For those of you who would like to understand your pension better, here is a useful jargon-buster!

These are benefits built up by a member of an occupational pension scheme based on pensionable salary and length of scheme membership.

This means the rate at which your pension builds up if you are a member of a defined benefit or final salary scheme. Your pension will be derived from the accrual rate of your scheme multiplied by your length of service and by your final salary (see final remuneration).

Additional contributions paid by a member of an occupational pension scheme to secure extra retirement benefits. AVC arrangements may be 'in-house' (part of the main scheme) or 'free-standing' (a separate arrangement between the member and a product provider chosen by the member).

An annuity is a regular pension payment, usually payable until death. In a money purchase scheme a fund builds up based on the members contributions. At retirement this fund is used to buy an annuity and the annuity rate is the rate at which the capital sum is converted into regular pension payments.

A Personal Pension which has the facility to allow members to contract out of SERPS by accepting the national insurance rebate and using it to build up Protected Rights.

The BSP is a flat-rate pension provided by the Government. It is paid at 65 for men and 60 for women, but the pension age will be gradually equalised to 65 for all women born after 6 April 1950. The BSP is increased annually in line with the retail price index.

It is payable in full to men who have paid National Insurance contributions for 44 years between the ages of 16 and 65, and for women who have paid contributions for 39 years.

For further information on the BSP (and to find your eligibility status) the DSS should be contacted on their Pensions Information line on (0345) 313233 or their Pensions Direct line on (0191) 2030203.

The other component of state pension provision is SERPS.

Many occupational schemes are contracted out of SERPS. This means that members pay lower National Insurance contributions because they forfeit their entitlement to SERPS.

Contribution holiday Temporary periods when contributions to an occupational scheme, usually by the employer, but sometimes by the members, are suspended. This is one method of reducing or eliminating a surplus.

Sometimes called a final salary scheme. In this arrangement the pension benefits are derived from a proportion of pay at or near retirement, while the level of contributions will fluctuate according to the balance between the scheme's assets and liabilities.

Is another name for a money purchase pension. These schemes are different to final salary schemes, because they are based on a defined contribution as opposed to a defined benefit. Money purchase schemes only guarantee to pay a certain level of contribution. They cannot guarantee a specific level of benefits at retirement; these will depend on how much each individual contributes into the scheme, the subsequent investment performance, and what annuity rates are secured at retirement.

A check to ensure that payment of AVCs does not infringe Inland Revenue limits on projected benefits. Most commonly used with free-standing AVCs, where a headroom check is required only if contributions exceed £2,400 per annum.

In very general terms, the maximum Inland Revenue benefits permissible for occupational schemes are two-thirds of final remuneration which is your pay at or near retirement (or leaving the scheme) on which your benefits are calculated according to the individual scheme rules.

For personal pensions the Inland Revenue does not cap benefits, only the amounts that can be contributed by an individual.

For occupational schemes a members contributions cannot exceed 15% of your earnings.

For personal pensions, contribution levels are capped to a specific percentage of net relevant earnings (up to a maximum salary level) according to an individuals age.

A pension arrangement available to individuals, who are self employed or employed but who are not members of an occupational scheme. All PPP's operate on a money purchase basis.

Members who leave an occupational scheme before normal retirement age can leave their benefit entitlement with the scheme and wait for it to become payable at a later date.

This is the part of a contracted out money purchase pension or appropriate personal pension which is produced by the minimum level of contributions stipulated by the contracting out requirements.

The state earnings related pension scheme, which pays a pension, based on revalued career earnings. The maximum amount for those retiring from 2010 is 20% of earnings.