Financial terms are confusing to everyone, but you don’t want it getting in the way of finding the best ISA rates for over 60s and other money matter you face as you get older. To make it less confusing, we have rundown the common financial jargon you find and translated it too plainer terms.


Accrual rate

If you have a final salary pension, the accrual rate refers to the rate at which pension benefits built up in it each year.



An annuity converts your pension fund into retirement income. Shop around for the best deal as you can’t change your annuity provider once you purchased it.



The Annual Equivalent Rate (AER) shows the rate of interest earned in a year on savings or investments. The higher your AER, the better the return.



The Annual Percentage Rate (APR) shows the overall cost of borrowing on a credit card or loan. The lower the APR, the better deal you have.



Arrears refers to falling behind with regular payments such as monthly mortgage payments or not paying the required amount.



An Additional Voluntary Contribution (AVC) is an extra contribution you can pay into an occupational pension.


Capital Gains Tax

If you have to sell or give away an asset that has increased in value from when you first obtained it, you may be required to pay a Capital Gains Tax (CGT) on the profit. This typically applies to shares and investments.


Cashback Credit Cards

A reward scheme where your card provider gives you cash back each time you use your card. This could include £5 a month back for spending a certain amount with contactless payments.


Compound Interest

In interest you earn or owe is added to the original amount that interest is calculated on, meaning you are effectively earning interest on interest. This can help savings grow, but also accelerates debts.



The failure to pay back a loan.



Payments a company makes to its shareholders.


Endowment Policy

An investment plan that you pay into monthly for a fixed period. It pays out a lump sum at the end, or if you die before the plan finishes. Some policies also pay out in the event of critical illness.


Final Salary Scheme

A final salary scheme is a type of occupational pension. The amount of pension you get is determined on your salary at retirement or when you left the job and how long you were part of the scheme.


Fund Manager

A fund manager runs an investment scheme such as a pensions, and decides what shares or bonds the scheme should invest in.



An Independent Financial Adviser (IFA) will advise you on the best financial products for you after researching the whole market. You have the option to pay a fee for their service.


Inheritance Tax

A tax that is paid on your estate (everything you own, minus any debts) after you die, if the estate is valued over a certain amount.


Money Purchase

A money purchase is a type of pension where your money is invested in, for example, the stock market. The size of your retirement fund depends on how much you pay in and how well your investments do.


Payment Protection Insurance

An insurance policy that will help you keep up loan payments if you can’t pay them due to redundancy, accident or illness.


Retail Prices Index (RPI)

Measures inflation in the UK which is calculated each month by taking a sample of goods and services that a typical household might buy. This includes food, heating, housing, bus fares and petrol.



An employee savings scheme that stands for Save As You Earn. You can save up to £500 of your salary each month for a set period of time. At the end of that set period, you can use the savings to buy shares.


Standard Variable Rate

A loan at the lender’s normal mortgage rate. The lender may choose to move it up or down.


Transfer Value

The figure you get if you transfer your pension from one company scheme to another, or to a personal pension. By law, this must be fair to you.


Waiver of Premium

A feature on a personal pension plan or life insurance plan that guarantees your contributions will be paid for a period of time, usually by the insurer, if you are ill or lose your job. It often has an extra cost.


If you have any other queries about finance for older adults, take a look at our other blog posts or get in touch via our social media channels.