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The words on the paperwork
Pension jargon, A to Z
Short definitions of the terms that turn up on pension and tax letters, with the official 2026/27 figures where there is one. Each entry links to the explainer that goes into it properly.
Definitions
Additional State Pension
The second tier of the pre-2016 system, also known at different times as the State Second Pension or SERPS. It sat on top of the basic State Pension and could be contracted out of. For 2026/27 it is uprated by 3.8%, not by the Triple Lock figure.
Attendance Allowance
A benefit for people over State Pension age who need help looking after themselves because of a disability or health condition. Paid at £76.70 or £114.60 a week for 2026/27, and not means-tested. Scotland uses Pension Age Disability Payment instead.
Basic State Pension
The State Pension for people who reached State Pension age before 6 April 2016. The full standard rate rose to £184.90 a week from 6 April 2026.
Contracted out
A pre-2016 arrangement in which an employee stepped out of the Additional State Pension, paying lower National Insurance or having part of it go into a workplace or private pension instead. All contracting out stopped on 5 April 2016.
CPI
The Consumer Prices Index, the official measure of price inflation. It is one of the three measures in the Triple Lock, and it is the measure used on its own to uprate protected payments, Additional State Pension and deferral increments.
Defined benefit
A workplace pension that promises an income worked out from a formula, usually years of service and a measure of salary. Often called final salary or career average.
Defined contribution
A pension built as a pot of money from contributions and investment returns. The value can rise and fall, and the statement shows a current value alongside a projected figure.
Deferral
Delaying a State Pension claim. It happens automatically if the pension is not claimed. For people reaching State Pension age from 6 April 2016, every nine weeks deferred adds 1% to the weekly payment for life — just under 5.8% a year.
Guarantee Credit
The part of Pension Credit that tops weekly income up to the standard minimum guarantee — £238 single or £363.25 for a couple in 2026/27 — plus any extra amounts.
Increments
The extra State Pension built up by deferring a claim. Once in payment, increments are uprated in line with CPI — 3.8% for 2026/27 — rather than by the Triple Lock.
Means-tested
Assessed against income and capital. Pension Credit is means-tested; the State Pension and Attendance Allowance are not.
National Insurance credits
Credits that make a tax year count as a qualifying year without contributions being paid — for example during periods of caring, illness or unemployment. Some are automatic and some have to be claimed.
National Insurance record
The official list of tax years in which you paid or were credited with enough National Insurance. It is what a State Pension entitlement is calculated from.
New State Pension
The State Pension for men born on or after 6 April 1951 and women born on or after 6 April 1953. The full rate rose to £241.30 a week from 6 April 2026.
Pension Credit
A means-tested top-up for people over State Pension age on a low income. Separate from the State Pension, with no upper savings limit, and a gateway to other help such as Council Tax Reduction and a free TV licence at 75 or over.
Personal Allowance
The amount of income you can receive before Income Tax applies. The standard allowance for 2026/27 is £12,570. It is reduced for income above £100,000 and removed entirely at £125,140.
Protected payment
An amount paid on top of the full new State Pension, for someone who paid into the Additional State Pension before 2016 and would have received more under the old rules. It is uprated by CPI rather than by the Triple Lock.
Qualifying year
A tax year in which your record shows enough National Insurance contributions or credits for the year to count towards the State Pension. It is not the same as a year of work: a year with low earnings may not qualify.
SERPS
The State Earnings-Related Pension Scheme, an earlier name for the Additional State Pension. It is the tier that contracting out applied to.
Simple Assessment
A tax calculation HMRC may send after the end of the tax year where tax due cannot be collected through a tax code. It sets out tax already owed rather than creating a new charge.
Starting amount
The figure calculated in April 2016 comparing what a record was worth under the old rules with its value under the new ones, taking the higher. It is what each pre-2016 record carried into the new system.
State Pension age
The earliest age at which a State Pension can be claimed. It is reviewed periodically, and the official tool also gives the Pension Credit qualifying age and bus-pass eligibility date.
State Pension forecast
A free official estimate of what your record is projected to produce, for people not yet receiving a State Pension. It already reflects any contracted-out deduction, so it is more useful than a count of qualifying years.
Tax code
The instruction HMRC gives an employer or pension provider for how much tax to deduct from that income. 1257L is the code used for most people with one job or pension, and you get a separate code for each.
Triple Lock
The rule used to uprate the full basic and new State Pension rates: the highest of average earnings growth, CPI inflation or 2.5%. For April 2026 the earnings measure gave 4.8%.
Uprating
The annual adjustment of a published pension or benefit rate. It changes the rate itself and is applied automatically to an existing eligible award — it is not a separate payment and there is nothing to apply for.
General information
These definitions describe published rules and official figures for the 2026/27 financial year. They are general information, not personal pension or tax advice, and what applies to any individual depends on their own record and circumstances. The official services on GOV.UK are the place to confirm a personal position.