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P11D. Tax form returned by employer detailing benefits in kind for employees earning in excess of £8500 p.a.

P45. Certificate provided by employer on leaving service, showing PAYE code, earnings in the current tax year to date and how much tax paid since the start of the tax year.

P60. Annual statement provided by employer to employee showing income and tax paid.

Package. Separate elements grouped together to form a product or deal. See ‘Compensation Package’.

Packaged Products. Phrase used to describe products that invest in a spread of investments which may also include an element of life assurance e.g. endowment policies, investment bonds, unit, trusts, ISAs.

Paid Up. It is possible, with certain policies having an investment content e.g. endowment, to cease paying premiums and retain a paid-up policy which will pay out on eventual claim. Also another name for ‘preserved’ pensions.

Paper.

1. Documents such as bills of exchange which represent money .
   

2. share certificates.
   

3. banknotes.

Par Value. The face value, or nominal value of a company share, and the minimum value at which the shares are issued.

Parent Company. Company which holds at least 50% of the ordinary shares of another company. Distinguished from ‘Holding Company’ because a parent company often continues to trade in its own right, whereas a holding company usually does not.

Pareto Principle. Amongst Pareto’s many economic analysis laws and principles was the observation that income, whatever the political and taxation conditions, will be distributed in the same way in all countries - 20% of earners will receive 80% of the income. This has been extended generally to many situations e.g. 20% of sales calls produce 80% of the income.

Pari Passu. Latin phrase taken to mean of equal value or proportionately. Often used when new shares are issued with the same rights as existing shares.

Parity. Equal status, equal value. Often used when comparing currency values.

Parkinsons Law. Observations by C. Northcote Parkinson that:

1. work expands to fill the time available, and
   

2. expenditure rises to meet income. Taken to apply to larger organisations in his initial observations, but often applied generally.

Partner. In a legal sense, someone with whom you carry on a business.

Partnership Protection or Partnership Assurance See: Business Protection.

Patent. Official documents protecting the exclusive right to manufacture an item and exploit its use.

Pay and File. System of reporting profits and paying corporation tax, based on comprehensive questionnaire rather than assessment. Replaced by Self Assessment for companies for accounting periods ending on or after 1st July 1999.

Pay As You Earn. System of collection and payment of income tax operated by employers.

Pay As You Go. The State pays out benefits from revenue received from taxation and other sources, rather than funding and investing to produce income. Also termed ‘assessmentism’.

Payback Period. The length of time taken for the net cash inflow from a new project to cover the initial investment of the project.

Pecuniary. Relating to money; monetary.

Penny Shares. Term used to describe shares with low value, usually under £1 per share; often high risk shares.

Pension. An annual income, usually associated with the post-retirement period of one's life, but not necessarily so.

Pension Fund. General term used to describe an investment fund built up during working life and used at retirement to purchase an annuity to provide a continuing income.

Pension Increases. Once in payment, pensions may remain at the same level, increase occasionally at the discretion of the company or have contractual annual increases, up to increases in RPI.

Pension Mortgage. When there is a "promise to repay" the mortgage, using the lump sum cash payment, payable at retirement. As a pension cannot be assigned, the pension policy cannot be used as security.

Pension Schemes Office. An office of the Inland Revenue whose task it is to approve all occupational and Personal Pension Schemes. Replaced the Superannuation Funds Office.

Pension Transfers. Refers to a transfer of the cash value of accrued pension from an approved scheme to another approved scheme. The cash is transferred direct from one pension provider to another.

Pensionable Earnings. Earnings on which benefits and contributions are calculated. These are not necessarily full or P60 earnings, the actual definition depending on whether fluctuating earnings are excluded and/or adjustments made.

Pensionable Service. Period of service with a company which is used in the calculation of pension benefits (in defined benefit schemes) and of maximum approvable benefits.

Pensioneer Trustee. An independent trustee and mandatory requirement of a small self-administered pension scheme.

Pensioner’s Rights Premium. A state scheme premium paid to the state for a member (or pensioner over state pension age) of a contracted out defined benefit scheme which ceases to be contracted out. The state then accepts the liability to pay the GMP.

Pensions Ombudsman. Set up by the Social Security Act 1990 to review and settle disputes between pension scheme members and their pension scheme.

Pensions Tracing Registry. Agency which helps people trace accrued/preserved pension benefits where, for example, a company has ceased trading

PEP Transfer. Transfer of existing PEP investment to a new PEP manager. Aim is to benefit from lower charges and/or potentially better investment performance.

Peppercorn Rent. Nominal rent, often in goods rather than cash.

Per. Latin, meaning ‘for each’, as in

Per annum - each year

Per capita - each person

Per cent - each one hundred

Per Pro. Latin, Per Procurationem.
Having the authority, with the authority of, on behalf of.

Percentile. A one hundredth part of a set of data.

Periodic Charge. An IHT charge imposed on the capital of certain discretionary trusts, where the capital exceeds the nil rate band.

Perks. Shortened version of ‘perquisite’.
See ‘Fringe Benefits’.

Permanent Health Insurance. A policy which will provide an income in the event of long-term absence from employment because of illness or disability; income ceases upon return to work, retirement or death.

Permanent Interest Bearing Shares. Investment offered by building societies, giving a fixed rate of interest, paid twice yearly net of basic rate income tax but free of CGT.

Permitted Maximum. Usually refers to Revenue benefit and earnings cap limits.

Personal Accident Insurance. Not life assurance, but will pay out income or a cash lump sum in the event of disability, dismemberment or death, caused by an accident.

Personal Allowance. The level of income above which income tax starts to be levied.

Personal Chattels. Tangible and moveable property, personal belongings.

Personal Equity Plan. Tax free investment contract allowing limited investment into equities and unit trusts. One only per year per person, and they have to be maintained for a full year to get full tax benefits.

Personal Financial Planning. Generic term covering financial assessment and needs analysis, with a view to maintaining and improving the current financial situation, and securing the future.

Personal Investment Authority. (PIA) Regulatory organisation which replaced FIMBRA and LAUTRO and some functions of IMRO. It will be replaced by the FSA when it receives its full powers at N2 date.

Personal Pension Policy. A Pension policy available to employed persons who do not qualify for, or are not members of, an occupational scheme other than

1. a contracted in scheme (in which case the member can take out a Rebate only PP) or
   

2. a scheme providing death in service benefits only. Also available to the self employed with Net Relevant Earnings.

Personal Pension Protected Rights Premium. A state scheme premium paid when a personal pension arrangement ceases to contract out. The member is bought back into SERPS, for the amount the value of the PPPRP will purchase. No longer applies from 6th April 1997.

Personal Representative. Person who deals with the estate of a deceased person under the terms of a will or the rules of intestacy. Duties and responsibilities end when the estate has been dispersed and all taxes and debts paid.

Peter Principle. Theory advanced by Lawrence J Peter that in large organisations individuals are promoted to the level of their incompetence i.e. to jobs for which they are not suited and do not display competence.

Petrocurrency. Foreign currency earned by exporting oil.

Pie Chart. Diagram where statistical information is displayed as proportionately sized ‘slices’ of what appears to be a circular ‘cake’ or ‘pie’ shape. Comparison should be by area, not width.

Plaintiff. Someone who starts a legal action against another person.
See ‘Defendant’.

Pledge. An item retained by a pawnbroker in exchange for cash, and held until the cash is repaid. Essentially, a form of security.

Plenary. Complete. A ‘plenary session’ is a meeting attended by all.

Poison Pill. Action taken by a company threatened by an unwanted takeover bid to make it appear less attractive e.g. sale of an attractive or prized asset.

Polarisation. Concept introduced by the financial services regulations whereby it is mandatory for financial advisers to be either independent or tied to one company; they cannot be both simultaneously.

Policy. Formal document produced by the insurance company giving all details of the contract e.g. sum assured or insured, premium and payment frequency, term of the contract.

Policy Conditions. The 'small print' of a policy which sets out the rights and responsibilities of the parties involved.

Policy Document. The paperwork that makes up the policy - the formal document, and any schedules or amendments.

Policy Exclusions. The policy document may, if relevant, make a clear statement regarding any instances or situations upon which the insurance company will not pay out; these are the exclusions. They may be standard or specific to a particular proposer.

Policy Fee. Generally an administration fee, usually charged monthly or annually.

Policy Lapse. When the policyholder fails to maintain premium payments, the policy will eventually lapse, or cease to operate as a 'live' policy. Depending on the type of policy, there may be residual value in the event of a claim.

Policy Year. The period from commencement to the 'anniversary' date twelve months later.

Policyholder. Generally taken to mean the owner of the policy.

Policyholders Protection Board. Established by the Policyholders Protection Act 1975 to supervise protection for policyholders in the event of an insurer failing to meet its liabilities.

Pooled Investments.. Investments, such as unit trusts, where a number of people put their money together to enable them to buy a wider range of investments, thereby spreading the risk.
See also ‘Collective Investments’

Portability. Generally taken to refer to the ability to take pension arrangements from job to job without changing the policies involved and with the minimum penalties.

Portfolio. In financial terms, taken to mean the various securities and investments held by an individual.

Portfolio Strategy. Selection strategy with a view to pulling together investments with lowest average risks and highest returns.

Potentially Exempt Transfer. Gifts on which IHT will not be payable unless the donor dies within 7 years. If this happens, PETs become chargeable transfers and tax is calculated subject to a tapering scale, based on the value of the transfer at the date of the transfer.
See ‘Tapering Relief’.

Pound Cost Averaging. The term used to describe the effect of paying a fixed regular amount into a unitised investment fund where the value of units fluctuates. The amount will purchase more units when prices are low and vice versa. Over the longer term, the average cost per unit is lower than the average unit price over the period.

Power of Appointment. The ability under certain trusts to be able to change, or appoint new, beneficiaries.

Power of Attorney. Appointment of an agent to act on one’s behalf.

Practice Notes. Guidance issued by the Pension Schemes Office on the administration of approved occupational and personal pension schemes and limits applied to benefits. Referred to as IR12 and IR76 Practice Notes respectively.

Precatory Trust. Similar to a discretionary will, and allows an expression of wish in a will be to exercised as though written in the will itself.

Precedent. A decision used as the basis for future decisions in subsequent similar cases.

Preference Shares. Usually non-voting shares which pay out dividend before ordinary shareholders, and which will pay out first if the company goes into liquidation.

Premium.

1. A regular payment of money into a policy to secure the contract; an alternative word is Contribution.
   

2. Also describes what is paid for a share over its par value.

Premium Bonds. Purchased in units of £10 value with minimum purchase of £100, maximum £20,000. The bond numbers are entered in a monthly draw for tax-free cash prizes.

Premium Frequency. How often the premium is paid, e.g. monthly or annually.

Premium Rates. The actual cost of a policy depends on a number of factors, e.g. age, sex, mortality, which, when taken together, produce the premium rate.

Present Value. The cash sum you would need to put on deposit at a compound rate of interest to grow to a given figure at a future given date. See Future Value and Current Value.

Preservation. Granting of preserved accrued benefits in line with the minimum requirements required by the Social Security Act 1973.

Preserved Benefits. After two years as a member of an occupational pension scheme, benefits accrued to date must be preserved when leaving service. Less than two years service gives the option of taking a refund of any personal contributions, less certain deductions.

Price-Earnings Ratio. Calculated as share price divided by current earnings per share.

Prima Facie. On the face of it; at first appearance.

Primary Market. The new issue market on the UK stock exchange.

Principal. The initial cash sum invested, excluding interest earned or to be earned.

Priority Rule. The rule, set out in the pension scheme’s documentation, which details the order of priority of the purchase of benefits, when a scheme is wound up with insufficient funds to meet all its liabilities.
See ’Actuarial deficiency’, ‘Underfunded’.

Private Investor. A category of investor under the financial services regulations, equating to the 'average person on the street', and to whom the highest duty of care is owed.

Private Medical Insurance. Specialist insurance to cover the cost of in-patient medical care. May also cover some out - patient expenses.

Privity of Contract. Legal concept whereby only those party to a contract may sue or be sued on the contract.

Pro Rata. Latin, meaning at a proportionate rate i.e. a rate which varies depending on the size of something.

Probate. See 'Grant of Probate'.

Products. Generic term for life assurance, pensions, savings and investment policies.

Profession. An occupation or vocation needing skills and experience learned over a period of time, the practitioners of which are governed by an organised system of rules and ethics.

Professional Indemnity Insurance. Insurance intended to protect the insured from the legal consequences of the actions of an individual or a third party e.g. the policy would pay the costs incurred by any legal action and consequent award, resulting from, say, professional negligence.

Professional Investor. A category of investor under the financial services regulations, and one who would be transacting similar types of investment to the adviser.

Profit. The difference between the cost of goods and services, and their sale price.

Profit and Loss Account. A record of income and expenditure over a period of time, balanced to show profit or loss.

Profit Related Pay. Company remuneration scheme where, if registered, an agreed amount of income is tax exempt, but not NIC exempt.

Profit Sharing Schemes. The distribution of company profits in cash or share form to employees.

Projected Unit Method. A method of calculation of an actuarial valuation, where an allowance is made of projected earnings on accrued benefits. The contribution (funding) rate required is that necessary to cover the cost of all benefits accrued up to the date used in the valuation, but based on earnings projected to the date of retirement.

Promissory Note. A document stating that a sum of money will be paid to the bearer, or to a named person, or to that person’s order, on a particular date or on demand. It may be a negotiable instrument.

Proposal. A formal application, perhaps for insurance or business.

Proposer. The person applying to an insurance company for a policy.

Proprietory Companies. Insurance companies owned by shareholders, so that any profit is divided by shareholders and the reserves distributed between with profits policyholders.

Prospecting. The process of seeking new business leads and contacts.

Prospectus. A document which provides information to attract customers.

Protected Rights. The benefit under an appropriate personal pension, or a money purchase occupational pension scheme, which is attributable to the rebate in the NICs. There are certain restrictions placed upon these benefits, e.g. pension only (no cash), payable from age 60.

Protection Policy. A policy providing cash sums as compensation for losses, rather than one with investment content.

Proviso. A condition or qualification to a statement or action.

Proxy. A document authorising a third party to act on behalf of someone. May also be used as a term for the authorised person.

PTM Levy. A charge made on large share transactions used to fund the Panel on Takeovers and Mergers.

Punitive Damages. As Exemplary Damages.

Purchased Life Annuity. A privately purchased annuity, part of which is taxed, part of which is considered to be a return of capital and so escapes tax.

Pure Endowment. An endowment policy with no insurance content i.e. pays out a value only on maturity of the policy and provides no protection cover.

Put and Call Option. See ‘Cross Option’.

Put Option. An option to sell at a fixed price on or before a given future date.

Pyramid Selling. An illegal form of ‘hierarchical’ selling, whereby franchise agreements are sold to operators, along with stocks of the goods in question. These goods are then sold on down a distribution and sales chain. The system is viewed as illegal because the distributors tend to make the most money, leaving the final stage of salespeople in a situation where commissions earned are unlikely to pay back the payments made for the stock.