Reminder of important facts Pensions

Transcription

1 CIS PERSONAL PENSION Reminder of important facts Pensions

2 This guide applies to all variations of The CIS Personal Pension product (sold prior to April 2001), including: Voluntary contributions State Earnings Related Pension Scheme (SERPS)/State 2nd Pension (S2P) contributions Free-standing AVC contributions. What is a Personal Pension Policy? Your pension policy is a tax-efficient way of building up a pension pot to provide you with pension benefits in your retirement. The options available to you are included in the Taking your pension benefits section. Do I get tax relief on my pension contributions? To encourage people to save for their retirement, the Government gives basic rate income tax relief on your pension contributions. Basic rate taxpayers For basic rate taxpayers this means that if, for example, you pay 80 a month into your Personal Pension policy, we would collect an additional payment of 20 from the Government and pay this into your policy. You would then have 100 a month being invested in your policy. Higher and additional rate taxpayers Higher rate and additional rate taxpayers also qualify for basic rate income tax relief. If you are a higher rate or additional rate taxpayer, and you pay the same 80 a month into your Personal Pension policy, we would collect the same additional payment of 20 from the Government and pay this into your policy. You may then be able to claim further tax relief through your Self Assessment tax return if you complete one, or by asking H.M. Revenue and Customs to adjust your PAYE (Pay As You Earn) tax code if you don t. Where does Royal London invest my savings? We invest your contributions, together with the contributions of other with-profit policyholders, into the RLCIS OB & IB Fund, referred to here as the with-profits fund. The fund is managed by an experienced fund manager and aims to achieve steady growth by investing in a wide range of assets such as shares, property and government bonds. The value of the investments in the with-profits fund will go up and down, reflecting daily price changes in the underlying assets. However, we smooth our investment returns to protect against extreme changes in investment markets. By smoothing we mean that instead of sharing out the actual profits or losses made in the with-profits fund each year, we reduce the impact of variations in these from one period to another by spreading the profits and losses from one period to the next. We also aim to pass on a share of the with-profits fund s investment returns to you. We do this by adding annual and final bonuses to your policy. However, please note that the addition of bonuses depends on the fund s performance and there is no guarantee that we will add future bonuses to your policy. The bonuses also allow for deductions to cover the costs of managing your policy. 2

3 We explain how we manage our with-profits fund in the Principles and Practices of Financial Management (PPFM) of the RLCIS OB & IB Fund document available on our website royallondongroup.co.uk/rlcis or on request. In the event of conflict between this guide and the PPFM, the PPFM shall prevail. What are the Fund Guarantees? Your policy will provide you with a Guaranteed Cash Sum (GCS) at your Chosen Retirement Date* as long as you pay all your contributions up to that date. Your GCS and any bonuses, once added, are guaranteed to be paid on your Chosen Retirement Date, even if the investment markets fall. This provides the pension pot from which you can take your pension benefits at retirement. What is a Guaranteed Annuity Rate? For any pension contributions in respect of proposal forms signed before 1st March 1999, we guarantee a certain level of regular income for you if you retire at your Chosen Retirement Date and you use your pension benefits to buy a regular income with us. This is known as a Guaranteed Annuity Rate. Our Guaranteed Annuity Rates could be higher than the annuity rates offered by other pension providers, meaning that you could get a higher regular income by staying with us. The policy document we sent to you when you took out your Personal Pension policy will tell you if you are entitled to a Guaranteed Annuity Rate. When can I take my pension benefits? Pension benefits can be taken from age 55. We will write to you in the months leading up to your Chosen Retirement Date to inform you of your retirement options, unless you contact us to request an earlier retirement date. Taking your pension benefits The Government has made a number of changes to the way in which you can take your pension benefits. This means that you now have more choice than ever before in how you can take the pension pot you have saved. In summary, these choices are: Option 1 Take all your pension pot as a single lump sum (25% is tax free). Option 2 Convert your pension pot into a guaranteed income for the rest of your life. This is called an annuity (including the option to take up to 25% as tax free cash). Option 3 Take some of your pension pot and leave the rest invested for another time. You can take a series of lump sum payments or income at different times or a mix of both (including the option to take up to 25% as tax free cash). Option 4 Postpone taking your pension pot you can leave your pension benefits with us until you are age 75, after which you will be required to take your pension benefits. You cannot normally take advantage of these options until you have reached age 55. However, if you are unable to work because of poor health then you may be able to take your benefits earlier. 3

4 As you approach your Chosen Retirement Date, we will send you a detailed pack with all your options and details of what you need to do. To help you understand your options and make the right choices, the Government is making available a free and impartial guidance service - Pension Wise. We strongly recommend that you use this service to help you understand your options and make the right decision. You can access Pension Wise online by visiting gov.uk/pensionwise. This service will not provide advice or recommend specific products or providers. If you feel you need advice, we recommend you talk to a financial adviser. If you do not have a financial adviser, you can get details of local financial advisers by visiting unbiased.co.uk. Advisers may charge for providing such advice and should confirm any cost to you beforehand. What happens if I die before I take my pension benefits? If you die before you take your pension benefits, we will return the value of your pension pot to your beneficiaries. If you die before the age of 75, it will normally be paid tax free. If you die after the age of 75, it will be subject to tax at 45% if it is paid before 6 April After this date it will be taxed as income, i.e. depending on their total taxable income in a year, your beneficiary may pay income tax on these payments. If you purchased separate life cover with your pension, and this cover is in force when you die, then we will pay an additional lump sum benefit. Previously, there were certain restrictions applying to Protected Rights benefits, which meant that a regular income would automatically have been payable to a surviving spouse or civil partner, but this is no longer the case. You will still be able to choose to have a regular income payable to a surviving spouse, civil partner or any other person who is financially dependent on you, however if one is not chosen the pension pot will be paid as a lump sum. What happens if I am in ill-health? If you took out the Waiver of Contribution cover option with your policy, and are still paying for this cover, please contact us if you are unable to work for any significant period due to sickness or accident. We may be able to pay your pension contributions for you. If you are unsure whether you have waiver of contribution cover please contact us on If you retire early due to ill health, we may be able to make special arrangements for when and how you take your pension benefits. Can I transfer my policy? You can transfer your policy to another pension provider at any time before you take your pension benefits. We will not charge for doing this However, if you do transfer your policy, you will lose any Fund Guarantees and any Guaranteed Annuity Rate. 4

5 We recommend that you speak to a financial adviser before you transfer your policy. Can I stop paying my pension contributions? You can stop paying your pension contributions at any time but this will reduce the size of your pension pot. Additional information This guide is a short reminder of the main features of your Personal Pension policy and any important changes that might affect your policy. You should refer to the policy document we sent to you when you took out your policy, together with any contract endorsements, for more detailed information. In the event of conflict between this guide and the policy document, the policy document will prevail. Notes *Throughout this document, whenever we refer to Chosen Retirement Date, this is the date that you originally stated you would like to retire and is the date shown on your annual statement (unless subsequently changed). 5

6 If you would like a copy of this leaflet in large print, audio or Braille, please call us on Royal London Churchgate House, 56 Oxford Street, Manchester, M1 6EU royallondon.com The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales number Registered office: 55 Gracechurch Street, London, EC3V 0RL. MKT2613_RL 04/2015