Forms & Publications

SJCERA GLOSSARY

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Term Definition
Part-Time Employee A part-time employee is a permanent employee who works less than full time. Part-time employees may not be eligible for membership depending on the system.
Party in Interest A person who is prohibited from engaging in certain transactions with the plan. Defined as:
(1) a fiduciary, counsel or employee of the plan;
(2) a person who provides services to the plan;
(3) an employer any of whose employees are covered by the plan;
(4) an employee organization any of whose members are covered by the plan;
(5) a 50% or more owner of an employer or employee organization;
(6) a relative of any of the foregoing except item 4;
(7) a corporation, partnership, trust or estate 50% or more owned by persons in items 1-5 above;
(8) an employee, officer or director of the plan or of a person in items 2-5 and 7 above. See also disqualified employee; prohibited transaction.
Pensionable Income

Compensation earnable is the term that refers to the pensionable earnings base used to determine both:

  • The contributions a person pays as an active member in a contributory plan
  • The benefits that a member in any plan receives after retirement It includes the member's:
  • Base salary and other earnings deemed pensionable.
Period Certain Annuity A contract that provides an income for a specified number of years, regardless of life or death. If an annuitant dies, his or her beneficiary will receive payments for the remaining number of specified years. Also referred to as period certain, term certain, or dollar temporary annuity.
Permanent Employee A permanent employee is an employee who works on a continuing basis for an indefinite duration. Permenent employees who work less than full time may not be eligible for membership, depending on the retirement system.
Permanently Disabled A member is determined to be permanently disabled when she is permanently incapacitated from performing a substantial portion of her job duties.
Perquisite A benefit tied to a specific key or management-level job; for example, a company car for personal use, free meals, financial counseling or use of company facilities.
Phantom Stock Full value A long-term executive-incentive plan in which the participant receives a payment in cash, representing the value of a number of shares of phantom stock, using the company’s actual stock prices as the value determinant and the
Plan Administrator As defined by ERISA, the person or organization (frequently the sponsor) designated (by the terms of the instrument under which a pension or welfare plan operates) to administer the plan.
Portability A retirement plan feature that allows participants to change employers without changing the source from which benefits (for both past and future accruals) are to be paid.
Power of Attorney A durable power of attorney is a document, executed by a member, which empowers another person or entity to act in his behalf.The member has the right to revoke or terminate this durable power of attorney at any time, as long as he is competent.
Pre-Tax Contributions Pre-tax or taxable contributions are member contributions made through payroll deductions on or after (12-23-96) and are excluded from a member’s taxable income for the year in which they are made. They also include those contributions that are rolled over into a contributory plan either from an IRA or another qualified employer plan.   Taxable contributions are not taxable until received either as retirement income or as a lump-sum payment when a member terminates or dies.
Preferred Providers Preferred providers are physicians, hospitals, and other health care providers who contract to deliver health care services to persons covered by a particular plan.
Present Value An aspect of money which recognized that receipt of a dollar in five years is less desirable than receipt of a dollar today. Present-value formulas take into account assumptions about interest rates, to produce an estimate of the current work of the guaranteed delivery of a dollar at some specified point in the future. Present-value formulas and variants are used in determining funding requirements for several compensation and benefit programs.
Profit-Sharing Plan Plan established and maintained by an employer to provide for the participation in its profits by its employees or their beneficiaries. The plan must provide a definite predetermined formula for allocating the contributions made to the plan among the participants and for distributing the fund accumulated under the plan after a fixed number of years, the attainment of a stated age, or upon the prior occurrence of some even such as layoff, illness, disability, retirement, death or severance of employment. Deferred profit-sharing plans are subject to the participation, vesting, reporting and disclosure, and fiduciary rules of ERISA. They are excluded from the funding and plan termination provisions of the act. - Current profit-sharing plan (cash). Profits paid directly to employees in cash, check or stock as soon as profits are determined. - Deferred profit-sharing plan. A defined contribution plan; a qualified program of retirement benefits wherein the employer provides retirement benefits subject to a written agreement and based on the limitations described in the IRC. The employees’ benefits for retirement are based strictly upon the sum total of the contributions made and the investment result thereon.
Prohibited Transaction An ERISA rule which states that, with certain exceptions, a trustee or the plan fiduciary may not engage in any financial transaction with the employer or individuals in control of the employer (referred to as parties in interest under the regulatory provisions and as disqualified persons under the tax provisions) if he or she knows or should have known that such a transaction is prohibited by ERISA. This includes the selling or leasing of property, the lending of money, the furnishing of goods, services, or facilities, or the transfer of any assets to or for the use of a part in interest (or disqualified person). In addition, plans other than eligible individual account plans may not invest more than 10% of plan assets in the employer’s securities and/or real property. A plan may not hold or acquire an employer security or employer real property that is not a “qualifying employer security.” In regard to an IRA, any action that results in a constructive distribution from an IRA. According to the IRS, such actions are borrowing money from an IRA, selling property to an IRA or receiving unreasonable compensation for managing an IRA. The effect is a loss of favorable tax treatment.
Projected Annual Benefit Used in funding calculations of pension liabilities. Generally, calculates an annual benefit when a participant would retire.
Provider A provider is a term used to describe an individual or group of individuals who furnish health care services. It can include hospitals and clinics, as well as doctors and other practitioners.
Prudent Person Rule A common-law standard applicable to the investment of trust funds. Briefly stated: - All that can be required of a trustee in the investment of trust funds is that she or he conduct her or himself faithfully and exercise sound discretion. She or he is to observe how persons of prudence, discretion, and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of the capital to be invested. ERISA: - ... a fiduciary shall discharge her or his duties ... with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and like aims. An investment standard adapted by the majority of states that allows a fiduciary to invest in only those securities which would be acquired by prudent persons of discretion and intelligence who are seeking a reasonable return and preservation of their capital. Some states have a legal list published by the Superintendent of Banking to which savings banks, trust funds and similar institutions must adhere.
Purchasing Power In cost-of-living agreements, any index that measures the power of a dollar to purchase goods. Inflation is reflected in loss of purchasing power of currency.
Purchasing Service Credit Purchasing service credit is the application and payment process by which service prior to membership may be purchased as additional retirement service credit.