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Salary Definition

Used in group insurance to agree the definition of employee salary to be applied in calculation of insured benefit.

Salary Sacrifice

A written agreement between an employer and an employee for the employee to give up part of his/her earnings in return for an additional contribution by the employer to a Pension Scheme

Sealing Fee

A charge made by some lenders when they release their legal charge over the deeds.

Section 32 Policy (Buy Out Policy)

Used for the purpose of transferring pension entitlement from an Occupational Pension Scheme to a stand-alone policy.

Unlike a Personal Pension Plan, a Section 32 Policy guarantees that if a transfer payment includes an element relating to the Contracting out of the State Earnings Related Pension Scheme (GMP element) then a minimum GMP will be provided at Retirement Age.

Unlike a Personal Pension Plan, benefits in retirement from a Section 32 Policy are subject to maximum limits based on the limits laid down in the Occupational Pension Scheme from which the entitlement was transferred.

Section 226 Policy

A term sometimes used to describe a Retirement Annuity Contract. Refers to section 226 of the Income and Corporation Taxes Act 1970

Section 226a Policy

A term sometimes used to describe Term Life Cover provided under a Retirement Annuity Contract. Refers to section 226a of the Income and Corporation Taxes Act 1970

Sector

This refers to how funds are grouped. A fund may be placed in a grouping by Country it invests in or the type of fund it is. E.g. funds which invest in America will be found in the American sector.

Securities

another name for stocks and shares but also applies to any approved or registered financial instrument, such as bonds.

Securities & Futures Association (SFA)

A regulatory body which polices investment businesses like stockbrokers.

Securities and Investments Board

The overall regulator of financial services set up under the Financial Services Act 1986.

Security Deposit

An amount used to offset possible costs associated with excessive wear and tear, or unpaid lease charges at lease-end, where applicable. After applying the security deposit to any amounts owed by the lessee at lease-end, any remaining deposit is refunded to the lessee.

Seed Money

A grant or contribution used to start a new project or organisation.

Segmentation

The option to take a proportion of the investment and leave the rest invested, i.e. to take 10% of your pension and leave the other 90% still invested.

Self Administered Scheme

Occupational pensions scheme where the assets are invested and managed by the trustees or an in-house investment manager.

Self Insured Scheme

A program financed entirely by the employer for insuring employees instead of purchasing coverage from an insurance company.

Self Regulating Organisation

A body authorised by the Securities and Investment Board to regulate and supervise investment business or financial service activities.

Self-Select

This refers to an ISA that invests in stocks and shares selected by the investor. Usually such an ISA is used by investors who wish to invest directly in shares. Some investors will also invest in Unit Trusts, however this is rarer, as usually it may be better value for Unit Trust Investors to invest directly with the Unit trust Company.

Self-Select PEP

A general PEP where you can choose which funds you'd like to invest in.

SERPS (State Earnings Related Pension Scheme)

If you're employed, part of your National Insurance contributions go towards the State Earnings Related Pension Scheme, which is paid on top of your basic state pension when you retire. You can choose to contract out of SERPS, in which case the Government will pay the money that would have gone into SERPS into a personal pension of your choice.

See: State Earnings Related Pension Scheme.

Shares

Shares are issued by a company to raise money. Unlike bonds, which are a straightforward loan, shares give you ownership of part of the company. Most shares are listed on a stock exchange, which makes them easy to buy and sell, although dealing costs may be expensive, which is another attraction of investing in a unit trust as the costs are shared with lots of others.

SIB

Securities and Investments Board.

Sickness and Accident

Pays you a benefit if you're unable to work through sickness or accident. Normally pays out for a set period, i.e. one or two years.

Simplified Administration

The system most often used to administer group insurance. Designed to keep administration overheads to a minimum. Normal changes in membership and benefit need only be advised to the insurer on a periodic (usually annual) basis.

Single Company PEP

A tax efficient investment where you invest in the shares of only one company.

Single Premium Costed

A method of cost calculation used for group insurance schemes with a small number of members (typically less than 20). The overall premium is based on the costs calculated in detail for each member and based on age, sex and other factors.

Single Premium Policy

A Life Insurance policy paid for in advance by one single premium rather than in periodic premiums.

Small Caps

another name for smaller companies, as measured by their market capitalisation. Our definition of a smaller company is one which has a market capitalisation of less than US$500 million, which is still quite sizeable by most standards. Usually a switch discount of up to 3% off the offer price is given.

Small Self Administered Scheme

A Self Administered Occupational Pension Scheme which has less than 12 members.

SOFA

Society of Financial Advisers. A professional body linked to the Chartered Insurance Institute. Membership is open to those who have passed the Institute's examinations for the Advanced Financial Planning Certificate.

Special Presentations

A service to inform a customer paying in a cheque that the payer's bank will make the payment. This does not reduce the time taken for the cheque to clear - this will still take three working days.

Spread (Bid Offer Spread)

The difference between the buying (Offer) and selling (Bid) prices of shares.

Spread Rentals

The spreading of the remaining rentals over the term of the contract e.g. Deposit equal to 3 rentals followed by 35 further rentals, spreading the payments over the term. It is normal to have a number of payments, following deposit, 1 less than the term in months. This has the benefit of reducing the monthly payments (and the deposit).

SRO

Self Regulating Organisation.

SSAS

Small Self-Administered Scheme. A self-administered occupational pension scheme with usually less than 12 members.

Staggered Vesting Phased retirement (Phased retirement)

The principle of 'phasing in' an individual's retirement income by drawing only a portion of the total Pension Fund value each year to purchase an Annuity which will in turn provide an income.

An individual's income in retirement can thereby be increased each year according to his/her income requirements by the purchase of a suitable amount of Annuity.

This principle takes advantage of the fact that the remaining Pension Fund should continue to grow and also that Annuity rates usually get better as an individual gets older.

In addition, in the event of the death of the individual, any remaining Pension Fund value should remain free of Inheritance Tax and Income Tax.

Stakeholder Pension

The name given to the new personal pension, which will be introduced by the government in two years' time. The details are not yet finalised, but it promises to be one of the biggest shake-ups of the pensions industry for years.

Stamp Duty

A tax levied on certain legal transactions, these include share dealing and the purchase of property.

Standard Variable Rate

A lender’s standard mortgage rate. This goes up and down with interest rates generally.

Standing Order

Pre authorised payment in which the customer gives instructions to their bank to pay fixed sums at regular intervals or on defined dates.

State Earnings Related Pension Scheme (SERPS)

The earnings related part of the state pension scheme, which provides benefits which are additional to the basic state pension.

State Pension

The basic state pension is paid to everyone. The level of pension you get depends on the amount of National Insurance contributions you pay over your working life.

State Retirement Age

The age at which an individual becomes entitled to the Basic State Pension.

Stocks and Shares ISA

This is an Individual Savings Account that invests in Stocks and Shares. The definition of Stocks and Shares can include Unit Trusts, Investment Trusts, Open Ended Investment Companies, investment on any recognised Stock Exchange, Corporate Bonds, Shares held in a savings related Share Option Scheme and Gilts.

Stock Exchange

A forum for the trading of stocks, shares and other securities. The London Stock Exchange is the main stock exchange in the United Kingdom.

Stop-Loss Insurance

Protection purchased against the risk of large losses or a severe adverse claim experience.

Substandard Risk

Where the risk of a claim against a policy is higher than average.

Superannuation Funds Office

The forerunner to the Pension Schemes Office of the Inland revenue that deals with the approval of all Occupational Pension Schemes and Personal Pension Schemes.

Successor Election

The designation, in writing by a donor, of a person to be assigned the rights and duties associated with the donor's account at the Charitable Gift Fund upon the donor's death. Successors are eligible only after the deaths of all donors named on the account. The donor designates an individual as the successor, or the donor may choose to recommend that one or more charitable organizations receive the proceeds of any remaining units in the account upon the donor's death.

Surrender

Where you cancel an investment or policy and usually receive a reduced payout, due to the impact of charges.

Surrender Value

The amount of money paid to the policyholder by the insurer when certain types of life policy are discontinued before the full benefit becomes payable.

Switching

refers to moving an investment (or part of it) out of one fund and into another. When you switch you sell at the bid price and sell units in the new fund at the offer price.

Switch card

A card linked to the UK Switch network. If you pay for goods and services with a Switch card, the money leaves your account straightaway. You can use your One account Switch card in just about every cash machine in Britain and tens of thousands of Cirrus machines worldwide, and to pay for goods abroad wherever you see the Maestro sign.

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