BI Horizon Pension Plan

Transcription

1 BI Horizon Pension Plan Geoff Hallett October 2013 Note: We cannot provide individual financial planning advice FOR FINANCIAL PROFESSIONAL USE ONLY NOT FOR PUBLIC DISTRIBUTION

2 BI Horizon Pension Plan 1. How can I plan for my retirement? 2. How does the BI Horizon Pension Plan work? 3. Where should I invest? 4. How much should I save? 5. What about my other pensions? 6. Your to do list It is important to emphasise that we are not making any personal recommendations during this presentation 2

3 How can I plan for my retirement?

4 net per month Pension - why do I need one? Working Retired Income Outgoings Outgoings Income Spare cash Mortgage Travel costs Family Holiday Going out Car Sky TV Bills Council tax Food Income Basic State Pension Based on a gross salary of 24,000 4

5 State Pensions Full Basic State Pension 2013/14 - payable at age 65? You need 30 qualifying years e.g. paid or credited with National Insurance Contributions (NICs) Single person: per week ( 5,730 per annum) Married couple: per week ( 9,160 per annum) State Second Pension (S2P) Previously SERPS (S2P from 2002) Flat Rate Pension for all Government proposals confirmed in the Budget to change the basis of State pensions to provide a single flat rate pension of approximately per week from 2016 Check your State Pension age at Source: 5

6 So how do I fill the gap? 1. Know what you need 2. Know what you ve got 3. Think about what you can change a) How much should I contribute? b) Where should I invest? c) What about my other pensions? d) When should I retire? 6

7 How does the BI Horizon Pension Plan work?

8 How much is paid into my account? Core Component (% of Basic Cash Pay) : SMART contribution Company adds Total contribution Optional Component (% of Non Basic Cash Pay) : 3% 6% 9% 4% 8% 12% 5% 10% 15% 6% 12% 18% >6% 12% >18% 3% 3% 6% >3% 3% >6% 8

9 Tax Relief and Reduced National Insurance pm (3% net) You 120 pm (6%) Company 12 pm Based on 24,000 pensionable salary 180 pm Plus Nat Ins saving 12% x 60 = 7.20pm Your Account Take home pay reduced by pm for a 180 pm contribution 9

10 Auto-Enrolment UK Government has introduced new legislation to help people save for their retirement Employers now required to automatically enrol employees into a workplace pension Boehringer Ingelheim had a staging date of 1 September 2013 for auto-enrolling employees into the BI Horizon Pension Plan 10

11 Tax Relief and Reduced National Insurance pm (6% net) You 240 pm (12%) Company 24 pm Based on 24,000 pensionable salary 360 pm Plus Nat Ins saving 12% x 120 = 14.40pm Your Account Take home pay reduced by pm for a 360 pm contribution 11

12 BI Horizon Pension Plan Company & Member Contributions paid into individual policy (Account) with BlackRock (An additional Account is set up for the Optional Component) Where to invest and how much is member s decision

13 Other benefits Death Benefits BI Horizon Pension Plan Full value of Account lump sum &/or dependant pension Complete nomination of beneficiary form Boehringer Ingelheim Life Assurance Plan Lump sum of 3 x Basic Cash Pay (not conditional on Pension Plan membership) Dependants pension of 40% x Basic Cash Pay and children's allowance of 10% x Basic Cash Pay (conditional on Pension Plan membership) Complete separate expression of wish form Income Protection (conditional on Pension Plan membership) Up to 50% x Basic Cash Pay if forced off work through injury or illness (after 39 weeks) to age 65 See the Boehringer intranet for further details and conditions relating to these benefits

14 Pension benefits Pension income from BI Horizon Pension Plan & Any other Pension Plans Additional State Pension (SERPS and/or S2P) Full Basic State Pension (approx. 5,730 pa) OR 7,500 pa ( 144 pw) Flat Rate State Pension 14

15 Taking benefits at retirement Tax free cash (25% x Account Value) Regular income Minimum age of 55 before you can take benefits 15

16 The Open Market Annuity Service what is it? Annuity quotes provided as part of the retirement pack given to members 6 months before retirement Helps members when they transition from work to retirement. No obligation to use external provider but discounts available for those that do BlackRock Template - Hardcopy

17 Recent annuities at age 65 on 100,000 6,053 per year Single Life level pension 5,582 per year Joint Life 50% Spouse s level pension 3,750 per year Joint Life 50% Spouse s pension escalating at 3% pa Assumed non-smoker, pension paid for 5 years guaranteed, spouse 3 years younger Illustrative annuity rates only rates constantly change Since 21 December 2012 annuity rates are the same for men & women Source: The Open Market Annuity Service 1 October 2013 FOR FINANCIAL PROFESSIONAL USE ONLY NOT FOR PUBLIC DISTRIBUTION 17

18 TOMAS What is provided under the service? Step 1 Initial member communication - A leaflet will be inserted in with the member s pre-retirement pack 6 months prior to retirement. Step 2 Pre-retirement Planning If the member decides to take up the Annuity Service then the following will be provided to the member: A pre-retirement report - Outlining everything they need to think about when choosing an annuity. Member Helpdesk - To answer all their questions on annuities. Online Annuity Assistant Members can login to see how the different annuity options will effect their retirement income. Step 3 At Retirement Process Once the member has selected their preferences the Annuity Service will find the best annuity in the market. Step 4 - The member decides whether to proceed BlackRock Template - Hardcopy

19 Where should I invest?

20 The four main types of pension funds Equities Shares in a company Multi-Asset (Diversified) Equities / Bonds / Cash / Alternatives Fixed Interest (Bonds) Loans issued by governments (UK Gilts) Loans issued by corporations (Bonds) Cash Money held on deposit and short-term money market instruments to which interest is added 20

21 Rebased to 100 (%) Long term returns versus inflation Gross Total Return (Adjusted for Cost of Living) GBP 800 Retiring now? Equities Gilts Cash Property Original investment of 100 on 31 December 1972 to 31 December 2012, gross income reinvested except property price performance. Adjusted for cost of living. All property data is using the UK Nationwide House Price Index. Source: Barclays Equity Gilt Study, Datastream - Nationwide UK House price Index 21

22 BI Horizon Pension Plan Lifestyle - Default Option Growth Phase Switching Phase % Invested 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% DC Aquila Over 15 Year Corp Bond Index DC Aquila Over 15 YR Gilt Index Standard Life GARS DC Aquila (50:50) Global Equity DC Aquila Over 5 Year Index Linked Gilt Index DC Cash DC Diversified Growth Retirement (TRA 65)

23 1999 Pension Scheme Lifestyle Option Growth Period Switching Period 100% 90% 80% % Invested 70% 60% 50% 40% 30% 20% 10% 0% Retirement (65 TRA) DC Aquila 70:30 Global Equity DC Aquila Over 15 Year Gilt Index DC Cash

24 Self Select (core funds) Capital Risk Fund Type Category Active Member AMC s/ expenses Risk Rating DC Aquila World (Ex UK) Equity Index Equity Passive 0.13 / Newton Overseas Equity Equity Active 0.85 / LGIM Ethical UK Equity Index Equity Passive 0.35 / LGIM Europe (ex UK) Index Equity Passive 0.25 / DC Aquila (70:30) Global Equity Index Equity Passive 0.15 / DC 50/50 Global Growth Equity Active 0.45 / DC Aquila (50:50) Global Equity Index Equity Passive 0.15 / DC UK Growth Equity Active 0.45 / DC Aquila UK Equity Index Equity Passive 0.25 / DC Balanced Growth Equity Active 0.45 / DC Aquila Consensus Index Equity Passive 0.15 / DC Property Property Active 0.95 / Standard Life GARS (Lifestyle only) Multi Asset Active 0.85 / DC Diversified Growth Multi Asset Active 0.65 / DC Aquila Over 15 Year Corporate Bond Index Fixed Interest Passive 0.15 / DC Aquila Over 5 Year Index Linked Gilt Index Fixed Interest Passive 0.13 / DC Aquila Over 15 Year Index Linked Gilt Index Fixed Interest Passive 0.13 / DC Cash Cash Active 0.15 / AMC = Annual Management Charge Red = funds used within Lifestyle options

25 Index returns (%) Market returns to 30 June months index performance UK North America Europe² Japan Pacific Basin³ Emerging Markets All Stocks Gilt Long Dated Gilts Index-Linked Long Dated Corps Cash Property Equity markets negative except in North America UK Bond markets up significantly Cash returns positive but well below inflation UK Commercial Property returns positive All returns shown in sterling, total return as of 30 June UK: FTSE All-Share Index, North America: FTSE World United States Index, 1. Europe (ex UK): FTSE World Europe (ex UK) Index, Japan: FSTE World Japan Index, 2. Pacific Basin (ex Japan): FTSE World Asia Pacific (ex Japan) Index, Emerging Markets: MSCI EMF (ex Taiwan and Korea) Index, All Stocks Gilts: FTSE A UK Gilts All Stocks Index, Long Dated Gilts: FTSE UK Gilts Over 15 Year Index, Index-Linked: FTSE Over 5 Years Index-Linked Gilt Index, Long Dated Corporate Bonds: iboxx Non-Gilts over 15 Years Index, Cash: 7 Days London Interbank Bid Rate (LIBID), UK Property: Investment Property Databank (IPD) All Balanced Property Funds Weighted Average. Source: BlackRock 25

26 Lifestyle Gross Performance to 30 June 2012 Fund and Benchmark performance Fund Class 3 months 12 months Lifestyle >15yrs to TRA Total DC Aquila (70:30) Global Equity O -3.1% -4.2% x 100% -4.2% Composite Benchmark -3.1% -4.3% (1999 Lifestyle) DC Aquila (50:50) Global Equity O -3.5% -4.9% x 50% = -2.45% IPD All Balanced Property Funds Index -3.5% -5.0% DC Diversified Growth O -1.3% -0.8% x 25% = -0.2% -0.45% Target Return BofE Base Rate + 3.5% 1.0% 4.0% (Default Lifestyle) Standard Life GARS O -1.5% 8.8% x 25% = 2.2% Benchmark 0.3% 1.3% Source: BlackRock 26

27 Index Returns Market returns to 30 June months index performance 45% Equities Bonds Other 30% 15% 0% -15% 17.9% 24.9% 27.9% 26.3% 14.4% 6.8% UK North America Europe¹ Japan Pacific Basin² Emerging Markets -2.4% All Stocks Gilt -4.7% Long Dated Gilts 2.7% 4.4% Index-Linked Long Dated Corps 0.4% 1.7% Cash Property Equity markets positive UK Government Bonds (Gilts) negative Cash returns positive but well below inflation UK Commercial Property returns positive All returns shown in sterling, total return as of 30 June UK: FTSE All-Share Index, North America: FTSE World United States Index, 1. Europe (ex UK): FTSE World Europe (ex UK) Index, Japan: FSTE World Japan Index, 2. Pacific Basin (ex Japan): FTSE World Asia Pacific (ex Japan) Index, Emerging Markets: MSCI EMF (ex Taiwan and Korea) Index, All Stocks Gilts: FTSE A UK Gilts All Stocks Index, Long Dated Gilts: FTSE UK Gilts Over 15 Year Index, Index-Linked: FTSE Over 5 Years Index-Linked Gilt Index, Long Dated Corporate Bonds: iboxx Non-Gilts over 15 Years Index, Cash: 7 Days London Interbank Bid Rate (LIBID), UK Property: Investment Property Databank (IPD) All Balanced Property Funds Weighted Average. Source: BlackRock 27

28 Lifestyle Gross Performance to 30 June 2013 Fund and Benchmark performance Fund Class 3 months 12 months Lifestyle >15yrs to TRA Total DC Aquila (70:30) Global Equity O -1.0% 19.8% x 100% 19.8% Composite Benchmark -1.0% 19.8% (1999 Lifestyle) DC Aquila (50:50) Global Equity O -0.6% 21.2% x 50% = 10.6% IPD All Balanced Property Funds Index -0.7% 21.0% DC Diversified Growth O -1.2% 7.6% x 25% = 1.9% 14.55% Target Return BofE Base Rate + 3.5% 1.0% 4.0% (Default Lifestyle) Standard Life GARS O -0.3% 8.2% x 25% = 2.05% Benchmark 0.1% 0.7% Source: BlackRock 28

29 How much should I save?

30 Consider saving as much as you can as soon as you can This looks quite easy This is going to hurt! Now Age

31 BI Horizon Pension Plan Estimated pension at age 65 in today s money 25 year old: 1. 3% contribution + 6% Boehringer contribution = 4,751 pa 2. 6% contribution + 12% Boehringer contribution = 9,502 pa 35 year old: 1. 3% contribution + 6% Boehringer contribution = 2,946 pa 2. 6% contribution + 12% Boehringer contribution = 5,892 pa 45 year old: 1. 3% contribution + 6% Boehringer contribution = 1,624 pa 2. 6% contribution + 12% Boehringer contribution = 3,248 pa Source: Money Advice Service Assumes 24k salary, 5% pa investment growth, 1% AMC, annual salary increase 2.5% & inflation at 2.5% pa. Figures are estimates and are not guaranteed

32 Contact Details BlackRock Website blackrock.co.uk/pensions/bihorizon BlackRock Helpline Number BlackRock 32

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34 Pension Calculator (Target Plan) 34

35 Target income calculator 35

36 Target income calculator 36

37 Target Plan can help you BI Horizon Pension Plan 37

38 Target Plan can help you 12% Helpline

39 What about my other pensions?

40 Should I transfer my pension benefits? What type of pension is it? Defined Contribution Scheme: Pension based on your accumulated fund at retirement Can leave fund where it is or transfer to another arrangement If you are thinking of transferring: Check any guarantees for example, guaranteed annuity rates Check any exit charges: some personal pensions have exit fees Investment options: Are you happy with current choices? Will you keep an eye on all your pensions? Annual charges: How do they compare? You may need to get advice but call BlackRock for help or information 40

41 Should I transfer my pension benefits? What you need to think about What type of pension is it? Defined Benefit ( Final Salary ) Scheme: Pension based on your final salary and the number of years you belonged to scheme Typically linked to inflation Scheme responsibility to ensure sufficient funds to pay benefits Transfer based on cash equivalent value MUST TAKE ADVICE 41

42 Your to do list

43 Your to do list Are you happy with your fund selection? Are you happy with your target retirement age? Are you saving enough? Review your choices regularly Complete/Update Nomination and Expression of Wish Forms 43

44 Further information 1. Issued by BlackRock Life Limited, authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: Registered in England and Wales No For your protection telephone calls are usually recorded. BlackRock is a trading name of BlackRock Life Limited. 2. Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested. Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time. 3. The target date in the name of a fund is the approximate date when an investor plans to start withdrawing money. The principal value of a fund is not guaranteed at any time, including at the target date. 4. Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy. 5. This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer. 6. Subject to the express requirements of any client-specific investment management agreement or provisions relating to the management of a fund, we will not provide notice of any changes to our personnel, structure, policies, process, objectives or, without limitation, any other matter contained in this document. 7. Unless otherwise specified, all information contained in this document is current as at 1 October BlackRock, Inc. All rights reserved. BLACKROCK, LIFEPATH and SO WHAT DO I DO WITH MY MONEY are registered and unregistered trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners. 44