A
ABI (Association of British Insurers) Sector
The ABI Fund Sectors are a classification system for funds. Funds are grouped into categories to allow like for like performance comparisons and to help investors compare funds with similar investment strategies. This is similar to the Investment Association (IA) Sectors used for other funds but is specifically for life and pension funds.
Absolute Return
Absolute return is an investment strategy aiming for positive financial gains over a specific period, regardless of whether market conditions are rising or falling. Unlike relative return, it does not use a benchmark (e.g. to outperform the FTSE 100 over a 5 year period) but instead focuses on delivering a positive return (e.g. +5% over a 5 year period).
Accumulation Fund
A fund or share class of a fund that does not pay dividends or interest. Instead, any dividends or interest received by the fund is reinvested into the fund. All LV= Insured Pension funds and Smoothed Managed Funds are accumulation funds, but some invest in underlying funds that are income funds. Any dividends or interest paid to LV= from the underlying fund are reinvested in the LV= Insured Pension fund.
Additional Expenses (AEs) (Also known as Operating Expenses or Other Expenses/OEs)
Additional operational costs associated with running the fund e.g. legal, auditing and administration fees. The Annual Management Charge (AMC) pays for the manager's portfolio management services and Operating Expenses cover the daily cost of running the fund. For LV= insured pension funds, together these make up the LV= Total Fund Charge (TFC) which is the total paid by the investor to invest in the fund.
Active Fund
An Active Fund is a fund where the Fund Manager uses their own judgement and expertise to select specific assets to invest in and to choose when to buy and sell these assets, aiming to outperform an index or deliver a specific performance objective.
Annual Allowance
The annual allowance is the maximum amount you can contribute to pensions each year and still receive tax relief. For most people, this limit is set by law. Exceeding it can result in a tax charge.
Annual Management Charge (AMC )/ Investment Management Charge (IMC)
The yearly fee, shown as a percentage of total assets, deducted by the fund provider to cover the costs of managing the fund. In our LV= Insured Pension Fund literature we refer to this charge as the IMC to differentiate it from the Annual Management Charge for the wider pension product.
Annuity
A financial product, usually purchased with retirement funds from an insurance company, that provides a guaranteed regular income for life or a fixed term.
Asset
An asset is anything you own that holds monetary value. When we talk about assets in regard to your pension funds this means the individual shares in different companies, bonds, cash or tangible assets (e.g. properties or real estate) that the fund holds.
Asset Allocation
The spread/division of a fund’s money between different asset classes (e.g. shares, bonds, cash). This is usually set by the Fund Manager to optimise the risk-return trade-off according to the fund’s objective and risk appetite.
Asset Class
An asset class is a grouping of investments with similar characteristics, behaviours, and regulatory rules. The main classes include equities (stocks/shares), fixed income (bonds), cash equivalents, property, and alternatives. Shares tend to provide the best potential for capital growth but can carry relatively high levels of risk. Bonds offer income with a moderate degree of risk. Property offers capital growth but with the potential for illiquidity. Cash presents the lowest level of expected return but ensures liquidity and the safety of the original investment.
Assets Under Management (AUM)
Assets Under Management (AUM) represents the total market value of all financial assets - including stocks, bonds, cash, and property - that a financial institution manages either within a single fund or in total on behalf of all clients.
Authorised Corporate Director (ACD)
An Authorised Corporate Director (ACD) is a regulated entity responsible for the day-to-day management, operation, and governance of an Open-Ended Investment Company (OEIC) in the UK. They ensure the fund complies with FCA regulations, the prospectus, and operates in the best interests of investors.
Averaged Price
The Averaged Price is the average of the unsmoothed unit prices over the preceding 26 weeks of a LV= Smoothed Managed fund. It is used to smooth out sudden market ups and downs. This helps reduce sharp changes in your plan value.
B
Benchmark
An index (e.g. FTSE 100) against which a fund measures its performance. A fund may have a target benchmark; where it has an objective to meet or beat the index. A fund may also have a comparator benchmark; where an index is provided to compare the fund against, to see how the fund is performing.
Beneficiaries
Beneficiaries are the people you choose to receive your pension benefits if you die. They can receive money as a lump sum or as income. You normally name them using a nomination form.
Bid Price
The price at which the unit-holder of a fund can sell shares/units.
Bond
A bond is a fixed-income investment representing a loan made by an investor to a borrower (typically corporate or governmental). It acts as an "IOU," where the issuer pays regular interest -often called coupons - and returns the original principal amount upon maturity.
It is different to an onshore investment bond which is a UK‑based, life‑assurance‑based investment wrapper that lets you hold a range of investments.
Bond Fund
A bond fund is a fund that buys and sells debt instruments like government and corporate bonds. The primary goal of a bond fund is to generate monthly income for investors. For an investor, a bond fund is an alternative to buying individual bonds. The investor in a bond fund is buying shares in a fund that buys and sells many bonds. Typically, a bond fund manager buys and sells according to market conditions and rarely holds bonds until maturity.
C
Capital Growth
Capital growth, or capital appreciation, is the increase in the value of an asset or investment over time. Capital growth is measured by the difference between the current value, or market value, of an asset or investment and its purchase price.
Cash Account (SIPP Bank Account)
A cash account in the LV= SIPP which holds money within the pension in cash form. It is used to receive contributions, pay charges, and pay income. Interest may be added depending on interest rates.
Cash In
To Cash In means taking all the money out of the plan and closing it. The plan then ends. For a pension investment this means the money is paid into your SIPP bank account.
Charges
Charges are fees taken from your plan or policy, usually to cover administration and investment management. They reduce the value of your plan or policy over time. Different investments can have different charges.
Commercial Viability
Commercial viability is the ability of a business, product, or service to generate sufficient revenue to cover costs, sustain operations, and achieve profitability in its target market. When our pensions funds or the underlying funds in which they invest fail to attract sufficient investment or shrink over time we may decide they are no longer commercially viable and remove them from our range.
Contributions
Contributions are the payments you or others make into your pension plan. They can be paid regularly or as one-off lump sums. Pension contributions usually receive tax relief.
Corporate Action
A Corporate Action is an event initiated by a Fund Manager or Authorised Corporate Director that brings material changes to a fund directly affecting its investors. Examples are a change of Investment Strategy, Investment Objective, Fund Name or Fund Charge.
Custodian
The organisation such as a bank or trust company responsible for the safekeeping, and sometimes settlement, of investments owned by a fund.
D
Direct Property Fund
A direct property fund (or "bricks and mortar" fund) pools investor money to purchase, manage, and sell physical commercial real estate, such as offices, warehouses, and retail, providing rental income and potential capital growth.
Discretionary Fund Manager
A Discretionary Fund Manager is a professional investment manager chosen by you. They make investment decisions on your behalf without needing approval each time. This service usually comes with additional charges.
Distribution payment
A payment of funds, usually dividends (but sometimes as a result of fund liquidation or suspension), to investors not as a result of a withdrawal request but instead as a share of profits (dividend) or released funds (liquidation/suspension).
Diversification
Spreading risk by investing in assets with different characteristics. For instance, an individual might invest in a combination of bonds, property and shares. Or share-based funds might invest in a variety of countries or market sectors. Investors can also diversify by investing in a range of different types of funds.
Dividend
A dividend is an after-tax distribution of a portion of a company's or fund’s profits paid to its shareholders or investors as a reward for their investment.
Drawdown Pension (Flexi-access Drawdown)
Drawdown pension lets you take income directly from your pension while keeping the rest invested. You can choose how much income to take and when. Taking too much can reduce how long your pension lasts.
E
Encashment
Encashment means selling investments to turn them into cash. This may happen to pay charges, income, or transfer to another provider. It can affect the value of your remaining investments.
Equities
An alternative term for shares or stocks. See Shares.
Equity Fund
An equity fund is a fund invests primarily in stocks (equities), aiming for capital growth. These funds pool money to buy shares in various companies, providing instant diversification to reduce risk compared to holding individual stocks.
ESG Fund
ESG funds (Environmental, Social, and Governance) are investment portfolios that select companies based on sustainable, ethical, and responsible criteria rather than just financial performance.
Exit Price
The Exit Price is the price used when units are taken away. It applies when taking money out, switching funds, or making claims. It may be different from the underlying market value.
F
Financial Adviser
A qualified professional who offers personalised advice on managing money, investing, and planning for future financial needs. They can assess suitability and explain risks. Adviser fees may apply.
Financial Conduct Authority (FCA)
The Financial Conduct Authority (FCA) regulates the financial services industry in the UK. Its role includes protecting consumers, keeping the industry stable, and promoting healthy competition between financial service providers.
Financial Ombudsman (FOS)
The Financial Ombudsman Service is a free and easy-to-use service that settles complaints between consumers and businesses that provide financial services.
Fixed Term Annuity
A Fixed Term Annuity provides income for a set period rather than for life. At the end of the term, a lump sum may be available. It offers some certainty but only for a limited time.
Form of Proxy
A form of proxy is a legal document allowing a shareholder to appoint someone else (a proxy), often the company chairman, to vote on their behalf at a meeting. It must be signed, indicate voting instructions (for/against/withheld) for resolutions, and be lodged with the company, usually 48 hours before the meeting.
Fund
A fund is a collective investment vehicle that pools money from multiple investors to purchase a diversified portfolio of assets, such as stocks, bonds, or property, managed by a professional.
Fund Closure
A fund closure means the fund has stopped taking in new money. It can also mean the fund is getting ready to sell what it owns and give the money back to investors.
Fund Manager
A fund manager is the person or company that looks after a fund and makes decisions about where the money is invested. A fund manager manages investors’ money responsibly and will use strategies to try and grow this money.
Fund Merger
A fund merger is when one investment fund is combined into another. If you’re invested, your money is moved from the old fund into the new one, usually without you having to do anything.
You should be clearly told what’s changing, why it’s happening, and whether it affects what you pay or how your money is invested.
Fund Series
A fund series refers to different versions of the same investment fund. They usually invest in the same way, but may have different charges, fee structures, or investor eligibility. You should be placed in a series that is appropriate and offers fair value for you, with clear information on costs and any differences that matter to your outcomes.
Fund Strategy
A fund strategy is a simple plan that explains how a fund will invest money. It shows what the fund invests in, how decisions are made, and how risk is managed, so the fund can work towards its goal. It is the fund’s game plan for growing or protecting investors’ money.
Fund Switch
A fund switch is when money is moved from one fund to another. This usually happens when an investor wants to change how their money is invested, for example to reduce risk, target better returns, or match a change in goals.
G
Gradual Averaged Price
The Gradual Averaged Price applies to LV= Smoothed Managed Funds and smooths prices during the first 26 weeks of investment. It starts close to the market value and gradually averages over time. This helps ease new investments into smoothing.
Guarantee
A guarantee is assurance that a certain value or outcome is protected, even if things do not go as planned.
Guaranteed Amount
Where a guarantee is in place, this is the minimum value your investment is promised to be worth at the end of the guarantee period, after allowing for withdrawals and charges.
Gilts
Gilts are bonds issued by the UK government. When you, or a fund you invest in, invest in gilts, you are lending money to the government, and in return you receive regular interest payments and get your money back at the end of a set period.
I
IA (Investment Association) Sector
The IA sector is a way of grouping similar investment funds together. Funds are placed into the same IA sector if they invest in similar assets and have similar goals, which makes them easier to compare.
Income
Income is money that you receive regularly. It usually means payments earned from things such as investments, savings, or work.
Index
An index is a list or measure that tracks the performance of a group of investments. It shows how a particular market or group of assets is doing overall, rather than focusing on one investment.
Index Fund
An index fund is a type of investment fund that aims to follow an index. Instead of picking individual investments, it copies the performance of a market index, such as a stock market.
Insured Fund
An insured fund is a type of investment where your money is pooled together with other people’s money and managed by a company. Your money is invested to help it grow, while also having some built‑in insurance protection. These funds are commonly used for pensions and long‑term savings plans. Insured Funds can also be called Unit-linked funds.
Interest
Interest is the extra money you earn or pay because money is being used. If you save or invest money, interest is what you earn for leaving your money there. If you borrow money, interest is the extra amount you must pay back on top of what you borrowed.
Investment Governance
Investment governance is the way investments are looked after and controlled. It means having clear rules, checks, and people responsible for making sure money is invested properly and fairly.
Investment Manager
An investment manager is a person or company that looks after investments on your behalf. They decide where money should be invested, such as in shares or bonds, to try to help it grow.
Investment Options
Investment options are the funds or assets your money can be invested in. These can include funds, shares, property, or managed portfolios. Different options carry different levels of risk.
ISA (Individual Savings Account)
A tax‑efficient savings and investment account. Any growth or income is usually free from UK income tax and capital gains tax.
ISA Allowance
The maximum amount you are allowed to pay into ISAs each tax year, as set by the government.
ISIN Code
An ISIN code is a unique identification number given to an investment, such as a fund or a share. It is used to clearly identify that specific investment and avoid confusion with others.
L
Liquidated/Liquidation
Liquidated / Liquidation means turning investments or assets into cash. This usually happens by selling them, for example selling a fund or shares. Liquidation is the process of this, whereas liquidated is the end result.
Liquidity
Liquidity is how quickly and easily an investment can be turned into cash without losing much value. If something has high liquidity, it means you can usually get your money out quickly. Cash is an example of a high liquidity asset, whereas art or real estate are seen as illiquid.
Lump Sum Allowance
The lump sum allowance is the maximum amount of tax-free cash you can take from pensions. Most people have a standard allowance set by law. Taking more than this may result in tax charges.
LV= Core Funds
LV= Core Funds are insured investment funds offered within the LV= SIPP. They are managed by professional fund managers. They form part of the required investments within the plan.
LV= Smoothed Pension
The LV= Smoothed Pension is an investment option designed to reduce sharp ups and downs in value. It spreads market movements over time to smooth returns. Optional guarantees may be available at an extra cost.
M
Multi-Asset Funds
Multi‑asset funds are investments that spread your money across different types of assets, such as shares, bonds, and cash. This helps reduce risk by not relying on just one type of investment.
N
Net Asset Value (NAV)
Net Asset Value (NAV) is the value of an investment fund at a specific point in time. It shows how much each unit of the fund is worth after taking away any costs or debts. It is calculated daily using closing market prices to determine the price at which investors buy or sell fund shares.
New Business
New business means money coming in from new customers or new plans being started. It can include first‑time investments, new policies, or new contributions.
O
Objective
Objective is the main aim or goal of an investment or scheme. It explains what the investment is trying to achieve, such as growing money or providing income.
Ongoing Charges
Ongoing charges are the regular costs taken from your investment to pay for managing it. These charges cover things like administration and investment management.
Open-ended Funds
An open‑ended fund is like a big pot of money that people can add to or take from whenever they want. When investors put money in, more units are created, and when they take money out, units are removed. Each unit’s value depends on the total value of the fund, and the fund can grow or shrink depending on how many people are investing.
P
Passive Fund
Passive funds are investment funds that aim to copy the performance of a market index, such as the FTSE 100 or S&P 500. Instead of choosing individual investments, the fund automatically follows the index. This approach usually keeps costs lower than actively managed funds.
Performance
Performance refers to how well an investment or fund has done over a period of time. It is usually measured by how much the value has increased or decreased. Good performance means the investment has grown, while poor performance means it has lost value.
Plan Schedule
A Plan Schedule is a personalised document showing key details of your plan. It includes information like contribution levels, arrangements, and charges. It is updated when changes are made.
Q
Quarter
A quarter is a three‑month period used to divide a year into four equal parts. Quarters are often used by businesses and organisations to plan, track, and report performance.
R
Redemption
Redemption is when an investor or policyholder takes money out of a fund or plan. It happens when units, shares, or a policy are sold back for their current value. Redemption reduces the amount of money held in the fund or plan.
Registered Pension Scheme
A registered pension scheme is approved by HMRC. Only registered schemes can offer tax relief and tax-efficient growth.
Regulator
A regulator is an official organisation that sets rules and standards for an industry. It checks that companies follow these rules and act fairly and safely. Regulators help protect customers and maintain trust in the system.
Retail Investor
A retail investor is an individual person who invests their own money. They usually buy investments such as funds, shares, or policies for personal savings or financial goals. Retail investors are different from professional or institutional investors, such as banks or pension funds.
Responsible Investment
Responsible investment is an approach to investing that considers not only financial returns but also the impact on people, society, and the environment. It involves taking factors like environmental, social, and ethical issues into account when making investment decisions. The aim is to invest in a way that is sustainable and responsible over the long term.
Return
Return is the money an investor makes or loses on an investment over time. It is usually shown as a percentage or amount gained compared to what was originally invested. A positive return means the investment has grown, while a negative return means it has lost value.
Risk
Risk is the chance that an investment or plan may not perform as expected. It means there is a possibility of losing some or all of the money invested. Higher risk usually comes with the potential for higher returns, while lower risk tends to offer more stable but smaller returns.
Risk Profile
A risk profile describes how much risk a person or investor is willing and able to take. It takes into account factors like financial goals, time horizon, and comfort with potential losses. A risk profile helps determine which types of investments are most suitable.
Risk-Rated Funds
Risk‑rated funds are investment funds grouped by how much risk they take, from low to high. Each fund is designed to suit investors with different risk profiles and comfort levels with potential losses. They help investors choose funds that match how much risk they are willing to take.
S
SEDOL Code
A SEDOL code is a unique identification code used to identify financial investments traded in the UK. It helps make sure assets like shares or funds are correctly recognised and processed in transactions. SEDOL codes are mainly used by stock exchanges, investors, and financial systems.
Selected Retirement Date
The selected retirement date is the date you originally plan to retire. It can be changed at any time. It is mainly used for planning purposes.
Self-Invested Personal Pension (SIPP)
A SIPP is a personal pension that lets you choose how your pension savings are invested. It allows more flexibility and a wider range of investments than basic pensions. It is used to save for retirement in a tax‑efficient way.
Series 1 and Series 2 Funds
See Fund Series. LV= series 1 pension funds are available on Deferred Annuity Plans, standalone Trustee Investment Plans and all LV= SIPP contracts sold before May 2009. LV= series 2 pension funds are available on all LV= pension contracts sold since May 2009.
Shares
Shares are units of ownership in a company. When you buy shares, you own a small part of that company. The value of shares can go up or down, and some shares may also pay income called dividends.
Share Class
A share class is a specific type of shares within the same investment fund. Different share classes may have different charges, income options, or minimum investment amounts. They allow investors to choose the version of the fund that best suits their needs.
Single-Strategy Funds
Single‑strategy funds are investment funds that focus on one main investment approach or style. They invest using a single strategy, such as equities, bonds, or property, rather than combining multiple strategies. This makes their aim and behaviour easier to understand and track.
Smoothing
Smoothed funds, such as the LV= Smoothed Managed Funds, apply processes that aims to reduce short-term market volatility in their unit price.
Soft Closure
Soft closure is when a fund limits new money coming in but does not close completely. Existing investors may still be allowed to add money, while new investors are restricted or discouraged.
Suspension
Suspension is when a fund temporarily stops investors from buying or selling units. This is usually done when it is difficult to accurately value the fund’s investments or to protect investors. Trading can resume once the issue causing the suspension is resolved.
Sustainable Investment
Sustainable investment is an approach to investing that aims to make financial returns while also considering the impact on the environment and society. It takes factors like climate change, social responsibility, and ethical behaviour into account. The goal is to support long‑term value in a responsible and sustainable way.
Synthetic Risk & Reward Indicator (SRRI)
The Synthetic Risk & Reward Indicator (SRRI) is a scale that shows how risky an investment fund is. It usually ranges from 1 (lower risk, lower potential return) to 7 (higher risk, higher potential return). The SRRI helps investors quickly understand and compare the risk level of different funds.
T
Tactical Asset Allocation
Tactical Asset Allocation is an investment approach where managers temporarily adjust how money is spread across different asset types, such as shares, bonds, or cash. These changes are made to take advantage of short‑term market opportunities or reduce risk. The aim is to improve returns compared to sticking with a fixed, long‑term allocation.
Tax Relief
Tax relief is money added by the government to boost your pension savings. Basic-rate taxpayers usually receive 20% tax relief. Higher-rate and additional-rate taxpayers may be able to claim more through their tax return.
Tax-Free Cash (Lump Sum)
Tax-free cash is money you can take from your pension without paying tax. This is usually up to 25% of your pension value. Taking tax-free cash reduces the remaining pension available for income.
Total Fund Charge (TFC)
Total Fund Charge (TFC) is the total cost of running an LV= core fund range insured pension fund, shown as a percentage each year. It includes fees such as management and administration costs. The TFC shows how much is taken from the fund to cover expenses, which can affect overall returns.
Trading
Trading is the buying and selling of investments such as shares, funds, or bonds. It is done to take advantage of changes in prices and make a profit or manage risk. Trading can happen frequently or occasionally, depending on the investor’s approach.
Transaction Charge
A transaction charge is a fee for specific actions such as transfers or sales. It covers the cost of carrying out the transaction. Charges are confirmed before the action is taken.
Transfers
Transfers are when pension savings are moved from another provider into this plan. They can help bring pensions together in one place. Transfers may involve selling existing investments.
Transfer Value
The transfer value is the amount paid when moving your pension to another provider. It depends on the value of investments when sold. Charges may reduce the final amount transferred.
Trustee Investment Plan (TIP)
A Trustee Investment Plan (TIP) is an investment plan set up and overseen by trustees on behalf of others, such as members of a pension or trust. The trustees decide how the money is invested and manage it in line with agreed rules and objectives. The aim is to look after the funds responsibly for the benefit of the people entitled to them.
U
Underlying Fund
An underlying fund is the main place where the money is invested. Many funds, like those in the LV= core range, put their money into an underlying fund run by another manager. This underlying fund holds the investments (such as shares or bonds) that determine how well the investment performs.
Underlying Price
The Underlying Price is the actual day-to-day market value of the assets in an LV= Smoothed Managed fund. It reflects the true value of assets held. It can be used to value a plan when smoothing is suspended or at specific times.
Units
Units are portions of an investment fund that an investor owns. When you invest money into a fund, you buy units based on the fund’s current price. The value of your investment rises or falls as the price of the units changes.
Unit Linked Fund
A Unit‑Linked Fund is an investment fund where the value of your investment is linked to the value of underlying assets, such as shares or bonds. You invest by buying units in the fund, and their value can rise or fall with market performance. Returns are not guaranteed and depend on how the underlying investments perform.
Unit Trust
A Unit Trust is a type of investment fund where money from many investors is pooled together and invested. Investors buy units in the trust, and the value of those units rises or falls with the value of the underlying investments. Unit trusts are managed by professionals on behalf of the investors.
V
Valuation Date
A valuation date is the date used to calculate investment values. Prices are based on asset values on that specific day. Different actions may use different valuation dates.
Volatility
Volatility refers to how much the price or value of an investment goes up and down over time. High volatility means prices change a lot, often quickly, while low volatility means prices are more stable. It is commonly used as a way to describe the level of risk in an investment.
W
Working Day
A Working Day means Monday to Friday, excluding bank holidays. Some actions are delayed if they fall outside working days.
Y
Yield
Yield is the income an investment generates, usually shown as a percentage. It often comes from interest or dividends paid on the investment. Yield helps investors understand how much regular income an investment may provide.
