24 Hour Loans glossary of financial terms

Allocation Rate

The allocation rate is a term which is used to describe how the money you pay into a pension is actually utilised. The pension payments that you make on a regular basis do not actually all go into your pension scheme ? some will be given to the pensions company that manages it to cover things like administration fees and other charges. The actual percentage of the payment you make that actually does go into your pension to be invested is called the allocation rate.

So if you make a pension payment of ?100 and you have a 70% allocation rate then 70% of your payment (i.e. ?70) will be paid into your actual pension scheme. The other 30% will not be paid into your pension. With this in mind the allocation rate can play a major part in a consumer?s pension choice. In basic terms, the lower the allocation rate the less of your money will actually go into being invested in your pension. Conversely, a higher allocation rate will give you a higher amount of investment.