The AIB Personal Pension Plan

Transcription

1 The AIB Personal Pension Plan

2 The purpose of this brochure is to describe the main details of The AIB Personal Pension Plan. You should familiarise yourself with this information, then keep this brochure in a safe place for future reference. Working together The AIB Personal Pension Plan is provided by Ark Life Assurance Company Limited, a subsidiary of Aviva Life Holdings Ireland Limited, a joint venture company between Aviva Group Ireland plc and Allied Irish Banks, p.l.c.

3 Contents The AIB Personal Pension Plan 3 A summary of the principal features and benefits 4 How much can be contributed? 6 How will your contributions be invested? 10 Funds from the top names in investment 11 Understanding risk and return 12 How we define risk and return 13 What funds can you choose? 14 The Lifestyle option with reducing risk 17 Additional fund Information 18 What are your retirement options? 20 Charges 23 Additional important information 26 The AIB Personal Pension Protection Plan 28 Statutory Information 32 A commitment to quality service 36 1

4 2 T H E A I B P E R S O N A L P E N S I O N P L A N

5 The AIB Personal Pension Plan Planning for your retirement is up to you. It could be that you are self-employed, or perhaps you work for an employer who doesn t provide you with a pension. In either case, nobody will make the decisions about a pension for you. You have to make them yourself. You know your pension is vital, not only for your own financial independence during retirement, but also for the future of your family who depend on you. It is important that you start your retirement planning early and that you get it right. Here are just a few points for you to consider: As a nation, we re living longer and longer. Your pension may have to last 20 years or more. Although there is a pension available from the State, it is a modest one and you will have to wait until the official retirement age before you can start receiving it. To get the most out of your retirement, you will probably need a pension of your own as well. There s also inflation to consider. Prices may not be rising as steeply as they did in the recent past, but they are still going up. You should allow for inflation in your pension planning. The earlier you start saving towards your retirement and the more you pay into your Plan, the higher your income should be when you retire. Delay will hit you where it hurts in your retirement pocket. Career patterns are changing. We tend to move from job to job more often than we did in the past, and there are periods when we may move into self-employment or not work at all - perhaps through redundancy or taking a break to bring up a family. Pension plans need to be flexible enough to suit the modern ways of working. Eligibility You may apply for an AIB Personal Pension Plan if you are self-employed, a sole trader, a partner in a partnership or you work for an employer who doesn t include you in a company pension scheme. You must be aged at least 18. 3

6 A summary of the principal features and benefits The Plan will provide benefits for you at retirement based on its accumulated value at that time. The larger the sum of money built up in your Plan, the greater your benefits will be. You decide how much you would like to contribute. You may make regular contributions, single or occasional contributions or a mixture of these types. There are valuable bonuses under regular contribution plans payable at the end of the 10th year and every 5 years thereafter, as described on page 8. You can choose from a range of attractive funds plus low risk investments for times of stockmarket uncertainty. When you retire, the full accumulated value of the Plan will be used to provide you with your retirement benefits normally a tax-free cash lump sum, plus an income for the rest of your life. You will have the option of choosing a lower income which would continue, after your death, to be paid to your spouse. Instead of securing your pension at retirement, you may have the option of investing its value in an Approved Retirement Fund (ARF), as described on page 20. You can take your Plan with you from job to job (see page 27) and between nonpensionable employment and self-employment. Life assurance protection can also be built into the Plan, to protect you and your dependants (as described on page 28). 4

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8 Don t short-change your future! How much can be contributed? It s up to you to decide how much you want to pay into your AIB Personal Pension Plan but in order to maximise your benefits it will pay you to contribute as much as you can possibly afford. An AIB Financial Adviser will be pleased to provide you with a personalised illustration showing the possible benefits that you could receive, based on different levels of contribution. The minimum contribution is currently just 500 a month (or 6,000 a year) on a regular basis or 10,000 as a one-off lump sum. There is no maximum contribution but, as described below, the Government limits the amount on which you can claim tax relief. The maximum tax-relieved pension fund that anyone can have is 2,300,000 or, if higher, the value of your pension fund on 7th December (The maximum amount that you may draw as tax-free cash lump sum is shown below and on page 20.) If the aggregate value of all your pension funds exceeds your maximum limit, the excess will be subject to income tax at 41%. What are the Plan s tax advantages? The Plan comes with important tax benefits for you. Income tax relief on your contributions. You will receive tax relief on your premiums, at the highest rate of tax you pay (up to the limits set out overleaf). Tax-free growth for the money. The contributions are invested in our pension funds, which pay no tax on their capital gains or investment income (although some withholding taxes cannot be recovered). A fund that pays no tax should provide a valuable boost to your pension. Tax-free cash lump sum at retirement. When you retire, you can take up to 25% of the Plan s value as a tax-free cash lump sum, subject to Revenue limits (set out on page 20). 6

9 Tax relief on contributions Your contributions to this Plan (and others like it) will be eligible for income tax relief up to the maximum annual contribution limits shown in the table below. Your Age Maximum personal contribution qualifying for tax relief as percentage of your net relevant earnings Under 30 15% % % % % 60 or over 40% Notes 1 These limits apply to the total contributions paid by you. 2 The maximum remuneration on which tax relief can be claimed is currently 115,000* per annum. * As at January Your net relevant earnings are your earnings from a trade, profession or employment, less any losses, capital allowances and certain other payments. 4 If you are a professional sports person, you may be able to contribute up to 30% of your net relevant earnings, regardless of your age. Further details are available from Ark Life, on request. Tax relief certificates We will send you a Retirement Annuity Certificate shortly after your Plan starts and, again, after you add any single contribution or vary your regular contributions. This Certificate will state the contributions that you have agreed to pay. If you are taxed under Schedule D, Case I or Case II : you should include details on your annual tax return of the contributions that you have paid to your AIB Personal Pension Plan. You may be required to submit your Retirement Annuity Certificate to your tax inspector. You will benefit from the relief when you settle your tax bill. If you are taxed under the PAYE system: you should forward your Retirement Annuity Certificate, as soon as you can, to your tax inspector. Your tax-free allowance should then be appropriately increased and the amount of tax deducted from your pay should be reduced. of Section 18 of the Taxes Consolidation Act,

10 It will benefit you over the longer term to keep your plan going Bonuses on regular contribution plans On the tenth anniversary and every fifth anniversary thereafter there is a loyalty bonus added to the Policy provided that the conditions below have been met. The loyalty bonus is equal to 5% of the value of units allocated to the policy in respect of regular contributions, excluding any units allocated by any non-automatic contribution increases in the five years prior to the date on which the loyalty bonus is due. None of the units allocated to the policy in respect of single contributions will be taken into account when calculating the loyalty bonus to be added to the policy. The loyalty bonus will be added provided that contributions have not been suspended for more than one year, in total, since the commencement of your policy. For the purposes of assessing whether contributions have been suspended for more than one year, different periods of time during which contributions have been suspended will be added together. A proportionate loyalty bonus is also added if a Retirement or Death Benefit becomes payable after the tenth policy anniversary and at a date between loyalty bonuses. This proportionate loyalty bonus will increase evenly each month from 0% immediately after the last loyalty bonus due date, to 5% at the next loyalty bonus due date. Units will be created to provide for any loyalty bonus due. The units will be created proportionately across the range of funds chosen for this policy. 8

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12 Successful investment can make a big difference How will your contributions be invested? The primary purpose of a pension plan is to provide you with the highest possible benefits at your selected retirement age. This objective can only be met by investing the money wisely. Through the AIB Personal Pension Plan, your contributions will be invested together with those of many other pension customers in funds which are managed, on a day-to-day basis, by Aviva Investors, AIB Investment Managers, Merrion Investment Managers or BlackRock. No matter how you invest, you can t eliminate risk as even cash deposits may fail to keep up with inflation, while the value of stocks and shares may fall at any time. However, you can reduce the element of risk by investing through a fund, as your money will be spread across a larger number of holdings than you would probably have been able to achieve by yourself. Single contributions are invested in Series A of the funds overleaf while Regular Contributions are invested in Series B. The fund charges for Single Contribution and Regular Contribution policies are shown on pages

13 Funds from the top names in investment The Funds within the AIB Personal Pension Plan, as described on pages 14-16, are managed by Aviva Investors except where otherwise stated. The additional fund managers are AIB Investment Managers (AIBIM), Merrion Investment Managers and BlackRock. Aviva Investors Aviva Investors is an international asset management business with almost 303 billion* assets under management. It has access to a global pool of research, a powerful network of asset managers and a team of over 1,400 employees in 14 countries across Ireland, UK, Europe, Asia Pacific and North America. Aviva Investors parent company, Aviva plc, is one of the world s largest insurance organisations. AIB Investment Managers AIB Investment Managers (AIBIM) are the investment and asset management arm of the AIB Group. AIBIM s philosophy is to be an active manager and they have a professional team of fund managers and analysts employed who are committed to leading the way in providing modern solutions in fast growing markets. BlackRock BlackRock, established in 1988, has grown to become the world s largest asset manager, conducting business in over 100 countries. It currently manages over US$3.15 trillion of assets. BlackRock maintains a vigorous focus on delivering the highest level of service, first-class investment performance, comprehensive choice, acknowledged credibility and unparalleled expertise. Merrion Investment Managers Merrion Investment Managers is one of Ireland s most successful independent specialist fund managers. The company has a distinct investment approach and an outstanding track record. The Merrion Managed Fund has been the top performing managed fund in Ireland since its launch in October 1993 and has delivered more than double the consensus return. *Source: Aviva Investors, June Source: BlackRock, 30 June Source: Mercer survey, 31 August

14 Understanding risk and return The highs and lows of the world s stockmarkets underline what everyone needs to know namely that every investment carries some degree of risk. Some investors are more cautious than others. However, you should be aware that funds involving a higher degree of risk can be more volatile although over the longer term they also have the potential to achieve greater growth. Funds carrying a lower degree of risk are more secure, but their returns are likely to be relatively modest and their value could be eroded by inflation. Please also remember that past performance should not be regarded as a guide to future performance. As you can see from the chart below, the greater the potential return from an investment, the greater the risk that its value could fall. Conversely, the lower the potential return from an investment, the lower the risk that its value could fall. If you have a relatively short-term investment horizon (under five years), you will probably want to avoid taking too much risk with your benefits. Conversely, if you have a medium to long term investment horizon (10 or more years) you may well be willing to accept a greater degree of risk, in return for the possibility of achieving greater investment returns. Potential Risk Low-to-Medium Risk Bond Funds High Risk Natural Resource, Geared and Emerging Market Funds Medium-to-High Risk Equity Funds Medium Risk Managed Funds and Property Funds Low Risk Cash Funds Potential Return 12

15 How we define risk and return Low risk There is no risk to your capital although, if the returns are lower than inflation, or the charges exceed any return achieved, the value of your capital will be eroded. Low-to-medium risk There is a low to medium risk to the capital value of the investment. The returns are not guaranteed and you may not get back the full amount invested. Medium risk The returns on these funds are not guaranteed and you may not get back the full amount you invested. The capital value and the returns from the Investment are both likely to fluctuate regularly. These funds may appeal to investors who are prepared to risk their capital (or on certain funds, a portion of their capital) in exchange for superior potential returns. Medium-to-high risk These investments are mainly in a more concentrated portfolio of shares. Compared with the other investments, the potential rewards and fluctuations in capital value could be greater. The returns are not guaranteed and you may not get back the full amount invested. High risk These funds involve a high degree of risk to your capital although, as a result, they have the potential to prove highly profitable. The returns are not guaranteed and you may not get back the full amount invested. 13

16 The widest range of funds from the top names in investment What funds can you choose? Low risk investments The AIB Cash Fund holds short-term low risk investments, which offer a secure, but relatively low rate of growth. The actual return achieved will vary from month to month, depending on the prevailing interest rates. It gives a steady return, combined with a high level of security and may therefore be a useful way of locking in accumulated investment returns from earlier years, particularly in the run up to retirement. However, it is not recommended for long-term investment. Low-to-medium risk investments The AIB Euro Fixed Interest Fund invests in bonds, which are loans given by governments and large companies in the form of fixed interest securities. Bonds can be bought and sold on the stock exchange, just like shares. In the past, bonds have often performed better than cash, but, over the longer term, not as well as equities. The value of bonds can rise and fall as interest rates change. Medium risk investments The AIB Merrion Managed Fund provides balanced long-term growth potential by actively managing the distribution of the portfolio between cash, bonds, equities and property, according to the prevailing economic conditions. This fund is managed by Merrion Investment Managers. The Lifestyle option is available on this fund. The AIB Managed Fund invests in a carefully selected and monitored portfolio of investments. Its holdings are likely to include Irish and international shares, fixed interest securities issued by the Irish and other sovereign governments, high quality properties and cash deposits. The Lifestyle option is available on this fund. The AIB Protected Managed Fund Series B (only available for regular contributions) gives you the opportunity to benefit from stockmarket performance when it is good, and the potential to protect your investment when it is less favourable. When markets are rising, more of your fund is allocated to the Growth component which is an investment in an AIB managed fund containing Irish and international shares, fixed interest securities issued by the Irish and other sovereign governments, high quality commercial properties and some cash deposits so it has the potential to benefit from any future rises. When markets are falling, more of your fund is allocated to the Secure component which is a deposit with AIB Bank so as to protect it from potential future falls. You also have the peace of mind of knowing that your money benefits from our Protected Price Promise, which aims to ensure that from the moment you invest, 80% of your money that is allocated to units is protected from potential falls in the market. Please see the AIB Protected Managed Fund Series B Customer Guide for further details. The AIB Invest Managed Fund buys units in the AIB Select Managed Fund, which is managed by AIB Investment Managers, a part of the AIB Group. The fund gains exposure to a range of Irish and international equities, bonds, property and cash. The allocation to each sector reflects the fund managers view of their relative value at any time but between 65% and 80% of the fund is usually invested in shares. The Lifestyle option is available on this fund. The AIB BlackRock European Absolute Return Fund Series A (only available for Single Premium contributions) seeks to achieve positive returns across all market conditions, by investing in a portfolio of equities and equity related securities (including derivatives) of companies incorporated or listed in the European economic area and Switzerland. It has the freedom to invest in synthetic-short investments; pair trades and also has the flexibility to switch up to 100% of the portfolio into cash if the market environment dictates. This fund is managed by BlackRock and invests in the BSF European Absolute Return Fund. Please see the Investing in Absolute Return Funds brochure for full details. BlackRock Strategic Funds 14

17 The AIB Consensus Managed Fund invests across a wide range of global equities, government bonds, commercial property and cash deposits. The fund adopts a consensus approach by matching the average asset distribution of the actively managed funds on a quarterly basis and tracks the underlying indices of each underlying market. This reduces the risks associated with active fund manager decision-making. The Lifestyle option is available on this fund. The AIB MultiTrack Fund spreads your money across a widely diversified portfolio, which spans all the major world stockmarkets and also provides exposure to Eurozone bonds. The Fund achieves this diversity by holding a portfolio of securities that provides exposure to more than 1,700 companies and bonds making up a number of chosen indices. The AIB Multimanager Fund will invest in AIBIM s Multimanager Managed fund which is a Unit Trust and sub-fund of AIBIM s Select Portfolio. The AIB Multimanager Fund is designed to benefit from the skills of some of the very best investment managers in the world. AIBIM employs rigorous and disciplined analysis techniques to identify and appoint the best in class investment managers for each of the Fund s investment sectors. The Fund will therefore benefit from a team of managers with outstanding and complementary qualities. The underlying funds focus largely on the equity sector, but the Fund also has exposure to fixed interest and property assets. Asset and geographic decisions are made with reference to a consensus allocation. The AIB UK Property Fund invests, through an underlying unit trust, in high quality commercial properties in the UK, and rents them out on long-term leases. It also holds some real estate securities. Property values tend to move differently from bonds and equities. The AIB European Commercial Property Fund invests in a portfolio of commercial properties (plus some exposure to real estate securities) in the European Economic Area (excluding UK but with the addition of Switzerland). Over the long term, the Fund offers the prospect of stable returns (through rent and dividend reinvestment) and the potential for capital growth. Medium-to-high risk investments The AIB Irish Fund invests only in the Irish stockmarket. Most of the investments are in large companies although there may be some exposure to small and medium-sized companies that have the potential to achieve dynamic growth. The AIB Eurozone Fund invests exclusively in the shares of companies that are based in the Eurozone the countries which have adopted the euro as their common currency. The AIB Global Fund invests in large companies, quoted on the world s major stockmarkets including the USA, the UK, Europe and Japan. It may also include some exposure to companies listed on some of the smaller stockmarkets including the Far Eastern and Australasian markets. The AIB High Yield Equity Fund invests in the shares of around 40 companies that are paying significant and sustainable dividends and which also have the potential for capital growth. The fund has an emphasis on large, well-established companies and is diversified in terms of both geography and market sectors. The AIB Euro Financials Fund invests in the shares of Banking, Financial Services and Insurance companies based in the Eurozone. The Fund is actively managed and seeks out undervalued financial stocks with superior earnings momentum and strong management which provides plenty of scope for the Fund Manager to add value through active stock selection. Continued overleaf 15

18 High risk investments The AIB Target 20 Fund consists of the 20 shares selected by the managers from their preferred themes and industries, in whichever markets and sectors they consider to have the greatest potential. The managers have full discretion when it comes to stock choice and there is no specific geographical or sectoral bias. The AIB Geared High Yield Equity Fund uses bank borrowings to increase the performance potential of the Fund. It invests in the shares of around 40 companies that are paying significant and sustainable dividends and which also have the potential for capital growth. The fund has an emphasis on large, well-established companies and is diversified in terms of both geography and market sectors. Please see separate Guide to Gearing for further details. The AIB Geared European Commercial Property Fund uses bank borrowings to increase the performance potential of the Fund. It invests in a portfolio of commercial properties (plus some exposure to real estate securities) in the European Economic Area (excluding UK but with the addition of Switzerland). Please see separate Guide to Gearing for further details. The AIB BlackRock World Gold Fund Series A (only available for Single Premium contributions) is a specialised actively managed fund that aims to achieve long-term capital growth by investing in a diversified portfolio of companies whose main activity is gold mining. It may also invest in companies whose predominant activity is other precious metals, minerals, base metals or indeed metal mining. The fund does not hold physical gold or metal. The fund invests in a euro hedged share class with the aim of minimising the effects of currency fluctuations for euro investors. This fund invests in the BGF World Gold Fund. Please see the Investing in Natural Resources brochure for full details. The AIB BlackRock World Mining Fund Series A (only available for Single Premium contributions) is a diversified portfolio of companies that are predominantly involved in the production of base metals and industrial minerals such as iron ore and coal. The Fund may also invest in gold or other precious metal or mineral mining companies. The Fund does not hold physical gold or metal. The fund invests in a euro hedged share class with the aim of minimising the effects of currency fluctuations for euro investors. This fund invests in the BGF World Mining Fund. Please see the Investing in Natural Resources brochure for full details. The AIB BlackRock World Energy Fund Series A (only available for Single Premium contributions) invests globally in traditional energy companies of all sizes. By using a portfolio of companies, the Fund aims to generate returns from companies that explore for, produce or transport oil, gas, coal and uranium, as well as those companies that provide services to these industries. Additionally, the Fund may invest in companies seeking to develop and exploit new energy technologies. The fund invests in a euro hedged share class with the aim of minimising the effects of currency fluctuations for euro investors. This fund invests in the BGF World Energy Fund. Please see the Investing in Natural Resources brochure for full details. The AIB BlackRock New Energy Fund Series A (only available for Single Premium contributions) is a relatively diversified portfolio of holdings investing in companies that manufacture equipment to produce energy (e.g. wind turbines), as well as companies that supply alternative energy (e.g. solar power farms). Emphasis may be given to renewable energy, automotive and onsite power generation, energy storage and enabling energy technologies, such as electricity transmission, metering and emissions trading. The base currency of the Fund is in US dollars. The AIB BlackRock New Energy Fund invests in a euro dealing share class and therefore is fully exposed to fluctuations in currency exchange rates. This means investors in this fund are fully exposed to currency risk. This fund invests in the BGF New Energy Fund. Please see the Investing in Natural Resources brochure for full details. BlackRock Global Funds PLEASE NOTE THAT THE PERFORMANCE OF THE HIGH-RISK FUNDS IS LIKELY TO BE MORE VOLATILE THAN THAT OF THE OTHER FUNDS. Please see additional fund information on page 18 &

19 Automatically reducing risk as retirement approaches T H E A I B P E R S O N A L P E N S I O N P L A N The Lifestyle option with reducing risk Our Lifestyle option gives you the peace of mind of knowing that as you approach your normal retirement age, your fund will be managed in a way that progressively reduces your exposure to riskier assets, such as equities. The Lifestyle option gives you access to a basket of up to three funds. This basket will be automatically managed in such a way as to ensure that the risk profile of your assets reduces as you approach retirement. The basket of funds is: A managed fund selected from one of either the AIB Managed Fund, the AIB Consensus Managed Fund, the AIB Invest Managed Fund, or the AIB Merrion Managed Fund, and The AIB High Yield Equity Fund, and The AIB Euro Fixed Interest Fund. These funds are explained in greater detail on pages 14 and 15. The only decision that needs to be made is which one of the three managed funds to add the Lifestyle option to. Once this is done, the percentage allocation to each fund within the basket will depend on how long you have before reaching your normal retirement age. When a plan is set up, a retirement age is selected, known as the normal retirement age (NRA). Regardless of your age, provided you have more than 5 years to go before your NRA: 1 80% of all contributions will be invested in your chosen managed fund, and 2 20% of all contributions will be invested in the AIB High Yield Equity Fund. As you get to within five years of your NRA, we will gradually begin switching* your fund and any future contributions from the AIB High Yield Equity Fund and then your chosen managed fund into the lower risk fund, the AIB Euro Fixed Interest Fund, as demonstrated in the simple table below: Number of months before AIB High Yield Chosen AIB Euro normal retirement age Equity Fund Managed Fund Fixed Interest Fund 61 20% 80% 0% % 80% 1.67% % 80% 11.67% 48 0% 78.33% 21.67% 36 0% 58.33% 41.67% 24 0% 38.33% 61.67% 12 0% 18.33% 81.67% At normal retirement age 0% 0% 100% * The first switch occurs on the same day of the month as the policy commencement date, immediately prior to the birthday that is five years before the NRA. The switching of funds occurs evenly and monthly between the whole months shown in the table above. Please note that, while investing in the Lifestyle option is designed to reduce the impact of stockmarket falls in the final years before retirement, investors should be aware that this strategy can also reduce the benefits of any stockmarket gains during the same period. 17

20 Additional fund information The medium, medium-to-high and high risk funds have the potential to provide your AIB Personal Pension Plan with long-term growth and are, therefore, a suitable home for your investments if you have some time to go to retirement (e.g. 7 years or more). Remember, the bigger your fund at retirement, the larger your pension will be. However, as these funds carry significant risk, they may not be a suitable investment in the last few years before retirement during which you may wish to consider switching progressively into funds that carry a lower risk profile (which happens automatically if you have selected the Lifestyle option). How do the funds work? Each fund is divided into a number of identical units and, as the market value of the fund s investments increases or decreases, the price of the units goes up or down. The unit price of the AIB Cash Fund will not fall. Each time a contribution is paid, it is used to purchase units at the prevailing unit price. Units are sold, to provide your benefits (or to switch between funds), at their prevailing unit price. The effect of changing the retirement age on the Lifestyle option If, subsequent to starting the AIB Personal Pension Plan, you decide to change the date that you wish to retire on, you will need to contact Ark Life in writing. If you do change your normal retirement age (within the Revenue limits), the fund allocations within the Lifestyle option will need to be altered to take account of the higher or lower number of years before you retire. Structure of the geared funds The AIB Geared European Commercial Property Fund and the AIB Geared High Yield Equity Fund invest in Unit Trusts managed by Aviva Investment Finance Ireland Limited (AIFIL), a unit trust management subsidiary within Aviva Group Ireland plc. AIFIL has made the following appointments in relation to the management of the Unit Trusts: AIB Bank to provide the gearing. Aviva Investors to monitor the gearing level (and assets where applicable). JP Morgan (Ireland) Ltd to administer the unit trusts and provide custodial services. Notes 1. AIFIL reserves the right to alter these arrangements as appropriate. 2. Please see the separate Guide to Gearing for further details. 18

21 Notes 1. Investment values and unit prices are not guaranteed; they can fall as well as rise, as a result of stockmarket and/or currency fluctuations and you may not get back the full amount of your contributions. However, the unit price of The AIB Cash Fund will not fall. 2. For the risk profile of each fund, please see page From time to time, some of the funds may also hold a proportion of their assets in short-term cash instruments. 4. Property investments cannot be sold as easily or quickly as equities or bonds so, in order to protect the interests of the remaining investors, we reserve the right to defer withdrawals, encashments (and any switch to another fund) from the AIB UK Property Fund, the AIB European Commercial Property Fund or the AIB Geared European Commercial Property Fund for up to six months. 5. Access to the AIB Consensus Managed Fund is through a fund reassurance agreement with Aviva Life & Pensions Ireland Limited. 6. Under Ark Life s agreement with BlackRock, the AIB BlackRock unit linked funds described herein are not available for distribution to, or investment by, US residents or citizens. They may not be directly or indirectly offered or sold in the USA or any of its territories or possessions or areas subject to its jurisdiction, or to or for the benefit of a US Person. A word of caution The value of your units in the funds will depend upon the value of the underlying investments and the income which they earn. These are not guaranteed and may fall from time to time, as well as rise. However, the unit price of The AIB Cash Fund will not fall. Warning: The value of your investment may go down as well as up. Warning: This product may be affected by changes in currency exchange rates. Warning: Past performance is not a reliable guide to future performance. Warning: Withdrawals and switches from the property funds may be deferred for up to six months. 19

22 Deciding on how and when to draw your benefits What are your retirement options? You may retire at any time between your 60th and 75th birthdays. You don t need to choose your retirement date at the outset. You simply notify us at least one month before you want to retire. With Revenue approval, people in certain occupations are allowed to retire earlier, as are those who become seriously ill. Option 1 Tax-free cash lump sum The amount of money that you may draw as a tax-free cash lump sum will, of course, be subject to Revenue limits. The maximum tax-free cash lump sum that can be withdrawn at retirement is 25% of the accumulated fund, subject to a lifetime limit of 200,000. Should you withdraw a lump sum which exceeds this maximum, the excess will be subject to a once off deduction of income tax (currently 20%) on a lump sum in excess of 200,000 but less than 575,000. Amounts of 575,000 and over will be subject to income tax (currently 41%) plus PRSI and the Universal Social Charge (USC), if applicable, at the time of drawdown. Please note that all tax free cash lump sums taken from pension arrangements since 7th December 2005 count towards the 200,000 and the 575,000 limits. Option 2 Pension Subject to the tax-free cash lump sum chosen by you (as described above), the balance of the Plan s value will normally be used to provide you with a pension by: a Purchasing an annuity, which will provide you with a guaranteed income for the rest of your life or a lower income that will continue to be paid, after your death, to your spouse, If you choose to purchase an annuity, and to enable you to enjoy the highest possible benefits, subject to Revenue limits, you may shop around at retirement and buy your annuity from any authorised insurance company. and/or b Fully or partially investing the balance of your fund in an Approved Retirement Fund (ARF) a more flexible arrangement that allows you to withdraw money as and when you wish, so long as you: have a guaranteed pension income of 18,000 per annum, or invest 119,800 in an annuity or in an Approved Minimum Retirement Fund (AMRF), or you are aged at least 75. Therefore, if you are under age 75 and wish to invest in an ARF, you must: have a guaranteed pension income of 18,000 per annum, or invest 119,800 in an annuity or in an Approved Minimum Retirement Fund. An AMRF differs from an ARF only to the extent that, until you are 75 years old, or you become in receipt of the guaranteed pension income of 18,000 per annum, you may only withdraw the amount (if any) by which the value of the AMRF has grown since its commencement. In other words, you cannot access any of the original capital sum invested. When you reach age 75, or you become in receipt of the guaranteed pension income amount (as set out above), your AMRF will automatically become an ARF and you will have the freedom to make withdrawals from it, as and when you please. 20

23 Option 3 Taking an additional, taxable lump sum At retirement, you may take an additional, taxable lump sum provided that you are aged at least 75 at the time or you have a guaranteed pension income of at least 18,000 per annum or you have already invested 119,800 in an AMRF. If you have invested in an ARF, you may take an additional taxable lump sum from the ARF at any stage. Ability to maximise your retirement benefits We want you to be able to enjoy the highest possible benefits at retirement. We therefore offer you the facility, when you retire, to: Buy your annuity from any authorised insurance company with the freedom to choose the company that will pay you the highest pension, and/or Invest in an Approved Minimum Retirement Fund and/or Approved Retirement Fund with any Qualifying Fund Manager with the freedom to choose the manager with the investment style and track record with which you feel most comfortable. Any income that you receive from an annuity, ARF or AMRF is subject to tax at your marginal rate. Death before retirement age If you die before retirement, the full accumulated value of your Plan (including the tax-free cash lump sum element), calculated at the selling price of the units held, will be paid to your estate. As described below, you may use part of your allowable contributions to provide yourself with additional life assurance protection through an AIB Personal Pension Protection Plan. Can protection benefits be included in the Plan? Optional life assurance If you wish, you can arrange for a life assurance benefit to be included in your Plan (subject to satisfactory medical evidence), in order to provide greater protection for your family. The premiums will be added to your pension contributions and, provided that the total doesn t exceed your overall tax-relievable contributions (see page 7), it will qualify for income tax relief. Your AIB Financial Adviser will be able to tell you more about this facility. 21

24 22 T H E A I B P E R S O N A L P E N S I O N P L A N

25 Charges A Contribution Charge is deducted from each contribution paid into the Plan: Regular Contribution less than 800 a month or 9,600 a year 5% Regular Contribution greater than or equal to 800 a month or 9,600 a year 3% The above contribution charges will be increased by 1% for each year that the term to retirement is less than 6 complete years. For example, if you are paying 1,000 a month and your term to retirement is 4 complete years; the contribution charge will be 5% (i.e. 3% + 2 years x 1% = 5%). The term to retirement of the initial contribution and of any subsequent increases of contribution will be calculated separately. Lump Sum less than 10,000 5% Lump Sum between 10,000 and 25,000 3% Lump Sum 25,000 or more 2% The above contribution charges will be increased by 0.5% for each year that the term to retirement is less than 10 complete years. For example, if you paid a single contribution of 15,000 and your term to retirement is 4 complete years; the contribution charge will be 6% (i.e. 3% + 6 years x 0.5% = 6%). Please note 1. The 800 a month or 9,600 a year on regular contributions and the 10,000 and 25,000 thresholds on single contributions may change from time to time, to take account of inflation or to take account of circumstances where this is necessary for the protection of Ark Life s financial well-being. 2. Regular and lump sum contributions will be applied to separate policies within the Plan and will not be added together for the purposes of the contribution charge. 3. Each lump sum contribution will be treated separately for the purposes of the contribution charge. A Policy Fee is deducted from the value of the units held under all regular contribution plans. This is currently 5.28 a month. The policy fee will be reviewed from time to time. Adjustment to charges and fees We reserve the right to change the charges and fees on The AIB Personal Pension Plan in circumstances where we believe this is necessary for the protection of Ark Life s financial well-being. Should any increase in charges or fees occur you will be given one month s notice of such an increase. There may be circumstances where the number and/or amount of policyholder withdrawals leads to a need for the underlying investment funds to have to sell a proportion of their assets. In such circumstances, Ark Life therefore reserves the right to adjust the unit price of the funds, to reflect the costs involved in selling the necessary assets. As a result, policyholders withdrawing money would bear the costs of realising all or part of their savings. For funds holding a significant proportion of property-related assets, given the costs associated with buying and selling properties, this adjustment can be significantly higher than that applying to funds invested in other asset classes. Charges continued overleaf 23

26 A Fund Charge applies to all funds. The charges currently applying to both single and regular contribution policies are detailed below. Fund Name Single Contribution Regular Contribution policies investing in Series A funds policies investing in Series B funds AIB Cash Fund 1.00% per annum 1.50% per annum AIB Euro Fixed Interest Fund 1.00% per annum 1.50% per annum AIB Merrion Managed Fund 1.00% per annum 1.50% per annum AIB Managed Fund 1.00% per annum 1.50% per annum AIB Protected Managed Fund Single contribution not permitted 2.25% per annum AIB Invest Managed Fund 1.10% per annum 1.60% per annum AIB BlackRock European Absolute Return Fund 1.65% per annum* Regular contribution not permitted AIB Consensus Managed Fund 1.00% per annum 1.50% per annum AIB MultiTrack Fund 1.15% per annum 1.65% per annum AIB Multimanager Fund 1.25% per annum 1.75% per annum plus third party fees*** plus third party fees*** AIB UK Property Fund 1.50% per annum 2.00% per annum AIB European Commercial Property Fund 1.65% per annum 2.15% per annum AIB Irish Fund 1.15% per annum 1.65% per annum AIB Eurozone Fund 1.15% per annum 1.65% per annum AIB Global Fund 1.15% per annum 1.65% per annum AIB High Yield Equity Fund 1.00% per annum 1.50% per annum AIB Euro Financials Fund 1.25% per annum 1.75% per annum AIB Target 20 Fund 1.15% per annum 1.65% per annum AIB Geared European Commercial Property Fund 1.20% per annum (GAV) 1.45% per annum (GAV) AIB Geared High Yield Equity Fund 0.75% per annum (GAV) 1.00% per annum (GAV) AIB BlackRock World Gold Fund 1.65% per annum Regular contribution not permitted AIB BlackRock World Mining Fund 1.65% per annum Regular contribution not permitted AIB BlackRock World Energy Fund 1.65% per annum Regular contribution not permitted AIB BlackRock New Energy Fund 1.65% per annum Regular contribution not permitted Please see overleaf for notes on charges. 24

27 Notes on charges * In addition to this charge, the underlying BSF European Absolute Return Fund incorporates a performance fee, linking BlackRock s remuneration more closely to the performance of the Fund. The performance fee is 20% of outperformance over the hurdle (3-month EURO LIBOR**) and when the current net asset value (NAV) is higher than the High Water Mark (HWM). The HWM is the higher of the initial launch Net Asset Value and the last NAV for which a performance fee has been paid. Where the current NAV is below the HWM, or the NAV is below the hurdle, no performance fee will be accrued until the underperformance has been made good. BlackRock only takes a performance fee when the Fund not only generates an absolute return, but outperforms both the hurdle & HWM. If the Fund underperforms both the hurdle and the HWM, BlackRock will not charge a performance fee. This performance fee is reflected in the share price Ark Life receive from BlackRock. A separate publication entitled Performance fees explained outlining BlackRock s performance fee accompanies this document. ** EURO LIBOR is the London Interbank Office Rate denominated in Euros. This the interest rate that banks offer each other for large short-term loans in Euros. Third Party Fees ***The AIB Multimanager Fund invests in an underlying fund that benefits from the expertise of a number of third party investment managers. Fees are paid to these investment managers by the underlying fund. The underlying fund generally avoids initial investment charges and receives substantial reductions in investment management fees with all rebates received being credited in full to the Fund. The net management fee payable by the Fund through the third party funds chosen is currently expected to be no more than 0.60% p.a. but may change over time due to the funds chosen and the asset allocation policy. At the target level of gearing, this would be equivalent to a fund charge of 2.40% p.a. (single contributions) or 2.90% p.a. (regular contributions) on policyholder s money only. At the target level of gearing, this would be equivalent to a fund charge of 1.50% p.a. (single contributions) or 2.00% p.a. (regular contributions) on policyholder s money only. On our geared funds we apply the fund charge to the Gross Asset Value (GAV) of the fund, i.e. to the policyholder s money and any borrowings made by the fund on behalf of the policyholder. Please see the separate Guide to Gearing for further details. Please note 1. The fund charge applies to the value of the investments and is deducted daily from the fund. The costs of buying, selling and maintaining the investments are met by each fund itself. 2. Ark Life may from time to time close or merge the funds or offer the opportunity to invest in new funds not listed above. These new funds may have fund charges different to those shown above. 25

28 You can adapt your plan, as your life changes Additional important information Switching between funds As time goes by, you may want to adapt your investment strategy, to take account of your changing needs or of changing prospects in the various investment markets. You may, therefore transfer money between funds. In each year of your AIB Personal Pension Plan, your first six switches between funds will be carried out free of charge. For any further switches in the same period, we will make a small charge currently 30 to cover administration costs. This will be deducted from the value of your units. You may instruct us, at any time, to redirect future contributions to a different fund. (There is no charge for this service.) Inflation-linked option As time goes by, your income will probably increase. So, The AIB Personal Pension Plan offers you the option of allowing your regular pension contributions to rise automatically each year in line with a publicly available index of earnings (subject to a minimum increase of 5%), on the anniversary of the commencement of the policy. This facility is strongly recommended, as it will help you to maintain the value of your retirement benefits while still keeping your contributions affordable. Increasing your contributions Provided that your contributions don t exceed the maximum allowed (outlined on page 7), and subject to Ark Life accepting increases (including lump sum contributions) on your Plan at that time, you may increase your contributions or pay lump sum contributions to your AIB Personal Pension Plan. Separate policies are required for lump sum contributions and regular contributions. Increases in regular contributions will be added to the original regular contribution policy. Lump sum and regular contribution policies will be treated separately for the purpose of the contribution charge described on pages 23. Increases in regular contribution policies must be payable at the same frequency and by the same payment method as the original contribution. Increases in a regular contribution policy under which contributions are paid annually may only be made at an annual anniversary of the commencement date. Additional lump sum contributions and transfers received from other plans will be added to the lump sum policy and may be accepted at any time. You should note that lump sum contributions are not permitted in the AIB Protected Managed Fund Series B. Reducing your contributions If you find yourself unable to maintain your regular contributions, please contact your AIB Financial Adviser who will be pleased to explain all the alternative options to you. Provided that at least the first full year s contributions have been paid, you may reduce your contributions to the regular contribution pension policy if you need to but not below the minimum regular contribution then allowed by Ark Life. The current minimum premium level is 500 per month or 6,000 per year. Your policy will still be entitled to the bonuses so long as the conditions on page 8 have been satisfied. Suspending or stopping your regular contributions Provided that at least one year s contributions have been paid, contributions may be suspended until you can afford to re-start them. Unfortunately, it will not normally be possible to suspend contributions before the above criteria are met. However, in exceptional circumstances the policy may be made paid up. In the meantime, the costs of maintaining the policy will be met by the normal charges, which will be deducted from the value of the units. If you suspend payment of your contributions under this policy, payment may re-commence (subject to the conditions below), in which event you are required to give Ark Life written notification of re-commencement. If you wish to re-commence payment of contributions you can make good contributions that were missed. Any contributions made good in this manner will be taken into account when assessing the eligibility to the Bonus Units as set out in page 8. 26