, and the period in which the matter must be resolved.

Defendant. Someone who is accused in a legal action. See 'Plaintiff' Deferred Annuity. An annuity on which payments will be made at some point in the future - often as a pension.

Deferred Interest Loan. A type of mortgage which allows you to refer the amount of interest currently due, and to pay it at a later date.

Deferred Period. A waiting period e.g. under PHI policies there can be waiting, or deferred, periods of between 4 and 104 weeks before the policy begins to pay out. Usually, the longer the deferred period, the lower the premium.

Deficit. A shortfall in income compared to what needs to be, or has been, spent. Defined Benefit. Pension schemes which base their pension calculation on a defined formula, usually based on salary and service. Also called final salary schemes.

Defined Contribution. Another term for 'money purchase' pensions. A pension scheme where the final pension will be the result of an agreed contribution input, rather than an agreed formula output, as with a final salary scheme.

Defined Contribution Regime. New Taxation regime applying to certain types of pension schemes from April 2001. Applies to personal pensions, stakeholder pensions, new money purchase occupational pensions and existing money purchase occupational pensions which elect to be governed by the new regime.

Definitive Deed. Name given to the trust deed which governs an occupational pension scheme. Must be executed within two years of scheme establishment. An interim deed is often used while definitive deed is prepared.

Demography. The statistical study of population.

Department of Trade and Industry. Government department dealing with company affairs and operations. Dependant. Someone who is reliant upon others.

Dependant's Pension. One of the options with a pension scheme, to provide a pension for a dependant, on the death of the member. Usually pre-determined with a company scheme, but a separate decision with a personal pension.

Depletion. Natural wastage or reduction.

Deposit Account. An account which pays interest, the interest being determined by reserves and long term investment projections, rather than current investment conditions. Interest may be variable, but once paid is not subject to fluctuations in value e.g. as with a building society account.

Deposit Administration. Type of investment used by defined benefit schemes. Contributions, net of expense charges, are accumulated in a pool. An agreed amount of interest is added. Additional interest may be declared and added to the fund retrospectively for the interest period concerned e.g. 6% added at beginning of year and additional 2% declared at end of year and backdated. Pensions and other benefits are paid from the fund as they fall due.

Deposit Protection Fund. The Banking Act 1975 established the fund to pay compensation to depositors in the event of a bank going into liquidation.

Depreciation. The amount by which the value of an asset reduces from the beginning of one accounting period to the beginning of the one which follows.

Derivatives. A form of investment, such as options or futures, which are based, or derive from, ordinary shares or bonds.

Direct Costs. Costs relating directly to the production of goods or services, such as materials and production labour.

Direct Debit. Regular payment system whereby the supplier of a service instructs their bank to collect the requisite sum from the bank of the purchaser of the service. See 'Standing Order' Direct Tax. A tax levied on capital and sources of income over which the taxpayer has no discretion. See Indirect Tax.

Director. An officer of a company whose actions may bind the company. May be, but need not be, a shareholder. 20% Director. A director who has actual or potential control of 20% or more of the voting shares of a company.

Disability. In terms of critical illness and PHI policies, a condition which may give rise to a claim on a policy. May also be termed 'disablement'.

Disbursement. A payment of money. Disclaimer. Legal refusal, usually written, to accept responsibility for the action of a third party or an action attributed to the individual concerned.

Disclosure of Information. Also referred to as 'utmost good faith' or 'uberrima fides'. A pre-condition of insurance contracts to disclose all relevant facts to the insurer. Disclosure at the point of sale of investment products, the amount of commission earned by the adviser, and the extent of expenses incurred by the product provider.

Discount. A reduction of the full price of goods or services by the provider of those goods or services.

Discount House. A business which specialises in buying and selling bills of exchange. Discretionary Approval. Section 591 of ICTA 88 allows occupational pension schemes to offer a wider range of benefits than section 590 (see Automatic Approval) e.g. enhanced pension accrual, life assurance, enhanced retirement cash. See also: Exempt Approval.

Discretionary Investment Management Agreement. Detailed investment agreement specifying the limits of discretion within which manager will manage investments. Sets out exact nature of relationship between manager and client, degree of discretion granted and fee structure.

Discretionary Scheme. Usually used in relation to occupational pension schemes, where membership is by employer invitation only, and where benefits and contributions may differ from member to member. Although discretionary, equal access and discrimination rules must be adhered to.

Discretionary Service. Investment service whereby the adviser makes investment decisions without consulting the client.

Discretionary Trusts. A trust in which the trustees may exercise their discretion, within a class of beneficiary, as to whom should receive benefit.

Discretionary Will. A will which confers on the executors overriding powers of appointment in favour of a specified class of beneficiary.

Disposal. Sale or distribution of goods. Distribute. In financial terms, to share out profits as shareholders dividends.

Distributor Fund. An offshore fund which complies with the Revenue's rules on distributing most of the gains, usually up to 85%, as dividends, the dividends then being liable to income tax.

Diversification. The spread of risk by investing in a portfolio of securities each of whose performance is affected by a different set of economic and market conditions.

Dividend. A share in company profits, usually paid annually, and related to the number of ordinary shares held. Usually expressed as a value of the shares held e.g. 5p per share.

Dividend Waiver. Similar to 'bonus sacrifice', in that this may be a way to increase payments into a company pension scheme i.e. the dividend is waived, and the money thus 'released' is paid into a pension arranged by the company, as an additional employer contribution for the benefit of the individual. The dividend must be waived before the dividend is calculated and known.

Dividend Warrant. Payment of share dividends which includes details of tax deducted at source shown on tax credit voucher.

Dividend Yield.The dividend payment of a share divided by the current market price of the share and expressed as a percentage.

Documents of Title. Paperwork proving ownership or possession or control of goods.

Domicile. The country that a person considers to be, and treats as, a permanent home and which forms the closest ties. An essential element when dealing with legal and taxation matters.

Domicile of Choice. Determined by personal choice after age 16, and proven by intention to stay and form permanent ties.

Domicile of Dependence. Determined by changes in parents domicile until age 16 (in Scotland 14 for boys, 12 for girls).

Domicile of Origin. Determined for a child by the parents domicile at the child's birth. Double Option Agreement. See 'Cross Option'.

Double Taxation. This is what may happen when a person domiciled in country A works in country B. Tax will be deducted in B, and the same income may also attract tax liability in country A. Many countries have tax treaties (agreements), so that provided the Inland Revenue is informed of the tax already paid on income, it will not be deducted again.

Dow Jones Industrial Average. Index of share prices traded on the New York Stock Exchange.

Dread Disease. See 'Critical Illness'.

Duty. Tax to be paid on certain imported goods.

Dynamisation. Increasing final remuneration figures, by the increase in RPI for periods up to retirement, to enable greater benefits to be paid at retirement from pension schemes. Current Yield. The dividend or interest payment on an investment expressed as a percentage of its current price.

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1998 - 2007 UK Pensions - Planning before, at the onset and during retirement - Pensions.co.uk