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Abbott-Langer & Associates Business Glossary

This glossary of business definitions contains over 2,000 business terms used in compensation and benefits administration. Continually updated, this specialized business dictionary focuses on definitions of Human Resources terms and business terms.

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Package

A combination of benefits and wages that employees receive due to collective bargaining.

Paid Sabbatical

An executive benefit that allows a paid leave of absence for a predetermined period of time, usually to let the executive to follow another endeavor.

Paid-Up Policy

An insurance policy that has already been paid, therefore no further premium is due for services that are received at a future date.

Paired Comparison

An arranging technique that compares the occupations being evaluated to all other jobs to determine which of the positions has a higher value.

Par Value

For stocks a random number given to a stock that is issued that is obligated by the registration requirements of particular states. Not all states have a par value for shares.

Parachute

An employment contract that states if there is a change in control of the corporation, there will be an increase or accelerated payments or vesting or some other rights to the employee once the change is final as stated in the contract.

Paramedical Report

A report that is completed by another medical professional such as a technician, or a nurse or a physician assistant after a medical history and physical examination.

Paraprofessional

A trained worker who assists a professional, although not a member of the profession. For example: AA’s in disciplines like Accounting and Information Technology, Certified Information Systems technicians, paralegals, licensed paramedics, certified professional secretaries, CAD-CAM operators, and other similarly technically focused workers who are narrowly specialized and whose formal credentials fall short of Wage-Hour FLSA Professional Long Test requirements. Typically, these individuals have successfully completed an extensive course of professional instruction (or the equivalent) beyond secondary school but short of a four-year college degree.

Parent And Subsidiaries

One company is controlled by another company via stock ownership.

Parent Subsidiary Group

One company, the parent company, owns stock in one or more companies called subsidiaries.

Parking

A free parking space dedicated to an employee is typically a taxable benefit, however if there is not a market value to the parking space, not value can be determined.

Partial Disability

A type of disability that would prevent an insured from completing the usual occupation on a full time basis, or from completing some of the duties of that usual occupation.

Partial Disability Benefit

A disability income insurance policy that pays a flat amount if the insured has a partial disability.

Partial Plan Termination

Termination of a pension plan or benefit plan from a specific organization, but not for another.

Participants

An employee that is currently eligible or will be eligible in the future for the company benefits. A participant may also include a beneficiary.

Participating Insurance Contract

A agreement with the employer group and the insurance company in which the premium due is based upon the actual premium and utilization of the plan.

Participating Policy

A kind of life insurance policy or annuity where dividends might be paid to the policy owner.

Participation

The amount of individuals given pay increases as a percentage of all of the employees in that group.

Particular Weight

In FLSA exempt employee determinations, factors to consider include, but are not limited to, whether it is part of the employee’s job duties to make such suggestions and recommendations; frequency with which such suggestions and recommendations are made, requested, and relied upon.

Partnership Insurance

One type of insurance for businesses that is intended to provide funds to the remaining business partners so that they may purchase the interest of the business of the disabled or deceased partner.

Past Service

The time of employment prior to a pension policy beginning or being amended or the time before that employee had begun participating in the plan.

Pay Adjustments

A universal change in pay raises.

Pay As You Go

The typical technique for financing social security.

Pay At Risk

A changeable pay policy that is funded by a reduction of base pay that is typically offset by the chance that a larger variable pay policy will payout when base pay is not at risk.

Pay Compression

A term used to describe differentials in pay that is too little to be considered equitable. May be applied to the differences between (1) a supervisors pay and that of a subordinate. (2) The pay of an experienced employee versus that of a newly hired employee.

Pay for Performance

Paying employees based upon their performance level. Employees are evaluated via performance appraisals and given raises based upon their performance ratings. Poorly performing employees have their wages frozen; they are not given wage cuts.

Pay For Time Not Worked

An employee is paid for the time that was not actually worked, such as holidays, jury duty, and personal days.

Pay Grade

The salary level assigned to a job through a job evaluation system. (See ERI DLC Course 34: Installing Job Evaluation in Your Organization.)

Pay In Lieu Of Notice

A pay arrangement for employees that have been terminated that is a continuation of the usual pay and usual benefits after the last day for a specific period of time.

Pay Plan

A list of pay ranges or rates for each job in the plan classification. Might also include administration rules and benefits.

Pay Policy

A specific position of a company's pay with respect to the jobs competitive pay at a specific time.

Pay Policy Line

The pay level that a company sets its pay at compared to the market pay, typically the midpoint of the pay structure is set to judge the going market rate.

Pay Range

Usually used to determine individual employee pay, this term refers to range of rates, from the minimum to the maximum for a particular class or grade of employees.

Pay Range Overlap

The level to which pay ranges in adjacent grades in a category overlap.

Pay Satisfaction

When an employee thinks that the salary they are paid is fair in comparison to the work they actually perform.

Pay Steps

Specific levels in a pay range. An employee may move up grades depending upon their performance, time at the same grade, new job skills or performance.

Pay Survey

Data gathered regarding salaries and wages that is paid for by other employers to see specific job classes or benchmark jobs.

Payee

The individual that benefits are payable to as stated in the supplementary contract.

Payment Of Insurance Money Into Court

In Canada, an insurer can take action if they have admitted liability to fund policy proceeds, however the insurer cannot determine the appropriate recipient. After the insurer pays the court, they are released of any further obligation under the policy.

Payout Frequency

The time that incentives are paid. They can be paid weekly, monthly, per quarter, or yearly.

Payroll Deduction Plan

A payment method in which the employer deducts the premium from the individual employee's paychecks and sends it to the insurer.

PBA

Principal Business Activities are IRS definitions of industry classifications.

Peer Comparison

This is an idea in which results of incentive plans certain financial measures are compared to those of similar organizations.

Peer Review Organization

Local physicians that belong to an organization that assist in resolving insurance claims arguments and encourage ethical and fair behavior in the health care business.

Penalties

In benefits and wages, when a employer does not adhere to the legal requirements they must pay a sum of money.

Pension

A fixed sum of money that is paid to a person that has retired and is entitled to receive the benefit under the pension plan.

Pension Benefit Guaranty Corporation (PBGC)

A federal corporation that insures the benefits of defined benefit pension plans. The PBGC is supposed to ensure that all plan participants received their vested benefits, even in the event that the pension plan goes bankrupt.

Pension Benefits Guarantee Fund

In the Canadian province of Ontario, a fund is created to guarantee that benefits are paid in the event of insolvency of a pension plan.

Pension Benefits Standards Act

Federal legislation in Canada that regulate administration of pension plans for federal employees and other employees that may fall under this legislative authority.

Pension Equity Plan (PEP)

A kind of defined benefit pension plan that bases its retirement on final pay, however the percentage at a certain rate per year based upon the individual's age and/or service.

Pension Fund

A fund set up to manage the assets and pay for the pensions of retirees.

Pension Index

An index utilized by the Canadian Pension Plan and Quebec Pension Plan to change the pension payments to incorporate the effects of inflation.

Pension Plan

A benefit plan that offers retirement benefits from a trust or another fund, via the purchase of insurance or from an unfunded plan.

Pension Plans

A pension is a monetary benefit to an employee or beneficiary at the time of retirement.

Pension Trust Fund

A fund that is made up of money that has been contributed to by both the employer and the employee for pension benefits. A trustee takes the funds and invests the money, collects the earnings and interest and distributes the benefits.

Pension Versus Lump Sum

A pension is a retirement benefit that is paid periodically, and a lump sum is paid all at one time.

Per Capita Beneficiary Designation

A beneficiary designation in which the proceeds from a life insurance policy are only shared with the class members who live longer than the insured.

Per Cause Deductible

A deductible that must be paid for each individual illness or accident before nay major medical benefits will be paid.

Per Cause Maximum

A medical expense policy maximum amount that will be paid for medical expenses incurred from any specific injury or illness.

Per Stirpes Beneficiary Designation

A beneficiary designation in which the proceeds from a life insurance policy are given to the descendents of the deceased beneficiary.

Percent

One part of 100.

Percent Difference

The percent that the worth of one item is different from another item.

Percentage Bar

A device in the form of a graph that is used to provide a summary of data that depicts percentiles of common interest in the data in graph form.

Percentage Contribution

The total premium that company member would pay or pays to a contributory insurance plan.

Percentage Method Of Withholding

A technique of figuring income taxes that are to be withheld by including wages for a specific pay period to the total wages paid to date that year.

Percentage Participation

A provision of a policy, typically found in major medical insurance, in which the insured employee and the insurer share the medical and hospital expenses in a predetermined ratio (e.g., 80%:20%), after the deductible is met. Also known as a form of cost-sharing.

Percentile

A point on a rank-ordered scale, found by dividing a group of observations into parts in order of magnitude from lowest to highest. The first percentile approximates the very lowest/bottom number found, while the 100th percentile is the very highest reported. The nth percentile is the point exceeding n percent of the observations. For example, in test taking, a score equal to or greater than 55 percent of those earned on an exam is said to be at the 55th percentile.

Performance Appraisal

A method used to determine how well an employee has performed during a specific time period. Usually utilized in determining salary increases.

Performance Based Restricted Stock

Restricted shares of stock that are awarded to an executive and are contingent upon the attainment of internal or external performance goals or an increase in the price of the company stock.

Performance Culture

A group of averages and attitudes regarding performance in an organization.

Performance Cycle

Job incumbents performance taken on a year to date cycle.

Performance Dimensions

Phases of performance that are imperative to an occupation by which the incumbent will be measured.

Performance Log

A written log that is kept by managers to remember behaviors that were effective and ineffective with regard to certain performance standards during the appraisal period being measured.

Performance Management

A process utilized by managers that is made up of planning an managing performance via observation and providing feedback. The process also includes bettering performance through development, assessing and rewarding performance.

Performance Measurement

Any method utilized to gather data that gives a basis to exercise performance appraisal judgment.

Performance Period

The time period for which performance is measured.

Performance Sharing (Goal Sharing)

A method by which performance is described in terms of specific criteria, and norms are determined along with incentive awards being made depending upon if the goals have been met.

Performance Targets

Job duties or behavioral goals that are predetermined for an employee to provide a comparison for performance appraisal purposes.

Performance Unit Plan (PUP)

Closely resembles a performance share plan, however the unit value is not related to the stock price. The award payment could be is stock, cash or a combination of the two.

Peril

The cause of loss, such as earthquake, fire, flood and accident.

Period Certain

Also known as annuity certain. A contract that states income will be provided for a specified number of years, regardless of life or death. If an annuitant or insured dies, his or the payments will be made to the beneficiary for the remaining years.

Permanent And Total Disability

A situation that keeps an insured person from performing the job duties of any suitable, gainful employment.

Permanent Capital

The capital that a company has that is supposed to be an aspect of a balance sheet for over one year. The capital is to include non-current liabilities and equity.

Permanent Transferee

An employee that was relocated and is not expected to go back to his home country or relocate to another country.

Permitted Disparity

The difference between benefit and contribution rates that are allowed for highly compensated and non-highly compensated participants in a qualified pension plan as legislated by the IRS.

Perquisite

Special benefits, perks, for high level executives and other managerial employees. This income is taxable to the employee. Some of these perks may include club memberships, legal counseling, and special parking.

Persistency

The retention of business that takes place when an insurance policy stays in force as the result of continuing to pay premium.

Personal Interview Report

A report that includes a proposed insured's lifestyle, occupation, and economic standing. The report relies solely on the information reported by the proposed insured.

Personal Producing General Agency (PPGA)

A kind of general agent that is more similar to a broker than to a agency manager. Usually PPGAs are contracted with various insurance companies and spend their time attempting to sell insurance rather than managing and building an office.

Personal Producing General Agency (PPGA) System

An individual that sells distribution systems who relies upon the use of PPGAs.

Personal Selling Distribution System

A system to sell insurance that utilizes salaried or commissioned sales people to prospective insurance purchasers via oral presentations.

Person-Based Pay

Compensation based on a skill or knowledge instead of a specifically defined job.

Phantom Options

Options on units equal to stock shares, however they are not true shares, or rights to the increase in value of the shares not including related option rights.

Phantom Stock (Full Value)

An incentive plan that is long term in which the participant is given the compensation in cash that is determined by a formula. A full value plan pays the full value. The formula does not have to include the actual price of the stock.

Phantom Stock (Incremental Value)

The concept is similar to the phantom stock full value, however the payment is an appreciation or increase in value as determined by the formula. The formula does not have to include the actual price of the stock.

Philosophy

A method of translating the current state of a company into real policy action to gain the long term goals of the company.

Physical Examination Provision

A provision in health insurance plans that the insurer has the right to have a n insured that has filed a claim be examined by a physician of their choice and their expense.

Physical Examinations - Employer Assisted

Many times employers will provide the employees with a yearly physical examination, typically at no cost or very little cost to the employee.

Piece Rate

A performance payment to an employee based upon production. Payment is given based upon each piece or quantity of work that is produced by an individual employee.

Piece Work

An incentive payment is given for work that has been completed. The pay is dependent upon the amount of items produced or operations finished.

Plan Administrator

The administrator of the plan is the plan sponsor, however someone else can be named as the sponsor in the plan document. The responsibilities include- 1) managing the plan assets to reduce risk of loss, 2) act on the interests of the beneficiaries, 3) act accordingly under the terms governing the plan.

Plan Advisor

A person that the plan trustees might delegate their tasks to. The plan advisor has fiduciary responsibilities, including buying, selling and managing plan assets. The plan advisor must put in writing that he or she is the plan fiduciary. The plan advisor must also be a registered investment advisor.

Plan Document

A document that states the terms of a pension plan for an employer. The document states the eligibility requirements and the specific benefits of the plan.

Plan Participant

An individual, such as an employer, a terminated employee or a beneficiary of an employee or terminated employee for which contributions are made or benefits are earned under a employee benefit plan or a pension plan.

Plan Sponsor

The party that creates and maintains the plan. This party is either (1) the employer, when the employee benefit plan is maintained by a one employer, (2) the employee organization, if the plan is maintained by an employee organization, or (3) the committee or association, joint board of trustees or other equivalent group individuals of the parties involved, if the plan is maintained by one or more employers and one or more employee organizations.

Plan Termination

The benefits of a pension plan profit sharing plan cease voluntarily or due to circumstances. The discontinuation of benefits will cause assets to be distributed to beneficiaries. If the distributions are not equal to the accrued benefits, the Pension Benefit Guarantee Corporation will try to assist with the difference.

Plan Year

A period of 12 months for which plan records are kept.

PMSA

Primary Metropolitan Statistical Area (PMSA). See METROPOLITAN STATISTICAL AREAS (MSA).

Point Factor

A quantitative occupation evaluation technique that utilizes defined factors and degree levels in each factor.

Point Of Service Plans (POS)

Health Plans that are a combination of an HMO and fee for service plan. The individual can choose at the point of service whether he wants to see a network provider or a non network provider. The co pays and will be vary and deductibles may apply.

Policy

A document that provides evidence of the insurance contract and has the important facts about the agreement between the insurance carrier and the policyholder.

Policy Acquisition Costs

Cost that are attributed directly the production of any new business.

Policy Anniversary

The anniversary of the date that a policy was first issued.

Policy Charge

The amount that will add to the total premium to assist in covering the insurance company's expenses. The charge is the same and does not take into consideration the size of the group.

Policy Filing

The process of getting legal authorization to sell insurance products in certain areas.

Policy Loan

A loan that is given to a life insurance policyholder by the insurer. The loan cannot exceed the cash value and is secured by the cash value. When the benefits are paid the pending policy loan against the policy is subtracted from the benefits.

Policy Proceeds

The actual amount that a beneficiary receives from a life insurance policy after all adjustments have been to the death benefit.

Policy Provisions

The statements in a policy the discuss the insurance contract.

Policy Reserve

The assets that ensure the insurer will have the appropriate funds to cover future claims.

Policy Summary

Usually a computer printout, this document provides specific legally required information with regard to the certain policy that the applicant is considering.

Policyholder

A organization or company that owns a group insurance contract. The policy holder does not have the same rights that a individual policy owner has with an individual contract.

Policyowner

The person that owns an individual life insurance policy. The policyowner is not required to also be the insured party.

Pooled Trust

A common trust fund generally sponsored by one employer and used to accumulate the assets of different plans of the employer and its subsidiaries.

Pooling

A practice in group insurance in which the underwriters put several small groups together to create a large group.

Population

A statistical term that takes into account all of the units that are of interest for a certain situation.

Portability

The right of a pension plan participant to transfer already accrued pension benefits under a one plan with one employer to another employer sponsored plan. The act of transferring is typically tax free.

Portfolio

Several definitions: 1) The products that are offered by an insurance carrier, 2) Investments that are owned or managed an organization or individual.

Portfolio Method

A technique in accounting utilized by insurers in that every customer gets the interest rate that is equal to the norm of all of the assets in the general account.

Position

All of the job responsibilities and all of the job duties that require one employee.

Positive Correlation

When the relationships between x and y are generally the same.

Post Employment Benefits

Typically given to executives these employment benefits include other benefits beyond medical and retirement, such as compensation and a secular trust.

Post Notice

A document that an insurer is required to send to an applicant in situations that the insurance company has made a negative decision based upon information that was received via a consumer reporting agency.

Post Retirement Benefits

Any form of benefits, beyond retirement income, that is provided to its retirees by their employer.

Power Of Agency

An insurance agents right to act on the behalf of an insurer. It is created through contracts between and insurer and their agents.

PPO

Preferred Provider Organization. A network of healthcare providers that will discount services to individuals or groups that participate in the particular plan.

Pre-Admission Review

An element of the utilization and review system that provides authorization for non-emergency hospitalization, if the insured person or the insured's physician has received prior authorization.

Pre-Authorized Payment System

A payment method that allows a policyowner to sign an authorization to pay insurance premiums. The authorization is two parts. The first part gives the insurer authorization to withdraw the premium from the insured's account. The second part gives the bank authorization to allow withdrawals that do not have the insured's signature. If this authorization system is completed via checks, it is then called the pre-authorized check (PAC) system.

Predetermination Of Benefits Provision

A stipulation that is often included in dental policies that states if dental services are anticipated to exceed a certain level the dentist will need to submit a proposed treatment plan to the insurer so that the insurer can determine what amount they will cover.

Pre-Existing Condition

Several definitions: 1) In individual medical plans, the condition is an injury that occurred or an illness that was diagnosed prior to the policy issue date, and in addition was not stated on the insurance application, 2) In group medical insurance the condition is one in which the employee received medical attention during a certain period of time (typically 3 months), just before the effective date.

Pre-Existing Condition Provision

A stipulation in many insurance policies that states that the insured must be covered under the policy for a specific time period before the insurer will pay for benefits resulting from any pre-existing condition.

Preference Beneficiary Clause

Wording in a life insurance policy that states if there is not a specific beneficiary named, that the insurance company will pay the proceeds according to a list of people included in the policy, in a stated order.

Preferred Beneficiary

A class of beneficiaries, in Canada, associated with policies given before 1962 that include grandparents, parents, spouse and grandchildren of the said insured. The policyowner can only change the preferred beneficiary to a non-preferred beneficiary with the authorization of the preferred beneficiary.

Preferred Provider Organization (PPO)

A managed care health delivery arrangement that contracts with certain health care providers and/or health care organizations to provide comprehensive medical service. Providers provide services at discounted rates to members of the PPO.

Preferred Shares

Capital stock which gives a certain dividend that is paid prior to any dividends are paid to the common stock holders, and that takes priority over the common stock if the company must liquidate.

Preferred Stock

Capital stock which gives a certain dividend that is paid prior to any dividends are paid to the common stock holders, and that takes priority over the common stock if the company must liquidate.

Pregnancy Disability Leave

Leave from the workplace for a specific period of time that is related to disability caused by pregnancy.

Preliminary Inquiry Form

Application that is used if there is a strong possibility that the policy may not be used at a later date or may be issued with a high substandard so that the premium for the policy will not be acceptable to the applicant.

Premature Distribution

A withdrawal prior to the age 59 1/2 from a qualified retirement plan. There are certain circumstances that will allow the distribution if specific requirements are met. If these requirements are not met there usually is a penalty associated with the distribution.

Premium

Several definitions: 1) An amount that is added to a base salary to pay additional monies for situations such as graveyard shift, working weekends, or working away from home, 2) In an international situation the definition relates to an incentive that is paid to an expatriate, 3) One payment or a sequence of payments made for an individual or for a group to continue the insurance policy that is in force.

Premium Conversion

Provision that allows employees to make a contribution, pretax, to an employer sponsored health or welfare plan.

Premium Deposits

Money that is left on deposit with the insurance carrier to pay for future premiums.

Premium For Risk

The usual amount of presumed additional return on investment that is required by investors when they choose a higher-risk investment.

Premium Pay

An amount that is added to a base salary to pay additional monies for situations such as graveyard shift, working weekends, or working away from home.

Premium Receipt

Recognition that the insurer has received the initial premium payment.

Premium Receipt Book

A book with receipts in it that is given the policyowner at the time when a home service agent sells a policy. The book has prenumbered receipts that the agent signs at the time premium is collected.

Premium Reduction Option

A life insurance policy dividend option that applies policy dividends toward the payment of renewal premiums.

Pre-Notice

Notification to the applicant in advance that the insurance company may make an investigative consumer report.

Pre-Retirement Counseling

Preparation for the financial and emotional changes that occur during retirement for the employee and the spouse.

Preretirement Survivor Annuity

A provision in a pension plan that states a certain benefit for a surviving spouse of a vested plan participant if the participant should die prior to retirement.

Prescribed Annuity Contract

A type of annuity in Canada that has met the specific criteria set by the Income Tax Regulations to therefore qualify as exempt from accrual taxation.

Present Value

Current value of an amount of money or its value at the beginning of a certain time period.

Present Value Factor

The value that an amount of money that is going to be paid at a later date is multiplied to determine the current value of the money.

Presumptive Disability

A state that will cause an insured to be deemed totally disabled, such as loss of two limbs, or total hearing loss, or total blindness.

Prevailing Wage Rate

The salaries that other employers pay for labor in similar markets. These wages rates are typically used with immigration pay analyses, where General Administrative Letter 2-98 requirements must be met. See www.erieri.com/freedata/hrcodes.

Price At Exercise

The price of a stock at the time a person exercises the option. This act also determines the option price at a time after the option exercise price is subtracted.

Prima Facie Rate

In the United States, that standard premium rate that is suggested by the state regulators for a contributory policy in organization creditor insurance. An insurance company is not allowed to require more than the prima facie rate when the contributory organization creditor insurance policy is initially issued.

Primary Beneficiary

The individual or parties of a group that are first to receive the benefits once the benefits of an insurance policy become due.

Primary Duty

The principal, main, major, or most important duty that the employee performs. Determination of an employee’s primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee’s job as a whole. Factors to consider when determining the primary duty of an employee include, but are not limited to, the relative importance of the exempt duties as compared with other types of duties; the amount of time spent performing exempt work; the employee’s relative freedom from direct supervision; and the relationship between the employee’s salary and the salary paid to other employees for the kind of nonexempt work performed by the employee. (FLSA Section 541.700)

Primary Provider Of Benefits

Under circumstances when coordination of benefits occurs, the medical expense plan that covers the benefits under this plan prior to any benefits being paid by another medical expense plan.

Principal Business Activity (PBA)

IRS definition of industry classifications.

Prior Service Liability

Liability that relates to services that prior to the plan implementation or is attributed to an increase in benefits for services prior to amendment date.

PRN

PRN Nurses are part-time nurses that work intermittent schedules on an as-needed basis. These employees are typically not eligible to receive benefits but receive competitive hourly wages and an increased work-life balance.

Probability

Several definitions: 1)The chance of something occurring, 2) A mathematical term that is the amount occurrences that something may occur out of a specific amount of occurrences.

Probationary Period

Several definitions: 1) The duration of time between the beginning of an insured person's disability and the start of the policy's benefits. (2) The period between employment or enrollment in a program and the date when an insured person becomes eligible for benefits.

Proceeds

The money that the insurer is supposed to pay for a settlement of an endowment policy, an annuity or life insurance policy.

Productivity

A measuring of an operation's efficiency, typically including a comparison of outputs to inputs.

Professional in Human Resources (PHR)

A designation proving mastery of the HR body of knowledge. Initial PHR certification is provided by the Human Resource Certification Institute (HRCI); see www.hrci.org. The ERI Distance Learning Center provides PHR recertification credits. See our Course Credit Map for a list of courses each approved for 1 PHR recertification credit hour.

Professional Reinsurer

A insurance company whose major line of business is reinsurance. Sometimes the insurance company may only handle reinsurance.

Profit And Loss Statement (P&L;)

A detailed summary of the income and expenses of a business over a period of time (usually quarterly, semiannually or annually) showing the net income or loss incurred.

Profit Sharing Pension Plan

A money purchase pension plan in Canada that link employer contributions to company profits. Employers are required to make a minimum contribution of 1% of employee earnings, even if the company was not profitable. The plan must adhere to the same legal provisions as pension plans.

Profit Sharing Plan

An agreement between an employer and the employees in which the profits of the company are shared with the employees.

Profits

The result of selling goods or services for more than the cost of producing them. In investment, profits result from selling a commodities or securities for a higher price than the cost of purchasing them.”

Progressive Incentive Formula

An employee rewards plan that increases the incentive as the employee performance exceeds predetermined degrees of performance.

Progressivity Of Incentives

An employee rewards plan that increases the incentive as the employee performance exceeds predetermined degrees of performance.

Projected Benefit Obligation (PBO)

The current value of benefits that have accrued for a defined benefit plan, no future service is assumed however, salary increases are anticipated.

Promotion

Assigning a current employee to another job with a higher range or grade in the company's hierarchy.

Promotional Increase

An increase in an employees salary due to a promotion.

Property Insurance

A kind of insurance that provides a benefit if in the event of theft, accident, fire or another circumstance insured items are lost or damaged.

Property Plant And Equipment

Non current assets.

Proposal Form

A document in Canada that is provided to a prospective insured with individualized data about the policy and its values.

Prospective Normal Retirement Age

The pension that is expected to pay at normal retirement age to any employee that has stayed on the job to the specified date and that employee's salary as it relates to pension is unchanged.

Prospectus

A legal document required by the SEC offering securities or mutual fund shares for sale. It must state the offer, including the terms, issuer, objectives if mutual fund or planned use of the money if securities, historical data, business plan and other information about the company.

Prototype Plan

A standardized pension or employee benefit plan, created to make drafting plans easier for the plan sponsors.

Provider Fraud

One type of medical insurance fraud that takes place with the provider tries to grow his/her own income by sending the insurance company fraudulent claims.

Provision For Taxes

Earnings on a company income statement report item estimating current year tax liability.

Proximate Cause Of Death

A circumstance that is the cause of an event or a death that begins a chain of events that is not broken that ultimately leads to death.

Proxy Reporting

An SEC requirement for public corporations to reveal the compensation, in a summary compensation table, of the five highest paid executives.

Proxy Statement

The SEC requires that publicly owned companies send out a document that alerts shareholders of the annual meeting, or any other special meetings. The proxy statement will also disclose the issues that will be discussed.

Prudent Expert Rule

The sponsor or manager must abide by the legal requirements in that he/she must display specific standards of prudence and competence in accounting for the assets in a pension plan as well as investing the funds of the plan.

Prudent Man Rules

Common law standard that is supposed to be followed by the trustees of funds. The trustee is expected to act faithfully, with discretion, prudence and intelligence keeping in consideration the probable income and the security of the capital.

Purchasing Power

When determining cost of living, an index must be referred to that determines the strength of the dollar for the purchasing of goods and services.

Pure Endowment

An amount of money that is only paid to the individuals who remain living for a specific period of time. If they do not live for the certain time period, they do not receive any of the endowment. This is typically illegal unless it is combined with a form of life insurance.

Put Option

A stock option contract that gives you the right to sell a specified quantity of the stock at a specified strike price by a specified expiration date.

Pyramiding

The process of taking profits that were accumulated from open positions to purchase additional securities without having to use cash.