Pension benefits guide How you can use your pension pot to suit your needs

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1 Pension benefits guide How you can use your pension pot to suit your needs axawealth.co.uk

2 With the flexibility you have to take benefits through your pension, it can be difficult to know what s best for you and your beneficiaries. So we ve created this guide to help answer: Page 2 Page 3 Page 4 Page 5 Where to get guidance? About this guide The options we offer How do these options differ? More details about the different options Page 9 Page 11 Page 14 How do these options compare? What should I think about when taking benefits? What else you might need to know Where to get guidance? PENSION WISE - FREE PENSION GUIDANCE While we recommend you get financial advice when deciding which option is best for you, if you are close to retirement you can get free, impartial guidance using Pension Wise, from the Government. It offers: Personalised guidance on how to take your pensions savings. An appointment with a guidance specialist to explain your options. Information about how much tax you could pay. Tips on shopping around for the best deal. It s available: Online and over the phone ( ) through The Pensions Advisory Service (pensionsadvisoryservice.org.uk) In person through the Citizens Advice Bureau (citizensadvice.org.uk). You can find out more about the Pension Wise service at pensionwise.gov.uk 2 Pension benefits guide

3 Pension benefits guide 3 About this guide This guide describes the options available to you on the following AXA Wealth pension products: Retirement Wealth Account Family Suntrust The Personal Pension The Executive Pension The Section 32 These are all known as money purchase pension schemes (sometimes called a defined contribution pension scheme). If you have a money purchase arrangement with another provider they may not offer the same options. If you have a defined benefit (sometimes called a final salary ) pension, options on how to take those benefits will be different. The options we offer How you can take benefits will depend on what AXA Wealth pension you have. Retirement Wealth Account Family Suntrust The Personal Pension The Executive Pension The Section 32 Lifetime Annuity Can be arranged through us or another provider Can be arranged through another provider Can be arranged through us or another provider Can be arranged through us or another provider Can be arranged through us or another provider Flexi-access drawdown Additional Capped drawdown (Only available if you currently have capped drawdown) Uncrystallised funds pension lump sum (UFPLS) Full Drawdown Partial Drawdown Drip feed Drawdown Full Drawdown Partial Drawdown Full Drawdown Partial Drawdown Drip feed Drawdown Full Drawdown Full Drawdown (part drawdown available if set up as a cluster of policies) Yes Yes Yes Not available Not available Yes Not available Yes Not available Not available Small pension pots lump sum Yes Yes Yes Yes Yes You can also take a transfer value from your AXA Wealth pension to another provider to access any options they offer.

4 How do these options differ? Once you ve reached the minimum pension age, (normally 55) you ll be able to access your pension fund in the way that best suits you. This table shows the different aspects of the options you have. Your pension fund Tax free lump sum (optional) Tax free lump sum (optional) Uncrystallised funds pension lump sum Small pension pots lump sum Lifetime annuity Drawdown pension 25% tax free 25% tax free Purchase a secure income paid for the rest of your life Normally 25% of funds selected for an annuity can be paid as a tax free lump sum Regular annuity payments are subject to income tax Additional options include: - increasing payments - guarantee periods Take flexible withdrawals from your pension fund Normally 25% of funds selected for drawdown can be paid as a tax free lump sum Take as much or as little income as you want from your drawdown fund (Capped drawdown has a maximum that can be taken each year) Withdrawals are subject to income tax Take one-off withdrawals from your pension fund 25% of the amount you withdraw is tax free The remaining amount taken is subject to income tax You may be able to take the whole of your pension fund as a cash lump sum 25% of any uncrystallised fund is tax-free The remaining amount is subject to income tax - spouses payments Please note: Taking income from Flexi-access drawdown or taking an UFPLS restricts the amount you can pay into any money purchase pension arrangement and get full tax benefits from. If you are currently contributing to any pension, or may wish to do so in the future, please refer to our Tax and your pension leaflet for more details. If the value of all your pension funds exceeds the Lifetime Allowance (currently 1 million), you may be: -- subject to additional tax charges when you take benefits -- restricted in the amount of tax free lump sum you can take. For more details refer to our Tax and your pension leaflet. The table above does not take into account any potential Lifetime Allowance tax charges. 4 Pension benefits guide

5 Pension benefits guide 5 More details about the different options Lifetime annuity Use all, or part, of your pension fund to buy an annuity Normally 25% of the fund can be taken as a tax-free lump sum You use the remainder to give you a secure income Until recently, most people used their pension fund to buy an annuity, and this option is still available to you. It works by giving an insurance company all or some of your pension fund, in exchange for a guaranteed income for life. You can normally receive a tax-free lump sum up to a maximum of 25% of the funds you are taking. The rest is used to provide a regular income which is taxed as pension income through PAYE. There are many different types of annuity, each designed to suit different personal circumstances. A free online annuity planner is available at pensionsadvisoryservice.org.uk which can help you decide which type of annuity is right for you. You need to think about: Some insurance companies will give you a higher income than others, especially if you have health or lifestyle issues. You should shop around to get the best rate. Some may have a minimum fund size they accept. What you get back will depend on a number of factors including, but not limited to, the annuity rates at the time you buy the annuity, the options you include, the charges and how long you live. Now you are able to access and use your pension funds in any way available from age 55, you should get advice or guidance before deciding whether an annuity is right for you. Drawdown Use all, or part, of your pension fund Normally 25% of the fund you re using can be taken as a tax-free lump sum If you take 25% as a lump sum, the remaining 75% becomes your drawdown fund and remains invested in your pension scheme until you take it as income As well as buying, or as an alternative to buying, a lifetime annuity, you have an option known as drawdown. Through drawdown once you have taken the tax-free lump sum you can then take income payments directly from your pension fund which remains invested in your pension scheme. You don t have to use all of your pension fund at the same time. You can choose to just use part of it, leaving the remainder untouched so that it can be used to provide a tax-free lump sum at one or more later dates. You can normally take up to 25% of the amount you ve decided to use as a tax-free lump sum. The remainder becomes your drawdown pension fund which you can use to take: A one off lump sum - taxable as pension income through PAYE A regular income - taxable as pension income through PAYE No income If you don t take the whole of your remaining fund as an income payment your drawdown fund will stay invested.

6 There are two kinds of drawdown: 1) Flexi-access drawdown This is the only type of drawdown you can start from 6 April From the age of 55 you can transfer money into flexi-access drawdown, we call the money in flexi-access drawdown your crystallised fund, and any money you don t transfer will remain as uncrystallised. From the crystallised fund you can take as much or as little as you want at any time. Any money remaining in flexi-access drawdown, or in uncrystallised funds, continues to be invested in the funds of your choice. This means you could still benefit from potential growth in the funds. However, the value of investments can fall as well as rise and are not guaranteed which could impact your level of future income. Once you start taking income, this will affect how much you can keep contributing to money purchase pension schemes and get full tax benefits from. If you just take a tax-free lump sum and leave the crystallised fund invested, then the amount you can contribute is not affected. We explain this, and the limits, in our Tax and your pension leaflet available on our website axawealth.co.uk/literature. We recommend that you get advice or guidance before deciding whether flexi-access drawdown would be suitable for you. Drip feed drawdown option (Only available on the Retirement Wealth Account and The Personal Pension). AXA Wealth also offers flexi-access drawdown using a drip feed option. This is where you decide how much money you want to withdraw and how frequently you want this. You can choose to withdraw this monthly, quarterly, half yearly and yearly. The drip feed option sets up a series of flexi-access drawdown crystallisations and lets you select in advance how you want your withdrawals to be made. Normally, when you crystallise your money you are entitled to withdraw 25% of it as a tax-free lump sum (TFLS).The remaining 75% of the fund will be taxed at your marginal rate of income tax when you withdraw it. Through the drip feed option you have two choices of how you set up your payments. You can choose to have: Just a regular tax-free payment For each payment you receive we will use (crystallise) a higher amount from your uncrystallised fund. Every payment you receive will be tax-free. This will be the maximum (normally 25%) available to you from the total fund we crystallise. The remaining amount crystallised will be invested in your flexi-access drawdown fund. You can access this fund to receive a taxable income payment at any time. Or A regular payment with tax-free and taxable elements For each payment you receive we will use (crystallise) the amount you specify from your uncrystallised fund. Part of every payment you receive will be tax-free. This is normally a maximum of 25% of the payment amount. You will be taxed on the rest of the payment as income through PAYE. None of the funds used remain invested in your flexiaccess drawdown fund to be available as income at a future date. These are demonstrated in the following examples for each regular payment. Example 1 1,000 payment of TFLS only Amount of fund being crystallised 4,000 Payment 1,000 tax free Increase in flexi-access drawdown fund 3,000* *You can withdraw this amount at any time taxed at your marginal rate. Example 2 1,000 payment to include TFLS and taxable income Amount of fund being crystallised 1,000 Payment of 1,000 split 250 tax free, 750 taxed at marginal rate Increase in flexi-access drawdown fund after payment 0 Where you withdraw all the money at 25% tax free, as shown in the first example, you will build up a crystallised fund, this will increase with every withdrawal. Equally, your uncrystallised fund will decrease and run out quicker than in example 2. Where the uncrystallised fund runs out of money, the drip feed will end, along with any regular withdrawals you ve set up. At this point under example 1 you can leave the crystallised money, withdraw all of the money, or set up a regular taxable withdrawal. 6 Pension benefits guide

7 Pension benefits guide 7 Using drip feed if you have fund and tax-free lump sum protection Various amendments to pension regimes since 2006 have introduced different levels of protection for eligible pension scheme members. If you have been granted a Policy Protected Tax-free Lump Sum the potentially valuable protection will be lost should you select the drip feed option. In all protection cases, if drip feed is not suitable due to the type of protection in place it may still be possible to access the other benefit options within flexi-access drawdown. Available under drip feed Enhanced Protection and Standard Tax-Free Lump Sum (TFLS) Enhanced Protection and Protected TFLS Primary Protection and Standard TFLS Fixed Protection 2012 Fixed Protection 2014 Individual Protection 2014 Not available under drip feed Primary Protection and Protected TFLS Protected Pension Age (until normal minimum pension age, currently 55) 2) Capped drawdown If you already have capped drawdown, it is normally possible to add further funds to your existing capped drawdown arrangement. It is not possible to start a new capped drawdown arrangement. If you re taking benefits through capped drawdown you re limited to a maximum amount you can withdraw each year. The maximum amount is reviewed every three years up until you reach age 75 after which the maximum is reviewed every year. This is to make sure your pension funds aren t exhausted. As a result this may provide a lower annual income than required. We do not allow you to take capped drawdown alongside flexi-access drawdown with, or without the drip feed option, therefore, any existing capped drawdown with us will need to be converted to flexi-access before any new flexi-access drawdown (including drip feed) can commence. You can apply to convert your current capped drawdown fund to flexi-access drawdown at any time. You will already have had the opportunity to take a tax-free lump sum from the funds you have moved to capped drawdown. This means you can t receive another tax-free lump sum if you convert these funds to flexi-access drawdown. 7 Pension benefits guide

8 Uncrystallised funds pension lump sum (UFPLS) Take all, or part, of your pension fund as a lump sum. Unlike flexi-access drawdown, 25% of the fund taken will always be paid as a tax-free lump sum. The remainder of the lump sum is taxable as income. This option lets you take some, or all, of your unused (uncrystallised) pension fund as a one-off lump sum payment. Uncrystallised means any part of your pension fund you haven t yet allocated, or used, to take benefits through capped or flexiaccess drawdown. You will receive 25% of the lump sum tax-free with the remainder taxable as pension income through PAYE. As 25% is the maximum tax-free amount allowed under UFPLS, if you have a protected higher entitlement you will lose it. Small pension pots lump sum If you take an UFPLS, this will affect how much you can keep contributing to money purchase pension schemes and get full tax benefits from. We explain this, and the limits, in our Tax and your pension leaflet available on our website axawealth.co.uk/ literature There are some circumstances where you may not be able to take a UFPLS. As such, you should get financial advice or guidance to understand whether it is available to you. Take your small pension funds as cash. 25% will normally be paid as a tax-free lump sum from uncrystallised funds. It can be used to take drawdown funds. The remainder is taxed as income. Over the course of your working life, you might have built up some smaller pension funds. It may be possible to take them as cash. You can take the whole of a pension fund or drawdown pension fund as cash as long as the pension fund value is 10,000 or less. Please note, you can only do this up to a maximum of three times in your lifetime for personal pension funds. Talking the value of a small pension pots lump sum as cash will not affect how much you can keep contributing to money purchase pension schemes. 8 Pension benefits guide

9 Pension benefits guide 9 How do these options compare? You may still have questions about the benefit options available to you. This table includes a summary of some you might have. To help, we ve answered them below. Question Annuity Drawdown UFPLS 1. Can I receive the whole value of my pension fund immediately? 2. Can I just take my full tax-free lump sum entitlement and no income? 3. Can I take the maximum tax-free amount and provide a regular income? 4. Can I take a regular amount from my pension fund tax free? 5. Can I set up a monthly payment made up of just tax-free lump sum or part tax-free lump sum and part taxable income? 6. Can I withdraw part of my pension fund as a lump sum? 1. Can I receive the whole value of my pension fund immediately? Yes, legislation lets you take as little or as much of your fund as you want, when you want. This means you can take your whole fund through either flexi-access drawdown or UFPLS. In both cases you will normally be able to take up to 25% (for UFPLS 25% is compulsory) of the value of your pension fund tax-free, with the remainder being taxed through PAYE. The amount you actually receive will be affected by charges and fees depending on whether you go down the flexi-access drawdown or UFPLS route. You may also be able to cash in all of your pension fund under the small pension funds rule. 2. Can I just take my full tax-free lump sum entitlement and no income? Yes, you can receive just a TFLS sum if you move your remaining funds into drawdown and choose not to receive any income. You can normally receive up to 25% of your pension fund taxfree. The remaining 75% will become your drawdown pension fund and remain invested in your scheme. For example, if you want your full tax-free entitlement and the value of your pension fund is 100,000 you would get 25,000 (25%) tax-free. The balance of 75,000 (75%) would stay invested in your drawdown fund. Unlike drawdown, through UFPLS you have to take the 75% as income immediately. You can t leave it invested to take income at a later date.

10 3. Can I take the maximum tax-free amount and provide a regular income? Yes, you can take up to 25% of your pension fund tax-free. You can then move the remaining fund into drawdown or buy an annuity to provide a regular income. Drawdown funds: Remain invested. You can arrange to take a fixed income from them either monthly, quarterly, half-yearly or yearly. The income is taxed through PAYE. The income amount and frequency can be varied at any time. By taking income, together with any charges, you would reduce the value of your pension fund and potential for future growth particularly if you take high levels of income and/or investment returns are poor. Income levels may also be unsustainable. Annuities Provide you with a secure income for life. The income will be taxed under PAYE. But once you buy it the income amount and payment frequency can t normally be changed. Through UFPLS you can only take a one-off lump sum payment meaning there are no remainder funds from which a regular income can be provided. Note: For the Retirement Wealth Account, Family Suntrust and The Personal Pension you can use all or part of your pension fund to provide benefits. For The Section 32 (unless set up as a cluster of policies) and The Executive Pension you must use the whole of your pension fund to provide benefits. 4. Can I take a regular amount from my pension fund tax free? Yes, you can arrange to move funds into drawdown on a regular basis depending on the type of AXA Wealth Pension you have. You can take a tax-free lump sum of 25% from the amount being used each time. The remaining 75% of your fund will remain invested in your plan as your drawdown fund. As you don t have to take an income from the drawdown fund the only payment you receive is your tax-free lump-sum. Your income tax liability will therefore not increase although your overall income has through the TFLS payments. You can start taking an income from your drawdown funds at any time, as and when you need to but this income will be taxed under PAYE. Through UFPLS you can only take a one-off lump sum payment of which 75% is taxed through PAYE. This will increase your tax liability. Note: It is only possible to set up a regular income in this way under the Retirement Wealth Account or The Personal Pension. 5. Can I set up a monthly payment made up of just tax-free lump sum or part taxfree lump sum and part taxable income? Yes, you can arrange to move funds into drawdown on a regular basis depending on the type of AXA Wealth Pension you have. You can take a tax-free lump sum of 25% from the amount being used each time. The remaining 75% can then be taken immediately as a taxable income. Although benefits taxed in the same way are available by using UFPLS, AXA Wealth does not offer to set up a regular UFPLS payment and each payment would have to be requested at the time it was required. Note: It is only possible to set up a regular income using the drip feed option under the Retirement Wealth Account and The Personal Pension. 6. Can I withdraw part of my pension fund as a lump sum? Yes, once you have decided how much you wish to take you can withdraw that amount through either flexi-access drawdown or UFPLS. Normally 25% will be tax-free (for UFPLS 25% is compulsory) and 75% will be taxed as income under PAYE. If you use flexi-access drawdown you don t have to take any taxable income, you can just take the tax-free part as a lump sum and leave the rest to be taken as a taxable income at a later date. The amount you actually receive will be affected by charges and fees depending on whether you use flexi-access drawdown or UFPLS. Note: For example you would like to take an additional 1,000 a month but don t want to pay any more tax. You would have to take 4,000 a month out of your pension fund of which 1,000 will be paid to you tax-free (this represents your taxfree lump-sum of 25%) the balance of 3,000 will remain invested in your plan and held as your drawdown fund. You can use part of your pension fund to take a lump sum through the Retirement Wealth Account, The Personal Pension and Family Suntrust. For The Section 32 (unless set up as a cluster of policies) and The Executive Pension you must use the whole of your pension fund to provide benefits. 10 Pension benefits guide

11 Pension benefits guide 11 What should I think about when taking benefits? This section covers what you should think about in relation to taking benefits and some of the risks associated with the main options available to you. There are many risks associated with taking benefits from your pension: The best option(s) for you will depend on your personal circumstances. You may lose guarantees associated with your existing pension when you choose to take benefits. The risks are different depending on the option you choose. Buying an annuity: do you know The options available under an annuity, and the level of income, varies by provider? A number of different options are available, and it s important that you choose the right options for your circumstances. These options can include income that increases each year, and income that can be paid to your partner or dependant if you die, although not all annuity providers offer every option. There is also a considerable difference between the lowest and highest income available from different annuity providers. There is therefore a risk that the type of option that you choose and your choice of annuity provider can affect the amount of income that you receive, so shopping around is really important to make sure you choose the right options for your circumstances, and that you get the best deal. Once bought, you may not be able to change the choices you have made on your annuity? If your circumstances change in the future, your annuity can t be changed to reflect this. Once purchased an annuity can t normally be cashed in or transferred to another provider, although regulations in this area may change in the future. You could receive an increased income if you have health issues such as diabetes, or have made certain lifestyle choices such as smoking? Some annuity providers offer annuities which could pay more for certain health or lifestyle issues, so by not shopping around you may receive a lower income than could be available to you. You should always fully declare any health issues or lifestyle choices so that the provider can take this into account. If you don t, you may receive less income than you otherwise could achieve. Your annuity could also be used to provide an income for your spouse / civil partner or financial dependant on the event of your death? If you select a single life annuity, the income you receive won t pass to someone else on your death whereas a joint life annuity would continue to pay an income to the person you selected after you die. You would be able to select how much annuity income is paid to your joint life after you die, although the higher this is, the more it will cost, so your initial retirement income will be lower. Not all annuity providers offer the joint life option and some have restrictions as to who can be your joint life. You should shop around to ensure you receive the highest income possible and that benefits can be paid to the joint life you require. Inflation could erode the value of your pension income over time? If you purchase a level annuity the income you receive won t increase over time and this will impact your buying power as the price of goods rises. Annuities that increase over time are available, however these will provide less income initially compared to a level annuity. Any income paid from your annuity will be subject to income tax? The level of income paid by the annuity will be added to any other income you are already receiving and may mean you enter a higher tax band where you will pay more tax and receive less income as a result. As you are unable to change the income from an annuity, you may not be able to do anything to reduce the tax band you re in. If you are unsure about your tax position, you should seek advice. Initially you may be required to pay emergency tax and consequently, the amount you receive may be more or less than expected. Where this is the case, HMRC will send your annuity provider a new tax code to use for your next pension payment to correct this.

12 Taking drawdown: do you know All the tax implications of taking money from your pension? Unless you have a P45 for the tax year the initial drawdown payment you receive will be subject to income tax at the emergency rate. Consequently, the amount you receive may be more or less than expected and may lead to future tax adjustments to other income you receive. The level of income you take will be added to any other income you are already receiving and may mean you enter a higher tax band where you will pay more tax and receive less income as a result. Once you take your first drawdown payment the amount you can contribute into money purchase pension schemes and get full tax benefits from will reduce to 10,000 per year. Unless you are taking 100% of your pension fund you should consider whether your investments are suitable for your drawdown fund? As some funds remain invested your investments may need to grow to provide the future levels of income you expect. If the investments are poorly performing, the income and/or lump sums you take may deplete your drawdown fund. This will happen sooner where you take higher levels of income and/or lump sums. Each investment available to you will have specific risks associated with it, and they will also vary in their level of risk. If you do not consider these points when you choose your investments in retirement you may be subject to greater risk than you would be comfortable with. If you are not sure about the level of risk you want to take with your retirement fund, you should get advice. Unless you are taking 100% of your pension fund your chosen level of income may not last for as long as you need it to? By not taking account of your expected life expectancy, or living longer than this, your ability to receive income may stop too soon, or may not be sufficient for you to live on. Taking money out of your pension reduces the fund available. This reduces the potential for investment growth and reduces the amount remaining to pay an income during your retirement meaning you may not have enough money available. When there is no more money in the fund, then income will no longer be available. The funds you select to invest your money may not perform as expected, or may fall in value suddenly when you need money, and this may mean that there might not be the amount of money available to you that you had expected. The potential consequences of drip feed drawdown if you have a Policy Protected Tax-Free Lump Sum? If you select drip feed drawdown and you have a Policy Protected Tax-Free Lump Sum in respect of your policy the protection will be lost. This means that you will be giving up valuable protection and this may cause you financial detriment. What could happen if you are planning to invest any money you re withdrawing into another investment? Please be aware of investment scams. Investment scams are being used by criminals who are targeting people like you that have access to the money in their pension. Investment scams are designed to look like genuine investments and they may seem very appealing. However, you could lose all your money, and you won t be protected through the financial compensation schemes. Charges vary across different products and different providers, and that all charges deducted from your fund reduce the amount available to you? Even if you re accessing money in the same way, different product providers charge different amounts. Higher charges mean your fund reduces quicker compared to lower charges. The potential consequences if you have debts? Creditors may have a call on any money taken from your pension savings. This could mean that some or all of your money is taken by creditors. The potential impact on means-tested benefits? Taking money from your pension savings may affect your means tested benefits. This may result in the loss or reduction of other benefits. If you are unsure, you should seek advice. You should shop around different providers before deciding on this option? Lower charges and different options may be available if you shop around. However, there may be additional costs involved if you transfer your pension to another provider. An uncrystallised funds pension lump sum: do you know All the tax implications of taking money from your pension? 25% of the uncrystallised fund pension lump sum is paid tax free with the balance being taxable. Unless you have a P45, or are already in receipt of drawdown income from us, tax will be charged at the emergency rate. This means the amount you receive may be more or less than expected and may lead to future tax adjustments to other income you receive, or will need correcting through selfassessment. The level of lump sum you take will be added to any other income you are already receiving and may mean you enter a higher tax band where you will pay more tax and receive less income as a result. Once you have taken an uncrystallised fund pension lump sum the amount you can contribute into money purchase pension schemes and get full tax benefits from will reduce to 10,000 each year. 12 Pension benefits guide

13 Pension benefits guide 13 Unless you are taking 100% of your pension fund you should consider whether your investments are suitable when taking lump sums? As your funds remain invested your investments may need to grow to provide the future withdrawals you expect. If the investments are poorly performing, further lump sums may deplete your pension fund. This will happen sooner where you take larger lump sums. Each investment available to you will have specific risks associated with it, and they will also vary in their level of risk. If you do not consider these points when you choose your investments in retirement you may be subject to greater risk than you would be comfortable with. If you are not sure about the level of risk you want to take with your retirement fund, you should get advice. Unless you are taking 100% of your pension fund, taking regular uncrystallised fund pension lump sums could mean your fund won t provide income for as long as you need it to? By not taking account of your expected life expectancy, or living longer than this, your ability to receive income may stop too soon, or may not be sufficient for you to live on. Taking money out of your pension reduces the fund available. This reduces the potential for investment growth and reduces the amount remaining to pay an income during your retirement meaning you may not have enough money available. When there is no more money in the fund, then income will no longer be available. The funds you select to invest your money may not perform as expected, or may fall in value suddenly when you need money, and this may mean that there might not be the amount of money available to you that you had expected. What could happen if you are planning to invest any money you re withdrawing into another investment? Please be aware of investment scams. Investment scams are being used by criminals who are targeting people like you that have access to the money in their pension. Investment scams are designed to look like genuine investments and they may seem very appealing. However, you could lose all your money, and you won t be protected through the financial compensation schemes. Charges vary across different products and different providers, and that all charges deducted from your fund reduce the amount available to you? Even if you re accessing money in the same way, different product providers charge different amounts, higher charges mean your fund reduces quicker compared to lower charges. The potential consequences if you have debts? Creditors may have a call on any money taken from your pension savings. This could mean that some or all of your money is taken by creditors. The potential impact on means-tested benefits? Taking money from your pension savings may affect your means tested benefits. This may result in the loss or reduction of other benefits. If you are unsure, you should seek advice. You should shop around different providers before deciding on this option? Lower charges and different options may be available if you shop around. However, there may be additional costs involved if you transfer your pension to another provider. Small pension pots lump sum do you know All the implications of taking a small pot from your pension? You are only permitted to receive three small pot payments from all your pension schemes during your lifetime. Taking a small pot now may restrict the options available to you from other pension schemes in the future. The tax implications of taking a small pot from your pension? Taking a small pot from uncrystallised funds means 25% is paid tax free with the balance taxed as income. Taking a small pot from previously crystallised funds means the whole amount is taxed as income. Unless you have a P45 for the tax year the taxable portion of the small pot payment you receive will be subject to income tax at the emergency rate. Consequently, the amount you receive may be more or less than expected and may lead to future tax adjustments to other income you receive. The taxable portion of the small pot you take will be added to any other income you are already receiving and may mean you enter a higher tax band where you will pay more tax and receive less income as a result. What could happen if you are planning to invest any money you re withdrawing into another investment? Please be aware of investment scams. Investment scams are being used by criminals who are targeting people like you that have access to the money in their pension. Investment scams are designed to look like genuine investments and they may seem very appealing. However, you could lose all your money, and you won t be protected through the financial compensation schemes. Charges vary across different products and different providers, and that all charges deducted from your fund reduce the amount available to you? Even if you re accessing money in the same way, different product providers charge different amounts, higher charges mean your fund reduces quicker compared to lower charges. The potential consequences if you have debts? Creditors may have a call on any money taken from your pension savings. This could mean that some or all of your money is taken by creditors. The potential impact on means-tested benefits? Taking money from your pension savings may affect your means tested benefits. This may result in the loss or reduction of other benefits. If you are unsure, you should seek advice.

14 What else you might need to know You can still make contributions once you ve started taking benefits You can still continue to invest into your pension and benefit from tax relief, even after you have started withdrawing your cash. However, taking UFPLS and certain drawdown payments will trigger the money purchase annual allowance rules. This will limit the amount of tax relief you can get on future contributions to any money purchase arrangement, or produce a tax charge if your employer contributes to your pension. For more information about annual allowance rules please read our Tax and your pension leaflet available on our website axawealth.co.uk. There are other tax implications you need to think about Taxable pension income is included as income for determining your overall income and may have an impact on your personal allowance or whether you need to complete a self-assessment tax return. What happens when you die Anyone, related or not, can inherit your pension funds when you die and potentially use it to provide income through flexi-access drawdown or take it as a one-off lump sum. We include more information in the Death benefit options form which you can also use to give us your instructions. You can get this from our website axawealth.co.uk. If you die before you are 75: Your fund may be paid out tax-free as a lump sum or drawdown. Any fund you haven t used to enter drawdown will be subject to a lifetime allowance test. Any amount over your remaining lifetime allowance will be subject to the lifetime allowance charge. We include more information about lifetime allowance in our Tax and your pension leaflet. If you die on or after your 75th birthday: A lump sum payment will be taxed at the recipient s rate of income tax unless the recipient is not a person (a trust for example) in which case it will be taxed at 45%. A pension payment will be taxed at your beneficiaries rate of income tax. 14 Pension benefits guide

15 Pension benefits guide 15

16 Contact us Visit Telephone Our lines are open 8.30am to 5.30pm, Monday to Friday. Address AXA Wealth Winterthur Way Basingstoke Hampshire RG21 6SZ Do you need advice? If you would like to learn more about our products and investments, or require any advice or further information, we recommend that you speak to a financial adviser. Please note that financial advisers use a variety of different ways to charge you for their services and you will be liable for any charges incurred. Please ask your financial adviser for full details of these charges. If you don t already have an adviser and would like to speak to one, you can find one in your area at axawealth.co.uk/find-an-adviser. Likewise you can contact the Institute of Financial Planning on or at financialplanning.org.uk. You can also get free, impartial guidance using Pension Wise, from the Government. See page 2 for details. AXA Wealth, Winterthur Way, Basingstoke RG21 6SZ. Telephone number is: As part of our commitment to quality service and security, telephone calls may be recorded. AXA Portfolio Services Limited (No ) and AXA Wealth Limited (No ) are companies registered in England and limited by shares. Their registered office is 5 Old Broad Street, London EC2N 1AD. AXA Wealth Limited promotes and distributes its own products. AXA Wealth Services Limited promotes and distributes the products of AXA Portfolio Services Limited, AXA Isle of Man and certain AXA Life Europe Limited products in the United Kingdom. Details of the companies offering specific products are shown in the product literature. AXA Portfolio Services Limited is authorised and regulated by the Financial Conduct Authority. AXA Wealth Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Details of the companies offering specific products are shown in the product literature. INCAW1005 MAY Pension benefits guide

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