Annual Allowance (AA)

The Annual Allowance is the maximum amount that can be paid or built up in a pension arrangement in any tax year before an additional tax charge is payable.


A pensions professional who estimates the long-term cost of providing pensions and advises on any contributions needed to fund a pension scheme, taking into account inflation, interest rates, how long people live and other factors.

Additional State Pension

This was paid on top of the Basic State Pension under the old State Pension, before 6 April 2016. It was based on an individual’s earnings between limits set by the Government each year.


Additional Voluntary Contributions are additional contributions that you may have chosen to pay into the Diageo Pension Scheme while you were an active member of the scheme. Your AVC savings pot can be used to provide additional income when you retire.


Basic State Pension (BSP)

The flat rate pension paid at State Pension age under the old arrangement to a single person who has paid enough National Insurance contributions during their working life.

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Capital Value

The total value of your pension benefits. In a defined contribution scheme, it is simply the value of your savings pot. In a defined benefit scheme, the valuation is more complicated as it relies on converting your annual pension into a capital amount by multiplying it by a factor. Often a factor of 20 is used.


CARE stands for ‘Career Average Revalued Earnings’, a name which gives a clear indication of what it entails. CARE like Final Salary is a type of ‘defined benefit’ pension scheme i.e. scheme members are promised a defined level of pension when they retire or leave, on a formula generally related to their salary and years of service. In calculating the pension the ‘Earnings’ you have in each year of your employment, or ‘Career’ are taken into account and an ‘Average’ of all of them is calculated.

Cash Equivalent Transfer Value (CETV)

This is the cash equivalent amount of your entitlement to pension benefits from the scheme. The scheme will pay this amount if you decide to transfer your benefits to another registered pension scheme.

Corporate Trustee

A company that acts as the Trustee for a pension scheme and has a legal duty to safeguard members’ benefits.

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Deferred member

Either an employee or former employee of - Lifestyle Section who has not yet taken a pension from the Diageo Pension Scheme.

Defined Benefit

Defined benefit (DB) pension scheme is one where the amount you’re paid is based on how many years you’ve been a member of the employer’s scheme.

Defined Contribution (DC) Scheme

A type of pension scheme where you pay contributions from your salary to an individual pension savings pot. There are a number of ways you can access savings in a DC Scheme.

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Final Pensionable Salary

Final pensionable salary refers to the amount on which the final benefits are calculated in a defined benefit scheme, as defined in the rules of the scheme.

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Guaranteed Minimum Pension (GMP)

Guaranteed Minimum Pension, which is the minimum pension a contracted-out DB pension scheme must provide for service before 6 April 1997, as one of the conditions of contracting out of the Additional State Pension (also known as the State Second Pension (S2P) or State Earnings Related Pension Scheme (SERPS)).

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His Majesty's Revenue & Customs (HMRC)

Responsible for the registration of pension schemes and the taxation of contributions and benefits.

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Lifetime Allowance

Prior to 6 April 2024, the Lifetime Allowance was the maximum value of pension benefits (excluding any State Pension) that you could receive before having to pay a tax charge. This was abolished from 6 April 2024 and replaced with three separate allowances: The Lump Sum Allowance (LSA), the Lump Sum and Death Benefit Allowance (LSDBA) and the Overseas Transfer Allowance (OTA).

Lump Sum Allowance (LSA)

The Lump Sum Allowance (LSA) limits the amount that can be paid as a tax-free Pension Commencement Lump Sum (PCLS) and as the tax-free element of an Uncrystallised Funds Pension Lump Sum (UFPLS) in a lifetime. The standard LSA is £268,275 and this is fixed in legislation. You may have a higher amount of LSA if you have protection in place.

Lump Sum and Death Benefit Allowance (LSDBA)

The Lump Sum and Death Benefit Allowance (LSDBA) limits the amount that can be paid as tax-free Pension Commencement Lump Sums (PCLSs), the tax-free element of Uncrystallised Funds Pension Lump Sum (UFPLSs), tax-free Serious Ill Health Lump Sums and tax-free lump sum death benefits. The standard LSDBA is £1,073,100 and this is fixed in legislation. You may have a higher amount of LSDBA if you have protection in place.

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Money Purchase Scheme

A scheme in which a member’s benefits are determined by the value of the pension fund at retirement. The fund, in turn, is determined by the contributions paid into it in respect of that member, any investment returns and charges deducted. Also known as DC scheme, Defined contribution scheme.

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Overseas Transfer Allowance (OTA)

This is the maximum amount that you can transfer to a Qualifying Recognised Overseas Pension Scheme without incurring a tax charge. The Overseas Transfer Allowance (OTA) is currently set at £1,073,100 but this may be higher if you have protection in place. Any benefits in excess of the OTA are subject to a 25% overseas transfer charge which must be deducted from the payment.

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Pension Scheme

A final salary pension, also known as a defined benefit pension, is a type of retirement plan that guarantees a fixed income for the rest of your life based on your final salary and years of service with your employer.

Pensionable Salary

The elements of salary used to calculate pension contributions. This figure may also use be used in determining the value of benefits in a DB pension scheme.

Pensionable Service

The period during which you were contributing to a pension scheme. This service is also used to calculate benefits in a DB pension scheme.

Preserved Pension

The pension held by a Deferred Member, that is no longer being contributed to and is not yet in payment.

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Retired Member

A member of the Scheme who has started to receive their pension.

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Scheme Rules

A legally binding document detailing the pension benefits which must be provided to members of a pension scheme.

State Earnings Related Pension Scheme (SERPS)

The Additional State Pension scheme that ran from 6 April 1978 to 5 April 2002. It was replaced by the State Second Pension (S2P) on 6 April 2002.

Small Lump Sum

A Small Lump Sum is a form of retirement benefit available from some schemes that provide Money Purchase type pension benefits.

This is only available where the total value payable to you is less than £10,000 and must remove liability for all pension benefits payable to you related to the employment during which they were accrued. When a small lump sum is paid to you, 25% of the amount will be payable tax-free with the remaining 75% subject to tax in line with Pay As You Earn (PAYE).

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A Trustee or Trustees are responsible for running the Scheme. They have a legal duty to safeguard the benefits you have in the Scheme.

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