Dictionary of Financial Terms -
- Price/Earnings Ratio. Calculated by dividing the market price of a
company's ordinary shares by its earnings per share figure.
The ratio reflects the market's expectation
of the future earnings of a company in relation to its current earnings; in other words, its performance potential.
- Paid Up Insurance
- Insurance on which all required premiums have been paid.
- Paid Up Scheme
- A pension scheme where contributions have ceased, but which has
assets that are held and used by an administrator in accordance with the scheme rules.
- Partial Disability
- A disability which is less than total (according to the particular
definition relating to the contract in question) but still sufficient to hamper the individual in his or her
- Pay-As-You-Earn method of income tax collection.
- Payment holiday
- A feature offered by some mortgages that allow you to miss monthly
payments on your mortgage. Payment holidays are particularly useful if you have some other major expense - like a new
baby or a wedding - to cater for!
- Payout Requirement
- Private foundations are required by law to pay out at least five
percent of the fair market value of their assets each year in grants and administrative expenses.
- A continuing income that is usually associated with the
post-retirement period of a person's life.
- Pension Scheme
- A vehicle by which an individual can make pension provision. This
may be either collective or individual and with or without the involvement (by means of contributions or otherwise)
from the individual's employer.
- Pension Schemes Office
- A division of the Inland Revenue which oversees the approval of
pension schemes for tax relief purposes.
- Pensionable Earnings
- The earnings on which benefits and/or contributions for a pension
scheme are calculated.
- Pensionable Service
- The period of service with an employer that is used in calculating
pension benefits from an occupational pension scheme.
- Personal Equity Plan. Introduced in 1987 by the then Chancellor
Nigel Lawson, over 3 million people in the UK invested in a PEP before they were replaced by ISAs in April 1999.
Although you can no longer open invest in a new PEP you can still transfer your existing PEPs.
- Per Capita
- Per person, by or for each individual
- Per Mille
- Per Thousand. The Premium Rate for some types of group insurance is
quoted per £1000 of benefit.
- Permanent Health Insurance
- Permanent Health Insurance will pay you an income if you become ill
for a long period or if you become disabled and can't work.
- Permanent Total Disability
- Disability from which the individual is unlikely to recover at any
time in the future. Some insurance contracts may specify that permanent is to be taken as meaning 'extending to normal
- A term used to refer to the length of time insurance remains
continuously in force with a company.
- Personal Equity Plan
- A Personal Equity Plan allows individuals to enjoy the profits from
stockmarket-related investment free of income tax and capital gains tax. PEPs were introduced in 1987 but from 6 April
1999, new investment in PEPs is no longer possible. However, existing PEPs can continue in existence and for up to five
- Personal Investment Authority
- A Self-Regulating Organisation (SRO) set up under the Securities
and Investment Board (SIB) with responsibility for regulating retail financial services.
- Personal Lines
- Insurance designed for individuals rather than businesses or
- Personal Loan
- An amount of money borrowed from a bank or other lender by an
- Personal Pension Plan
- 1. A pension plan which produces income and possibly a tax-free
lump sum on retirement or death. Personal pensions commenced in July 1988 and are designed to allow anyone who is
either employed but not a member of an occupational pension scheme or self-employed to make provision for a pension in
retirement. Personal pensions can be used to 'contract out' of the State Earnings Related Pension Scheme. Employers can
normally contribute to the personal pension of an employee. Employees who are members of an occupational scheme cannot
contribute to their own personal pension plan. 2. Personal pensions are a way of making your own pension provision if
you are not a member of an employer's scheme. The return from a personal pension or part of it can be used to pay off
the capital sum of a mortgage at the end of the mortgage term usually 25 years or, sometimes, earlier. They have the
benefit of being tax efficient but to find out if they are suitable you should discuss with your financial
- Philanthropic Advisor
- An individual or firm which provides counseling and evaluative
services to donors before and after grantmaking decisions.
- The Personal Investment Authority, which regulates the way in which
financial products are marketed, promoted and sold.
- Public Limited Company. Denotes any company which has share capital
of at least a fixed amount.
- Private Medical Attendant's Report.
- The requirement for a financial adviser to be either 'tied' to one
financial product provider, or completely independent. A provision of the Financial Services Act.
- The legal document issued by the insurance company to the
policyholder, which states the terms and conditions of the insurance, it may also be called the policy contract or the
- Policy Reserves
- The measure of the funds that a life insurance company holds
specifically for fulfilment of its policy obligations.
- Policy Term
- The period of time for which an insurance policy provides
- The person or organisation who owns an insurance policy.
- Pooled Investment Fund
- A vehicle for bringing together the investments of many people or
organisations and using the combined funds to obtain economies of scale and investment management skills not available
to individuals. Examples include unit trusts, investment trusts, etc.
- All the interest rates in this range are portable. This means that
if you move home during the discounted or fixed rate period, you can enjoy the same rate, on the amount outstanding on
your original loan, for the remainder of the discounted or fixed rate period. Conditions apply - please ask for
- Pound cost averaging
- Pound cost averaging is a benefit of making regular savings in the
stock market, especially when the market is volatile. In practice it means that you can get more for your money by
investing in smaller, regular amounts.
- Pre-existing Condition
- Any physical or mental conditions that exist prior to the effective
date of insurance coverage.
- The single or regular periodic payment made to an insurance company
in respect of an insurance policy.
- Pre-tax Net Income
- A corporation's annual net income before it has paid taxes. In the
USA, The Internal Revenue Service currently allows corporations to deduct charitable contributions as much as 10
percent of their pre-tax net income.
- Private Foundation
- A foundation that receives most of its income from, and is subject
to control of, an individual or other single or limited source. See Foundation. Also in the US, the technical IRS term
for an organisation which is tax-exempt under Section 501(c)(3) and classified as a private foundation under the
Internal Revenue Code. In the US, a private foundation is referred to as 'having a 501(c)(3) status'.
- Private Operating Foundation
- A legal classification for an endowed organisation which uses its
income to operate a charitable activity, such as a school or camp, rather than to make grants.
- Private Medical Attendant's Report
- A report from an individual's own doctor ('Private Medical
Attendant') which does not require a medical examination to be carried out. Used for underwriting purposes.
- Private medical insurance
- Pays towards private medical treatment if your condition is covered
by the policy.
- Processed Date
- The date the contribution was credited to the account by the
Charitable Gift Fund (USA).
- The process by which the Will of someone who dies while living in
England or Wales is validated. A local Probate Office will issue a Grant of Probate to validate a will and authorising
the executors to administer the estate. This Grant has the status of a decree of the High Court. Hence anyone dealing
in good faith with the executors named in the Grant has legal protection against any other party claiming to represent
- Professional Indemnity Insurance
- Protects professionals against liability claims resulting from
- Pro Rata Premium
- A rate charged for a period of insurance cover shorter than the
normal period. For example, if an insured had cover for one quarter of a year, the Pro Rata premium might be only one
quarter of the annual premium.
- Pension Schemes Office.
- Public Charity
- In the USA, charitable organisations (those designated under
Section 501(c)(3) by the Internal Revenue Code) that qualify as public charities, private operating foundations, or
private foundations. A public charity as defined in Section 509 (identified by the Service as "not a private
foundation") normally receives a substantial part of its income, directly or indirectly, from the general public or
from government sources. The public support must be fairly broad, not limited to a few individuals or
- Public Company
- A company listed on the stock exchange and hence one whose shares
are available for public investment.
- Public Foundation
- A nonprofit organisation that receives at least one-third of its
annual income from the general public (including government agencies and foundations). Public foundations may make
grants or engage in charitable activities.
- Purchased Life Annuity
- An income for life purchased from an insurance company. That part
of the annuity that is deemed to be return of capital is tax-free but any balance is treated as interest and is subject
to income tax.
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