F

“F”

Face amount
The amount stated on the face of a life insurance policy that will be paid in case of death or at the maturity of the policy. This amount does not include additional amounts either payable under accidental death or other special provisions or acquired through the application of policy dividends.
Family and Medical Leave Act of 1993
A federal law that requires employers with at least fifty employees who work within seventy-five miles to provide up to twelve weeks of unpaid leave to an employee in the event of the birth, adoption, or foster care placement of a child or a serious health condition involving the employee or the employee’s parent, spouse, or child.
Family expense policy
A policy that insures both policyholders and their immediate dependents (usually the spouse and children).
Family leave
Leave granted to allow an employee to care for a newborn and/or for sick or injured family members.
FASB
See Financial Accounting Standards Board.
Federal Insurance Contributions Act (FICA)
The federal statute that mandates withholding of employee and employer social security taxes.
Fee for service
Billing for each service provided, as opposed to charging a flat fee per head or using some other billing arrangement.
Fellow of the Society of Pension Actuaries (FSPA)
A professional designation awarded to individuals holding the MSPA designation who pass two additional examinations.
FICA
See Federal Insurance Contributions Act.
Fiduciary
Under ERISA, any person who (1) exercises discretionary authority or control over the management of a plan or the management or disposition of plan assets, (2) gives investment advice for a fee or other compensation with respect to the plan’s funds or property or has the authority to give such advice, or (3) has any discretionary authority or responsibility with respect to the plan.
Final average pay plan
A pension plan that provides retirement benefits on the basis of a formula that uses a participant’s average compensation over a specified period close to the time of retirement (e.g., 1.5 percent per year of compensation during the final five years of service with the employer).
Final pay benefit formula
A formula that bases pension benefits on the credited earnings of an employee at or during a selected number of years (typically, three to five years immediately preceding retirement).
Financial Accounting Standards Board (FASB)
The organization that promulgates generally accepted accounting principles for accounting in publicly owned companies, including the accounting rules for stock and stock-related incentive programs, pensions, and other retirement-related programs.
Flat benefit formula
A benefits formula that pays a fixed dollar amount per year of service.
Flat-dollar benefit formula
A benefits formula that provides a fixed dollar benefit regardless of service or salary.
Flat percentage of earnings formula
A benefits formula that pays a flat percentage of final or career average earnings.
Flat schedule
A type of schedule in group insurance under which everyone is insured for the same benefits regardless of salary, position, or other circumstances.
Flexible benefits plan
A plan permitted under Section 125 of the Internal Revenue Code that allows employees a choice among different benefits or between cash and benefits. The designation also includes flexible spending accounts.
Flexible hours
See flextime.
Flexible premium insurance policy or annuity
A life insurance policy or an annuity under which the policyholder or contract holder may vary the amounts or timing of premium payments.
Flexible premium variable life insurance
A life insurance policy that combines the premium flexibility feature of universal life insurance with the equity based benefits feature of variable insurance.
Flexible spending account (FSA)
A relatively simple type of flexible benefits plan in which employees forgo salary in order to set up accounts with pretax dollars that may be drawn on for health, child-care, or legal benefits, pursuant to designations made by employees at the beginning of the plan year.
Flextime
A work-scheduling approach that gives employees some freedom in deciding when they start and finish work and take meal breaks.
Floor plan
A defined benefit pension plan that pays the difference, if any, between the retirement income paid by the defined contribution plan and a specified minimum income, known as the floor.
Forfeitures
The benefits that plan participants lose because of death, severance of employment, or any other reason before the participants are fully vested in retirement benefits under the plan. Under a defined benefit plan, the forfeited amounts must be used as soon as possible to reduce future employer contributions under the plan. Under a defined contribution plan, the forfeitures may be either used to reduce future required employer contributions or allocated among the remaining participants to increase their benefits.
Formulary
A list of drugs covered under your plan. In most instances, your provider may only prescribe to you drugs included on the formulary.
401(k) plan
A cash or deferred arrangement.
403(b) plan
A tax-sheltered annuity plan that Section 403(b) of the Internal Revenue Code allows schools and tax-exempt organizations to offer.
Fraternal insurance
A cooperative type of insurance provided by social organizations for their members.
FSA
See flexible spending account.
FSPA
See Fellow of the Society of Pension Actuaries.
Full vesting
That form of deferred or immediate vesting under which all benefits accrued for a participant become vested benefits.
Fully funded
When a specific element of pension cost or benefit has been paid in full to a funding agency, that item is said to be fully funded. The entire pension plan is said to be fully funded when the assets in the pension fund are sufficient to make all benefits payments due at particular times. The term is also used to refer to plans in which regular contributions are being made to a funding agency to cover the normal cost and the reasonable amortization of past-service cost.
Fully insured plan
A pension plan in which retirement income or retirement annuity contracts are used and the cash value of such policies, issued on the life of each participant, is sufficient to provide for the full benefits set forth under the plan.
Fund
Assets accumulated by a funding agency to be used for benefits payments under an employee benefits plan. Also, the act of making payment to a funding agency.
Funded plan
A plan that has assets set aside to pay for projected liabilities of the plan.
Funding agency
An individual or organization that provides facilities for the purpose of accumulating or administering assets that are to be used for the payment of benefits under an employee benefits plan.
Funding deficiency
The excess of total charges over total credits at the end of a plan year for a defined benefit, money-purchase, or target benefit pension plan. Technically, such a condition is termed an accumulated funding deficiency.
Funding instrument
The contractual arrangement that describes the obligation of a funding agency.
Funding standard account
A bookkeeping account that ERISA requires a pension plan to maintain to determine whether the plan meets minimum-funding standards.
Future service benefits
Benefits that accrue through an employee’s service after the effective date for coverage under a plan occurs. 

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