| Term |
Definition |
Accrual
|
Change in assets and liabilities over time
|
Actives
|
Employees currently working and covered by the pension plan
|
Actuarial Assumptions
|
Assumptions made by the actuary about future experience, to estimate future costs of benefits, including assumptions about mortality rates, staff turnover, wage levels and investment returns
|
Asset Mix
|
Proportions of various types of investments held by a pension fund and required by the statement of investment policy
|
Assets
|
Investments or cash held by a pension fund
|
Beneficiaries
|
Person for whom a pension trust is established and who will or does receive benefits
|
Benefit Formula
|
Provision in a pension plan for calculating a defined benefit, according to years of service, earnings (career or final average), a fixed dollar amount etc
|
Bond
|
A certificate of debt
|
Book Value
|
Amount shown in the books as the cost of an asset
|
Commuted Value
|
The value of a pension calculated in a prescribed manner at a fixed date
|
Contribution
|
The tax deductible amount put in regularly to a pension plan by employers, employer or both
|
CPP
|
Canada Pension Plan
|
Deferred Wages
|
Workers’ earnings held over for retirement
|
Defined Benefit
|
A pension to be provided based on service, average earningsetc but not on the total contributions
|
Employer Sponsored
Plan
|
A pension plan offered by an employer where the employer bears all the risk
|
Fiduciary Duty
|
The duty of caring for another’s money
|
Flat Benefit
|
A defined benefit which specifies a specific dollar amount of benefit (often negotiated)
|
Fully Funded
|
A plan having sufficient assets to provide for all its pensions and benefits at a certain date
|
Fund Manager
|
The representative of a company in the financial industry, responsible for fund investment
|
Going Concern
|
An actuarial valuation that the pension plan will continue indefinitely
|
Investment Policy
|
The governing document of a pension plan setting out its investment policy, guidelines, asset mix and degree of trustee involvement in investment oversight
|
Liabilities
|
Financial obligations of the pension plan
|
Liquidity
|
The ease with which an investment can be converted to cash
|
Multi-Employer Plan
|
A pension plan covering employees of more than one employer
|
OAS
|
Old Age Security
|
Pension Trust
|
The embodiment of the trust agreement setting out the duties and responsibilities of trustees of a pension plan
|
Portability
|
Extent to which a pension benefit can recognize all periods of employment with various employers
|
Portfolio
|
Collection of investments
|
Prudence
|
The wisdom and care needed to handle someone else’s money
|
Rate Of Return
|
Investment yield as a measure of risk
|
Real Rate Of Return
|
Rate of return of investments after taking into account inflation
|
Risk
|
Central principle governing the mix of investments in a pension portfolio
|
RRSP
|
Registered retirement savings plan - a personal plan where contributions up to a certain ceiling are tax deductible
|
Solvency Liability
|
The cost of accrued benefits if the plan is wound-up immediately
|
Surplus
|
The amount determined by the actuary when the present value of estimated future liabilities is less than current assets of the pension plan
|
Tax Deferral
|
Provision in the Income Tax Act whereby pension contributions and investments are tax exempt and benefits are taxed
|
T-Bills
|
Treasury bills
|
Time Horizon
|
The period of time governing valuations of a pension plan
|
Unfunded Liability
|
The amount by which the assets of a pension plan are less than its liabilities
|
Vesting
|
The right of an employee to ‘lock-in’ contributions
|
Wind-Up
|
Discontinuation of a pension plan as regulated by law
|
YMPE
|
Year’s maximum pensionable earnings; refers to the earnings ceiling on which contributions and benefits are calculated
|
