In short, AAA ratings (‘triple-A ‘ratings) are the highest credit rating available for an investment, such as a bond or company.
AAA ratings are issued to investment-grade debt that has a high level of creditworthiness with the strongest capacity to repay investors.
Similarly, the AA+ rating is issued by S&P (Standard and Poor) and is similar to the Aa1 rating issued by Moody’s. It comes with very low credit risk and indicates the issuer has a strong capacity to repay.

Accrual rate is the speed by which a pension from an earnings−related occupational pension scheme builds up from one year to another. The rate is shown as a fraction or a percentage of the member’s final yearly salary.

The type of unit trust which reinvests the income it earns, instead of paying it out immediately to the investors, is called an accumulation unit.

An actuary is an expert on pension scheme assets and liabilities, life expectancy and probabilities for insurance purposes (the likelihood of things happening). An actuary works out whether enough money is being paid into a pension scheme to pay the pensions when they are due

People in occupational pension schemes can pay in extra money to increase their pension benefits. It’s not compulsory. The extra money they pay in is an additional voluntary contribution.

An agreement between you and your financial adviser to pay directly for the services you receive, initially and ongoing. The payment may be made directly, as a fee, or taken from your investment as a matched deduction which will be facilitated by a financial product provider.

This stands for annual equivalent rate. It is quoted by financial institutions, such as banks, to show how much the interest rate would be if the interest was worked out just once a year. It is intended to make it easier for people to judge how much interest they pay (or receive) when it is being worked out more than once a year. It is also intended to make it easier to compare different financial products.

When money is paid into a fund (such as a pension fund) the allocation rate is the percentage of the money left which can be invested after the charges have been taken off. For example, if the charges were 2% the allocation rate would be 98%.

The Annual Allowance is the limit of pension savings you can make in any tax year before you face a tax charge. You may be able to “carry forward” unused allowance from the last three years to increase your limit for the current year. Your annual allowance includes all the payments made into your pension by you, your employer, or any third party. It also includes most increases in benefits if you are an active member of a defined benefit pension scheme (or final salary, or career average pension plan). Check the latest tax rules at www.hmrc.gov.uk or get professional help.

Fees taken by financial service providers for looking after your investments.

An annuity is an amount paid out every year to someone. The money usually comes from an insurance policy. It can be split up into smaller amounts and paid out more frequently, such as monthly. It is usually paid for the rest of the beneficiary’s life.

This stands for annual percentage rate. It is intended to give people a more accurate idea of how much they are being charged when they borrow money.

The proportion of investments in a fund or portfolio that are held in different asset types, such as equities, fixed interest and cash, UK or overseas.

Items owned by an individual like investments, shares and property. Money held in a bank account is known as a liquid asset. Assets may also be held in a fund.

An attorney is a person appointed to act for another person, for example, when someone is unable to look after their own affairs. A formal document called a power of attorney is used to appoint the attorney

Glossary of Personal Financial Terms

AAA Rating

In short, AAA ratings (‘triple-A‘ ratings) are the highest credit rating available for an investment, such as a bond or company.

AAA ratings are issued to investment-grade debt that has a high level of creditworthiness with the strongest capacity to repay investors.

Similarly, the AA+ rating is issued by S&P (Standard and Poor) and is similar to the Aa1 rating issued by Moody’s. It comes with very low credit risk and indicates the issuer has a strong capacity to repay.