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Glossary

  • a

    Acquisition or purchase value

    The value used to calculate the number of points accrued on the basis of the RAFP contributions paid.

    Active benchmarked management

    This is where the investments are similar to those of the benchmark index but investment management is more active than under pure indexed management. The management mandate may, in particular, specify: a limit on tracking error relative to the benchmark; limits on the weight of individual issuers relative to the benchmark. The investment manager therefore makes few significant changes, in terms of sector, geographic spread, themes or specific securities, from the benchmark.

    Active non-benchmarked management

    When building the portfolio, the investment managers may deviate materially from the benchmark. The mandate does not specify: any limit on tracking error; any maximum weighting by issuer relative to the benchmark. For all ERAFP mandates, the investment managers must nevertheless select stocks from the SRI investment universe defined by ERAFP.

    Adjustment

    Calculation and payment of supplementary benefits following the receipt and/or processing of a declaration and payment of contributions. Adjustments are also known as ‘revisions’ in the administrative manager’s schedules and reports.

    AM

    RAFP’s administrative manager, the CDC.

    Annuity

    A sum paid at a specified interval (currently only monthly).

  • b

    Benchmark index

    An index that is representative of the market(s) in which the fund is invested.

    Best in class

    Approach used in socially responsible investing that consists of selecting those issuers considered to be the most responsible within a group of comparable issuers. For equities, this approach means not excluding any single business sector peremptorily, but favouring the companies in each business sector that have made the most progress as regards environmental, social and governance criteria.

    Bond

    A bond is a security evidencing a debt, issued by a State or by a company, and corresponding to a long-term loan. The bondholder receives income, also known as the coupon.

  • c

    Capitalisation rate

    Interest rate that enables an amount invested at this rate to reach a higher amount over a given time period.

    CDC

    France’s Caisse des Dépôts et Consignations, the scheme’s administrative manager.

    CSR

    The concept of Corporate Social Responsibility corresponds to the implementation of sustainable development practices at the company level. A socially responsible company integrates social, environmental and economic impacts in its decision-making mechanisms and strives to minimise these impacts.

  • d

    Defined contribution schemes

    Schemes in which only the amount of the contributions is set.

    Discounting

    Method for calculating the present value of a future amount based on an interest rate (here known as the discount rate).

    Dormant

    A person who has taken retirement under the main pension scheme but who has not yet liquidated his/her additional pension rights.

  • e

    Eligible person or successor-in-title

    A person who has acquired a right from another person, known as the rightholder. In the case in point, the term refers to those entitled to a reversionary interest, namely the beneficiary’s surviving spouse who has not remarried and orphans below the age of 21 (eligible persons do not necessarily include the beneficiary’s heirs).

    Engagement

    This term describes the dialogue between an institutional shareholder (pension fund, investment management company, etc.) and an issuer, typically a company, with the aim of ensuring that the issuer gives greater consideration to environmental, social and governance risk factors.

    ESG

    Acronym referring to environmental, social and governance issues.

  • f

    FCP (Collective Investment Fund)

    Acronym referring to environmental, social and governance issues.

    Funded scheme

    A funded retirement scheme invests the paid-in contributions in financial assets, which are liquidated at the time of retirement to pay the accrued rights either as an annuity or in a lump sum. The payment depends on both the amount saved and changes in the value of the assets (typically equities and bonds) in which the funds were invested.

  • g

    General Indicative Estimates for Pensions (French acronym: EIG)

    Document sent to active contributors aged 55 and subsequently every five years. The EIG provides an estimate of the amount of their pension at the legal retirement age and at the full rate, based on income projections prepared by the Pension Steering Committee (French acronym: COR).

    GIP information retraite

    French public interest group that includes 38 compulsory retirement schemes (CNAV, MSA, AGIRC, CNRACL, Ircantec, etc.) set up to create the individual information for beneficiaries on the rights vested in all the schemes in which they participate. GIP provides an online universal pension simulator (m@rel) that covers 95% of the population.

    Greenhouse gases

    Gases that are a source of global warming.

  • h

    Heir

    Any person entitled to a share of an estate.

  • i

    Indexed management

    The main objective of indexed management is to reproduce the performance of a benchmark index. The composition of an index-managed fund (weight in the fund of each security and therefore of each business sector or country) is very similar to that of the benchmark index.

    Individual Retirement Account

    A retirement account that includes details from the individual statement provided by the beneficiary’s employer. The account can be viewed online, through the secure SLG (online service) platform. The beneficiary’s rights are determined based on the information entered in the individual retirement account.

    Individual statement

    An annual statement containing a summary of all contributions paid into the public service additional pension scheme which the employer sends to the scheme manager for all relevant beneficiaries. The statement shows the amount of contributions paid into the scheme for each beneficiary, with a separate indication of those paid by the civil servant and those paid by the employer, although no distinction is made as to the type of premiums. Information is entered into individual retirement accounts on the basis of these individual statements.

    Individual Statement of Position (French acronym: RIS)

    Document sent to active contributors. The statements relating to RAFP are sent along with those of the main pension scheme. The RIS includes information on the beneficiary’s entire career, coverage periods and vested points. It can be prepared at the beneficiary’s request.

    Intergenerational equity

    This concept aims to ensure an equivalent standard of living amongst individuals at a given point in time and relative to other generations at the same ages.

  • l

    Liquidation

    Set of procedures for calculating and paying out benefits to a beneficiary.

    Liquidation of pension rights

    Liquidation of pension rights must be expressly claimed by the beneficiary. The annual annuity paid to the beneficiary will equate to the number of points accrued multiplied by the service value of a point, following application of an actuarial scale adjusting the service value according to the beneficiary’s age on liquidation of the additional pension benefits. A provisional liquidation is made on the basis of the beneficiary’s established rights under the scheme and adjusted when one or more of the rights are updated. The pension is paid in a lump sum if the beneficiary has accrued less than 5,125 points on the liquidliquidation is made on the basis of the beneficiary’s established rights under the scheme and adjusted when one or more of the rights are updated. The pension is paid in a lump sum if the beneficiary has accrued less than 5,125 points on the liquidation date.

    Lump sum pension

    Method of payment of an additional pension for beneficiaries who have accrued less than the threshold of 5,125 points, calculated by applying a conversion ratio to the amount of the annual annuity.

  • m

    Marketable security

    Security traded on the financial markets and evidencing a negotiable, associated claim or right (equities, bonds, etc.).

  • p

    Point

    Unit for calculating the pension in certain schemes. The contributions make it possible to acquire (vest) points. The amount of the pension is equal to the points acquired during the beneficiary’s professional life, multiplied by the value of a point at the time of retirement. Most additional pension schemes are based on points systems. Basic pension schemes tend to use the ‘quarters’ system.

    Points over threshold

    Points over and above 5,124, also known as ‘supernumerary’ points.

    Premium or pension bonus

    Premium applied to the amount of the future pension of a beneficiary who has reached the legal retirement age but chooses to continue working, even though he or she has satisfied the coverage period needed to receive a full pension.

    PRI

    Principles for Responsible Investment, a charter drafted under the auspices of the United Nations and to which ERAFP adheres.

    Provisional liquidation

    Calculation of the benefit due in the light of the beneficiary’s established rights on the effective date.

  • r

    RAFP pension

    The pension paid under the additional pension scheme to a qualifying beneficiary who retires.

    Return

    Ratio of the pension amounts received over the course of retirement to the contribution amounts paid in during the beneficiary’s active working life.

  • s

    Service value

    The value of the point used to calculate the RAFP pension.

    Share

    Negotiable security that gives its owner fractional ownership of a company and certain rights: to oversee and control management, to receive a share of the distributed profit (dividend).

    SRI

    Socially Responsible Investing is an approach aimed at integrating environmental, social and/or governance criteria in investment decisions and portfolio management.

    Supernumerary accounts

    Cases in which a pension is changed from a lump-sum payment to annuities following an adjustment. These apply to retirees who received a lump sum on provisional liquidation of their rights and who exceed the threshold of 5,125 points following the adjustment of their individual retirement account and therefore qualify for annuities. In such cases, the amount due is entered in a special account and the annual annuities are deducted from the relevant amount (terms used by liquidation of their rights and who exceed the threshold of 5,125 points following the adjustment of their individual retirement account and therefore qualify for annuities. In such cases, the amount due is entered in a special account and the annual annuities are deducted from the relevant amount (terms used by actuaries).

    Survivor’s pension

    Payment to a deceased beneficiary’s surviving spouse or ex-spouse(s) who has (have) not remarried or to the beneficiary’s orphans below the age of 21 (before or after the beneficiary retires) of part of his pension.

    Sustainable development

    The Brundtland Report, published in 1987 by the UN World Commission on the Environment and Development, defined sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

  • t

    Technical return

    Ratio of the service value of a point to the purchase value of a point.

    Tracking error

    Tracking error represents the volatility of performance variances between the fund and its benchmark index.