Retirement Take your tax-free Lump Sum today, and protect your pension income for tomorrow

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1 Retirement Take your tax-free Lump Sum today, and protect your pension income for tomorrow Lifetime Income Lifetime Income

2 Retirement on the horizon? Your investment choices in the few years before you retire are crucial. If you are aged 55 or over and within 10 years of retirement, you may be facing a dilemma: You ll want to ensure that your investments are working as hard as they can now, so that you will have the income you want in the future. At the same time, you may want to access a portion of your investments now, tax-free, and keep the rest invested until you re ready to retire. In the past, if you wanted to take your tax-free Lump Sum now and delay taking an income, you needed to move your pension fund into a traditional Drawdown Pension plan. However, by doing this there is a risk that your future income could be affected by market volatility. If the markets fall at the moment you want to retire, you could receive a lower income from your retirement fund than you expected. With Secure Advantage+ you can now access a pension plan that offers great flexibility. At the heart of Secure Advantage+ is a range of unique investment Funds which use leading-edge risk management techniques to reduce the impact of dramatic market fluctuations. You can choose from different investment Funds, and vary the way your Plan operates to take account of your changing circumstances. 2

3 Traditionally, pension funds are converted into a lifetime annuity on retirement, to provide a guaranteed income that will last a lifetime. However, people are living longer, and annuity rates have been falling. One of the reasons for this fall is that insurers need to compensate for the fact that they now need to pay out income for a longer period of time. While past annuity rates are not a guarantee of future annuity rates, annuities are currently paying over 60% less than they were 15 years ago (see graph below) 1 and this decline is expected to continue as life expectancy continues to increase. Today many more people will have a retirement that lasts 25 years or more. There is nearly a 50% chance that at least one person in a couple aged 65 will live to the age of 89 and a 25% chance that one of them will live to the age of The alternative to annuities has been to leave their fund invested and draw down an income from it on a regular basis. But this too carries worries how much can you safely withdraw without risking that your fund will run out in later years? 30 Annuity rates FROM ANNUITY RATE Note 1 and source of graph: AXA Life Invest s reproduction of part of Williams Burrows YEAR Annuities Annuity rates, Gilt yields and FTSE performance since January Based on a male aged 65, 50,000 purchase, single life, guaranteed 5 years and level payments. Note 2 : Analysis carried out by AXA Life Invest based on mortality tables PCMA00 and PCFA00, Annuity provided by the Institute and Faculty of Actuaries. 3

4 What are your pre-retirement investment options? If you want to take your tax-free Lump Sum now, but would still like to delay taking a retirement income, there are three main investment strategies which you could follow. These are summarised in the table below. STAY INVESTED AND TRY TO GROW your RETIREMENT FUND. REDUCE your INVESTMENT RISK BY SELECTING LESS RISKY ASSETS TO TRY AND PROTECT your INVESTMENT. GUARANTEE A FUTURE LEVEL OF INCOME FROM your FUND, BASED ON ITS CURRENT VALUE. Potential to increase your future retirement income through investment gains? Ability to reduce the effect of stock market falls on your future income? Security of knowing what your minimum income in retirement will be? Ability to protect your retirement income from annuity rate decline? Ability to change the underlying investments? The table above does not compare all aspects of the retirement investment options to be considered. It is not meant to give advice and you should always consult a financial adviser when considering if this Plan, or any other retirement product, is suitable for your needs. 4

5 Taking an example... A 58-year-old customer transfers 133,333 into the Secure Advantage+ Pension Plan. After taking 25% of his fund straight away as a tax-free Lump Sum, the customer invests 100,000 into the Guaranteed Benefit Investment of his Secure Advantage+ Pension Plan with the Income Reward benefit, and waits until age 65 to retire and start taking an income. What happens if the investments perform well for the next 7 years? In the hypothetical example below, as the markets performed well, the value of the Guaranteed Benefit Investment of the Plan rises in line with the performance of the underlying investments. On each Plan anniversary, the new Income Base is calculated. If the value of the Guaranteed Benefit Investment has grown above the previous Income Base, this new higher figure is locked in on each anniversary as the new Income Base. This will be used to calculate the Guaranteed Income Amount. In this example, when the customer is ready to start taking an income, the amount of income they will receive each year is the equivalent of 4.25% of their income base. They also receive an additional income reward of 2.5%. The income reward is paid out for the same number of years they defer taking an income. Full Plan years Amount paid into the Guaranteed Benefit Investment What happens to the CUSTOMER S level of income? Value of the Guaranteed Benefit Investment Income Base Guaranteed Income Amount Income Base x (Guaranteed Annual Income Rate of 4.25% + 2.5% Income Reward) 1 Day 1 100, , ,000 Year 1 105, ,000 Year 2 110, ,000 Year 3 115, ,000 Year 4 120, ,000 Year 5 125, ,000 Year 6 130, ,000 Year 7 135, ,000 9,113 What happens if the value of the investments falls over the next 7 years? In the hypothetical example below, even if the value of the underlying investments in the Guaranteed Benefit Investment falls between the time they invest in the Plan and start taking income, the income paid from the Plan will not reduce (unless they make a Guaranteed Benefit Deduction from their Guaranteed Benefit Investment). When the customer is ready to start taking income, the amount of income they will receive each year is the equivalent of 4.25% of their original investment. They also receive an additional income reward of 2.5%. The income reward is paid out for the same number of years they defer taking an income. Full Plan years Amount paid into the Guaranteed Benefit Investment What happens to the CUSTOMER S level of income? Value of the Guaranteed Benefit Investment Income Base Guaranteed Income Amount Income Base x (Guaranteed Annual Income Rate of 4.25% + 2.5% Income Reward) 1 Day 1 100, , ,000 Year 1 95, ,000 Year 2 90, ,000 Year 3 85, ,000 Year 4 80, ,000 Year 5 75, ,000 Year 6 70, ,000 Year 7 65, ,000 6,750 1 The Lifetime Income Rate is 4.25% if income is first taken at age 65. The Lifetime Income Rate varies depending on the age of the customer (and that of their husband, wife or civil partner if the Joint Benefit option is chosen) when they start taking income. For further information on the Lifetime Income Rates please see this Plan s Customer Brochure and Key Features Document. Please note the above tables are hypothetical examples and do not show what we think future fund performance will be. They also assume that no partial transfers, Additional Withdrawals or amounts in respect of Adviser Charges have been taken. The information is provided only to show how the features of the Secure Advantage+ Pension Plan work. They are not a projection of likely or possible benefits and they are not advice or a recommendation of any sort. 5

6 A guaranteed income for life, however the market performs? KEY TERM: INCOME BASE This is the notional amount used to calculate the Guaranteed Income Payments. Note that we use the value of the Plan, not the Income Base, to work out the amount that would be paid out if a partial or full transfer, an Additional Withdrawal, or a tax-free Lump Sum is requested from the Plan. KEY TERM: Guaranteed Benefit Investment This is the part of the Plan that is used to work out the guaranteed benefits from the Plan (such as the Guaranteed Income Payments or Death Benefit). Our guarantees explained The Secure Advantage+ Pension Plan with the Lifetime Income Benefit gives you the security of knowing the minimum amount of income you can expect in the future for the rest of your life (provided you don t take any additional money out of the Guaranteed Benefit Investment of your Plan). This is because when you start taking income, we use a notional amount called the Income Base to work out the income payments. Initially, the Income Base is the amount paid into the Guaranteed Benefit Investment of the Plan. While the Plan guarantees an income for life, it does not guarantee that the money invested in the Plan will be protected. This is because the value of the Plan will rise and fall depending on the performance of the underlying investments. If you transfer your Plan, you could get back less than invested. The guarantees are provided at an additional charge, which will reduce the value of the Plan and its growth potential. If at the Plan anniversary the value of the Guaranteed Benefit Investment is greater than the Income Base then this figure is locked in. KEY TERM: Income Reward For each year you defer taking an income, we will add on an additional 2.5% of the Income Base to your income payments for that year. So for example, if you defer taking income for 7 years, then your Guaranteed Income Payments will be higher for the first 7 years of payment. The Secure Advantage+ Pension Plan is available to customers who are resident in the UK for tax purposes and who are at least 18 years old. The Planholder (and their spouse/civil partner if the Joint Life Option is chosen) must be aged between 40 and 80 in order to take a Guaranteed Benefit and must be at least 55 years old to take an income from the Plan. The minimum investment into the Plan is 25,000. 6

7 Case study We ve told you that Secure Advantage+ is a flexible solution to provide income in your retirement. To help make this clearer, we ve picked a hypothetical example to show how this Plan could suit your circumstances. Helen is 65 and is retiring. She has a retirement fund of 200,000 which she has built up over the years. After discussions with her financial adviser, Helen decides to transfer her existing 200,000 pension funds into a Secure Advantage+ Pension Plan. She wants to start taking income immediately, so she elects to take 25% of her investment as a tax free Lump Sum and decides to initially withdraw the maximum allowed by HMRC (GAD max) each year. Helen invests into the 50/50 Fund from the Global Strategy range. Helen knows that the aim of this Fund is to offer smoother, more consistent returns over time while providing protection when investment markets are affected by high levels of volatility. Her Fund is protected from an increased level of volatility within a set level, but she still benefits from any positive growth in the markets. At any time in the future Helen can vary her income within the limits set and can even choose to add the Lifetime Income Benefit to her Plan if she wants the additional security of a guaranteed income for life (provided the Fund value is a minimum of 25,000). She also has ongoing flexibility and is still in control of her pension. So, should her circumstances change, she can transfer her investment to another pension arrangement or even buy an annuity if that suits her needs better. Helen has regular reviews with her financial adviser to monitor the performance of her investment and to review her income requirements on an annual basis. To find out more about the 50/50 Fund or any other Funds in the Global Strategy range please see this Plan s Customer Brochure. 7

8 More information The Plan is termed guaranteed because AXA Life Invest will continue to pay the Guaranteed Income Amount for life, regardless of the value remaining in the Guaranteed Benefit Investment of the Plan (note that transfers, Additional Withdrawals or paying amounts in respect of Adviser Charges from the Guaranteed Benefit Investment will result in a proportional reduction in the amount of guaranteed income paid). You should be aware that the guarantees provided under the Plan are provided only by AXA Life Invest. The only circumstances in which the guarantees would not be available would be if AXA Life Invest were to become insolvent. If this were to happen, the benefits from the Plan would be affected. You can find out more about this in this Plan s Key Features Document. Whilst a lifetime income is guaranteed from the Lifetime Income Benefit under the Secure Advantage+ Pension Plan, the value of the Plan is not. The value of the Plan can fall as well as rise and is not guaranteed. If all or part of the Plan is transferred, the Planholder may get back less than they invested as the Plan Value can go down as well as up in line with the performance of the underlying investments. This will reduce the Guaranteed Income Amount and Death Benefit that you will receive. The Plan Charges taken in order to provide the guarantees and manage the Plan will reduce the Plan Value and impact potential growth. Taxation is subject to change and depends on the Planholder s personal circumstances. The Death Benefit may also be subject to tax. CHARGES ASSOCIATED WITH THE Secure Advantage+ Pension Plan The charges associated with this Plan include: A charge applied for managing the Plan; Fund Management Charges for the Fund in which the Plan is invested; A charge if you take out a guaranteed benefit. If instructed to do so, we will pay amounts from the Plan in respect of Adviser Charges that the Planholder has agreed with their financial adviser. For a complete description of the risks and charges associated with this Plan you should refer to this Plan s Key Features Document and Terms and Conditions. Contact us Telephone Visit FURTHER INFORMATION If you wish to obtain information on an existing Secure Advantage+ Plan or would like to discuss an application which has already been sent to us, you can contact us as follows: Telephone Available 9am to 5pm, Monday to Friday As part of our commitment to quality service and security, telephone calls may be recorded. client.service@axa-lifeinvest.com Please be aware that s are not secure as they can be intercepted, so think carefully before sharing personal or confidential information in this way. ADDRESS AXA Life Invest, 3 rd Floor, Guild House, Guild Street, IFSC, Dublin 1, Ireland. The Secure Advantage+ range of Plans is underwritten by AXA Life Europe Limited. AXA Life Europe Limited, trading as AXA Life Invest, is authorised by the Central Bank of Ireland, and is subject to limited regulation by the Financial Conduct Authority and Prudential Regulation Authority. Details about the extent of our regulation by the Financial Conduct Authority and Prudential Regulation Authority are available from us on request. Registered in Ireland under number Head office: 3 rd Floor, Guild House, Guild Street, IFSC, Dublin 1, Ireland. Member of the AXA Group. PUKRSITFC1404AXA 09/14