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Rally. A reversal
of a downward trend of, say, share prices.
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Ramp. The purchase
of shares to force up share prices artificially.
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Ratio. The value
of one thing compared to something else.
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Real Estate. Property
comprising land and/or buildings. Also termed realty.
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Reason Why Letter.
A letter from financial adviser to client explaining the reasons
behind a recommendation.
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Rebasing. To ensure
that capital gains tax is not paid on any inflation linked increase
in the value of an asset, the purchase price is index linked from
date of purchase to date of disposal.
Where the asset was acquired before 31.02.1982, the purchase price
is taken to be the market value as at that date; this is the rebasing
- rebasing for indexation purposes.
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Rebate. Either
a reduction in price or a return of an overpayment.
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Rebate Only Personal Pension.
A personal pension which is made up solely of the National Insurance
rebates, payable by the DSS, where the member has elected to contract
out of SERPS, by means of a personal pension. See ‘Appropriate
Personal Pension’.
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Receiver. Someone
appointed by the court, or under statute, to protect and preserve
property, or to receive income from property and apply it as directed.
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Recession. Fall
or reduction in trading volume.
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Recognised Professional
Body. In addition to the Self Regulatory Organisations,
solicitors, insurance brokers, actuaries and accountants professional
organisations are recognised by SIB as being competent to control
their members’ conduct when providing financial advice.
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Red Book. Text
of the Chancellor’s speech published on budget day.
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Redeem. Pay off
a debt.
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Redeemable. An
investment where one’s initial investment is repayable at some
future date or event.
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Redemption Date.
The date on which a loan is to be repaid.
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Redemption Penalties.
When a loan under a mortgage is repaid before the agreed date,
there may be penalties and fees due to cover the lenders lost
investment and administration costs.
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Reduced Allocation.
A method of recouping initial expenses when setting up a unit
linked policy, whereby only a proportion of the investment is
allocated to the policy for the first few years.
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Reduction in Yield.
The amount by which an insurance company’s charges can be expected
to reduce the investment return on a policy with an investment
content.
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Redundant. Excess
to requirements.
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Reflation. Stimulation
of the economy by increasing the money supply and/or by reducing
taxes.
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Register of Members.
A company document listing details of members (shareholders) including
how many and what type of shares.
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Registered Individual.
Out of date term for a person registered with an SRO or a RPB.
PIA now uses the terms Independent Practitioner for IFAs, Product
Provider for those selling packaged products, and Marketing Associate
for company representatives.
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Reinstate. In certain
circumstances, it may be possible to 're-start', or reinstate
a policy where premiums have been unpaid for some time. Conditions
vary amongst companies and depending on the policies.
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Reinsure. An insurer
will try to spread the risk of certain large risks by seeking
to reinsure, or share, the risk with other companies in exchange
for part of the premium.
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Reinvestment Relief.
Allows CGT to be deferred when the gain is reinvested in certain
qualifying investments, for instance a Venture Capital Trust or
an unquoted investment including EISs and Shares listed on AIM.
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Related Property.
Related property means separate assets which, when valued together,
have a higher value than when valued separately e.g. a pair of
antique candlesticks together may be worth £1000, but separately
only £300 each. For IHT purposes, when splitting related property,
the value of the gift is deemed to be the relevant portion of
the joint value, not the value of the item on its own e.g. in
the case of the candlesticks, £500 each, rather than the £300.
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Relevant Benefits.
One of the proviso's for an occupational scheme to qualify for
'exempt approved' status, and meaning in broad terms any financial
benefits provided on death or retirement, but not a PHI-type benefit.
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Relevant Earnings.
Defined in S623(2) of the Income and Corporation Taxes Act 1988.
Refers generally to earned income only, schedule D and E.
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Remainderman. Someone,
male or female, who benefits from an estate after the death of
a life tenant.
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Remortgage. Replacement
of an existing mortgage loan with another, usually from a different
lender.
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Remuneration. In
pension planning terms generally taken to mean the full and total
earnings package i.e. salary and benefits in kind.
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Remuneration Limited. A figure set out in legislation,
which is used to determine whether a member of an occupational
pension scheme may also contribute concurrently to a scheme governed
by the new defined contribution regime.
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Renewable. Generally
used in connection with a type of term assurance, which runs for
an initial period of years. At expiry the policyholder has the
option to 'renew' the policy, at premium rates current at the
time, but without need for further underwriting.
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Rent. Payment by
a tenant to a landlord for the use of property
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Repayment Mortgage.
Loan repayment by means of instalments made up of capital and
interest.
See 'Annuity mortgage'.
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Requisite Benefits.
The minimum scale of benefits that were originally required in
order that a defined benefit scheme could contract out. This requirement
was removed in November 1986, but is intended to be re-introduced
(Pensions Act 1995).
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Residence. A place
in which a person has a home. See 'Domicile'
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Resident. Someone
living in a country whether domiciled or not, whether a citizen
of that country or not.
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Residual Value.
The value of property or assets remaining after e.g. repayment
of a loan, or at the end of a lease agreement.
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Retail Price
Index. A monthly indication of the average price
changes to a particular 'basket' of consumer goods, and used as
a general indicator of price inflation.
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Retained Benefits.
Pension benefits earned in previous employments and self employments.
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Retirement. The
state of having given up full time work.
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Retirement Annuity
Contract. The forerunner of the Personal Pension
Plan, although there are differences between the two e.g. in terms
of contributions and availability of cash sums. New RAC contracts
no longer available, but existing contracts may continue.
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Return on Capital.
Profit before tax and interest, expressed as a percentage of capital
employed.
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Revaluation. A
means of increasing a figure from a base date in line with inflation
e.g. pensionable salary, accrued pension deferred, pension in
payment, or capital gains.
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Revenue Maxima.
Revenue imposed ceilings on benefits and contributions when calculating
maximum approvable benefits.
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Revenue Undertaking.
A written undertaking, provided by the scheme administrator, promising
to notify the Inland Revenue in the event of certain circumstances,
or before taking certain specified actions. For example, the undertaking
that benefits will not exceed Inland Revenue maximum approvable
limits.
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Reversionary. Generally,
refers to property which passes on death.
| Also |
: reversionary annuity - one paid on the death of someone;
: reversionary bonus - see above. |
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Reversionary Bonus.
The general term for the annual valuation and distribution of
surplus to with-profits policyholders.
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Revertor to Settlor Trust.
A trust where the settlor is one of the trustees, and which contains
the facility for some or all of the trust property to revert,
or return, to the settlor if the settlor is alive at a particular
date.
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Revolving Credit.
Credit offered on the basis that as the debt is reduced, more
may be borrowed up to the agreed limit.
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Rights Issue. Issue
of shares to existing shareholders in order to raise extra finance.
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Risk. In insurance
terms, the likelihood of a claim being made on a policy during
its term.
In investment terms, the balance of potential loss and potential
gain as perceived by the investor; a subjective view in general.
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Risk Aversion.
The degree to which a client is unwilling to take on a
risk.
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Roll-over Relief.
A tax concession which allows investors and businesses to defer
the payment of CGT. For example, if proceeds from the sale of
a fixed asset are re-invested, CGT is not payable until the new
asset is sold.
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Roll-up Funds.
An offshore investment fund which does not distribute its dividends.
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Romalpa Clause.
Often seen on purchase invoices stating that ownership of the
item does not pass to the purchaser until full payment has been
made.
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Rule of 115. To
calculate how long it will take to treble money with interest
reinvested, divide the interest rate into the number 115.
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Rule of 72. To
calculate how long it will take to double money with interest
reinvested, divide the interest rate into the number 72. For example,
at 8 per cent it would take nine years to double the principal
– 72 divided by eight is nine.
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