KEY FEATURES OF THE FRIENDS LIFE PERSONAL PENSION PLAN

Transcription

1 KEY FEATURES OF THE FRIENDS LIFE PERSONAL PENSION PLAN The Financial Conduct Authority is a financial services regulator. It requires us, Friends Life Limited, to give you this important information to help you decide whether the Friends Life Personal Pension Plan is right for you. You should read this document carefully so that you understand what you are buying, and then keep it safe for future reference. Please read this document with your personal illustration. Where relevant information is contained in other documents these will be signposted at the appropriate point. You need to be comfortable that you understand the benefits and risks of this Plan before deciding whether to invest. The purpose of this document is to help you to make an informed decision. However, we recommend that you seek financial advice before you make any decisions about this Plan, please note your financial adviser may charge you for any advice provided. What is a Friends Life Personal Pension Plan? The Friends Life Personal Pension Plan is a long term investment plan designed to help you invest for your retirement. Through the pension plan you can invest in one or a number of investment funds. These funds invest in different types of assets, which tend to fall into four main categories: Money Market, Fixed Interest, Property and Shares. Please see the Risk Warnings and Additional Fund Charges Guide for further information. Please note that for new policies issued on or after 28 December 2012, the with-profits fund is not available. Who should consider a Friends Life Personal Pension Plan? You should consider this Plan if: you want to invest for your retirement you re under age 75 you can afford the contributions due you are at least the minimum age required for the Plan of 18 you are prepared to keep your funds invested until you are eligible to take benefits you have considered any other pension plans that your employer may offer. Its aims To build up a sum of money in a tax-efficient way which, when you take retirement benefits, you can convert to a pension or, if you prefer, a reduced pension and a tax-free cash sum. To provide benefits on your death to your dependant(s). Your Commitment To make regular contributions or single one-off contributions to your Plan. Your employer may make contributions too. The minimum investment that can be made is 100 per month or 1200 per year. The minimum investment amounts could change in accordance with the Plan s terms and conditions. There is a minimum of 1000 for single contributions or transfer values. All figures are gross amounts. To tell us if you stop being eligible for tax relief on your contributions. For example if the sum of all of your pension contributions in a tax year is greater than your earnings for that tax year. Your fund cannot be accessed until you choose to take your retirement benefits. You cannot normally take these benefits before you are aged 55.

2 Under this Plan, you must decide before your 75th birthday on the type of benefits you wish to take. You do however have the option of a transfer out of this Plan before age 75 into a scheme offering additional options after age 75. To review your plan regularly to ensure your investment fund(s) still meet your needs. To understand the risks shown in the Risks section. Risks The value of investments can fall as well as rise and is not guaranteed. This could mean that when you choose to take your retirement benefits the value of your fund may be lower than the amount paid in. The retirement benefits you receive from this Plan, may be lower than illustrated. This could happen for a number of reasons. For example: annuity rates provide lower pension benefits than those assumed in the illustration. This might be because: interest rates when you retire are lower than assumed, or life expectancy when you retire is greater than that assumed in the illustration. charges have been higher than assumed investment performance is lower than assumed you and/or your employer have stopped paying into your Plan, or have reduced contributions, or there has been a break in contributions paid you have chosen to take your benefits before your chosen retirement date tax rules change. The tax information provided here is based on our interpretation of current legislation which is subject to change and individual circumstances you have invested in our with-profits fund and a Market Value Reduction (MVR) applies on exit. It is important to understand that the Personal Pension Plan is denominated in British pounds. So if you invest in a fund that is denominated in a different currency, there is an additional risk that your investment could lose value because of changes in exchange rates between the different currencies. Some of the funds in which you can invest may carry additional risks because of the types of assets they may hold. For instance, the value of funds that invest overseas may fall and rise due to changes in exchange rates. Funds that invest in emerging markets may not be regulated as strictly as the UK and it may be harder to sell these assets. There may be a delay in accessing your money if you invest in property etc. There are other risks which could affect the performance of the funds that you invest in. Please see the Risk Warnings and Additional Fund Charges Guide for more information. Questions and Answers 1. Is this a Stakeholder Pension? No, but a Stakeholder Pension might meet your needs just as well as a Personal Pension. Stakeholder Pensions have to meet certain standards and comply with certain rules. 2. Can I change my mind? If you decide to invest in this Plan you can change your mind within 30 days by writing to us at the address shown in the How to contact us section on page 7. If you exercise your right to cancel we will return any regular contributions you have made to us. If you have made a one off single contribution we will return the contribution less any fall in value that has occurred before we receive your instruction to cancel. This means you may get back less than you invested. If you have invested all or part of your investment in the with-profits fund a MVR may apply. Please see What is the with-profits fund? on page 4 for more information. If you do not exercise your right to cancel within 30 days your Plan will continue in accordance with the Plan s terms and conditions, and any decision to transfer your benefits at a later date will be subject to any charges as shown in the illustration. 3. What are the charges? The charges we take cover the cost of setting up your Plan (which may include the cost of commission, which will be shown on your illustration). They also include the cost of administering your Plan and professionally investing your money. However, they do not cover any fee you may have to pay your financial adviser. Charges reduce the potential for growth. The enclosed illustration shows the charges that will apply to your Plan. There are a number of circumstances that could lead to an increase in the charges, such as tax rule, legislative or regulatory changes, or staff and overhead costs (which are reasonable in amount and reasonably incurred) being higher than we expect. In some cases the costs of using third parties could be more than we expected. A third party is any which is not Friends Life. If any of this happens, we will write to you to advise you of the change. Yearly Management Charge We deduct Yearly Management Charges from your Plan which accrue daily over the course of the year. Yearly Management Charges vary for each fund. You will find full details of the management charges in your personal illustration. 2

3 We will collect the charges for each fund by adjusting the number of units in your Plan. The Yearly Management Charge will be calculated as a percentage of the value of the fund. It may be changed at any time. Additional investment management charges Some funds incur additional yearly charges depending on the fund chosen. These additional yearly charges reflect: additional costs of professionally investing your money for these funds which are taken from your retirement fund by cancelling units each month. additional fund related costs incurred in some funds which are reflected in the fund price. We also take a one-off charge for certain investment funds every time you invest in them. For example, if you invest your regular monthly contribution in one of these funds, the charge will apply each month. If you invest in the with-profits fund there are additional costs. These costs are taken into account in working out the bonus, if any, to be credited to your Plan. Further details of these additional investment management charges can be found in the Our pension funds section of the Risk Warnings and Additional Fund Charges Guide. Commission charges We will take charges to cover the cost of any commission paid to your financial adviser. The Yearly Management Charge includes an amount for any fund based renewal commission payable. The cost of other types of commission paid is covered by either a Set-up Charge or an Ongoing Premium Charge. These charges may be applied at the start of your Plan and also if you increase your regular contributions or pay an additional single contributions, or transfer payment. Your personal illustration shows which of these charges and the amount that will apply to your Plan. Set-up Charge For regular contributions the Set-up Charge is taken over a set period of months by cancelling units. If regular contributions cease during the Set-up Charge period, no further instalments will be taken from your Plan until contributions are re-started. For single contributions or transfer payments received, the Set-up Charge can be paid upfront by deduction from the amount received before the number of units to be added to your Plan is worked out, or by instalments by cancelling units. If you retire early or transfer out of the Plan before the end of the monthly Set-up Charge period, the balance of outstanding instalments will be deducted before payment is made. The outstanding instalments cover our administration and overhead costs of providing the Friends Life Personal Pension Plan. We may also recover some or all of the cost of commission paid from your financial adviser. Please see your personal illustration for details of whether this charge applies to your Plan. Ongoing Premium Charge The Ongoing Premium Charge (regular contributions only) is deducted from each contribution received before the number of units to be added to your Plan is worked out. Additional Set-up Charges/Ongoing Premium Charges will be taken to cover the cost of any commission paid to your financial adviser if regular contributions are increased or additional single contributions or transfer payments are made. Please see your personal illustration for details of what charges will be payable. Fund based renewal commission may also be payable in respect of any increase to a regular contribution or an additional single contribution or transfer payment if this is already a feature of your Plan and the cost will be covered by the Yearly Management Charge. Please note charges reduce the potential for growth and may be higher than for a Stakeholder Pension. 4. How can I pay money in? What contributions can I make? You can make regular monthly contributions by direct debit (or by cheque if annually) or make single one-off contributions by cheque when you like. If you are employed, your employer can pay into your Plan too. There is no limit on the contributions that can be made by your employer but there is a limit on personal contributions (those paid by you or others on your behalf) to the Friends Life Personal Pension Plan. The Plan can only accept personal contributions that are eligible for tax relief. For more information about contributions which will attract tax relief please see the what about tax? section. The minimum investment amounts are subject to change. Charges apply to additional contributions as if they are a new initial investment and additional investments will have their own cancellation rights. Like the initial investment, their value can go down as well as up and is not guaranteed. 3

4 Can I stop or vary contributions? Yes, you can stop or vary contributions at any time. However you should note that: Fewer and/or reduced contributions will reduce the fund available at retirement. If you reduce your contributions they must not fall below the minimums required. If contributions are stopped the Plan will stay invested and Yearly Management Charges will continue to be taken from your Plan. Any Set-up Charges in respect of regular contributions will be suspended. If the Plan has not been in force for long or if its value is small, the ongoing charges may significantly reduce the future value of the fund and there is a possibility that the value will reduce to zero. If regular contributions are reduced any associated Set-up Charges will be also be reduced until contributions are increased. On your application form you may choose to increase your contributions automatically each year. Can I restart contributions? You can restart contributions at any time, so long as you are still eligible to contribute to a pension. You may also be able to make up any contributions you missed. Any Set-up Charges that were suspended when contributions stopped will restart. An illustration of the effect on your Plan benefits can be provided on request if stopping, reducing or restarting contributions is being considered. 5. Can I transfer money in from another pension scheme? Yes, although your previous arrangement, or an alternative new arrangement, may offer valuable guarantees which this plan cannot match. You should speak to your financial adviser to find out the risks and potential benefits of transferring. Please note the benefits you receive from the transfer could be less than those you would have got under your previous arrangement. if you decide to cancel the transfer, it may not be possible to get the transfer value back to the original arrangement. many occupational pension schemes which are contracted out of the State Second Pension and/ or were contracted out of the State Earnings Related Pension Scheme have to provide a guaranteed pension which replaces these state benefits. The replacement benefits under this plan are not guaranteed. if you transfer into this plan from a defined benefit pension scheme or other pension scheme that offers guaranteed benefits, your replacement benefits will not be guaranteed. 6. How does my Plan work? Where can I invest? You can invest in a wide range of funds. These funds invest in different assets like stocks and shares, and in different markets and countries. Our funds are detailed in our Risk Warnings and Additional Fund Charges Guide. Your financial adviser will be able to give you further information on the aims of the funds and the investments they hold. What are units and unit-linked funds? Each unit-linked fund is divided into units. The units in your Plan are used to work out the Plan s value. Unit prices are not guaranteed. They go up and down in line with fluctuations in the value of the funds investments. As unit prices go up and down so does the value of your Plan. This means you could get back less than you put in. Further details can be found in the Is there anything else I should know? section of our Risk Warnings and Additional Fund Charges Guide. What is the with-profits fund? The with-profits fund is one of the fund options under this Plan. If you invest in the with-profits fund, you are entitled to bonuses arising from the share of the profits within the Friends Life FLC With Profits Fund. Regular bonuses, if any, are added at least monthly by increasing the unit price. In addition, we may pay a final (also known as a terminal) bonus when you leave the with-profits fund. We regularly review bonus rates and these can change at any time. The amount available for bonuses is affected by several factors which include the cost of meeting any guarantees provided under new and existing policies in the with-profits fund. Please remember that future bonuses cannot be guaranteed as they come from profits we have not yet earned. If the investment performance of the with-profits fund is lower than that reflected in the bonuses we have already added to your Plan and you leave the fund either before or after your chosen retirement date then we are likely to reduce the value of units. This is known as a Market Value Reduction (MVR). An MVR will not apply at your chosen retirement date (unless additional investments have been made in the previous 5 years) or on death. We declare bonuses and manage the with-profits fund in line with our Principles and Practices of Financial Management (PPFM). An abbreviated version of that document, including information about the different types of bonus which can be added to your Plan, and in what circumstances MVRs may apply, can be found in our With-Profits Summary: A guide to how we manage our with-profits business. Copies of both documents are available from our website www. friendslife.co.uk/withprofits or by contacting us. 4

5 How will I know how my Plan is doing? We will send you a yearly statement to show how your Plan is doing. Can I switch between investment funds? You can normally switch your investment between funds at any time. There is currently no additional charge for this, but one could be introduced in the future in accordance with Section 5.8 of the Friends Life Personal Pension Plan booklet. However there is a One-Off Charge applied at the time of investing into some funds. Any fund One- Off Charges are detailed in our Risk Warnings and Additional Fund Charges Guide and are reflected in your illustration. Friends Life reserves the right to delay any transactions in the funds, such as switches. This could happen, for example, when dealings on a stock market exchange are suspended. The delay could last up to one month or, for funds that invest in property, up to six months to allow property to be sold if necessary. In unusual or exceptional circumstances, we may extend these periods for as long as is necessary and we think is fair to the policyholders invested in the fund. We would later process any delayed transaction using the unit price at the time the transaction takes place, not the date that it was requested. Please see the Friends Life Personal Pension Plan booklet for further details. Can I transfer my Plan to another provider? You may transfer your Plan s value to a qualifying recognised overseas pension scheme or a registered pension scheme. You should seek financial advice before considering any transfer. For single contributions and transfer payments, if you transfer the whole of your Plan before the end of a Set-up Charge period then we will deduct the balance of outstanding Set-up Charges before we transfer your benefits. If you transfer part of your Plan s value, you will need to leave an amount we determine to be sufficient to cover the balance of any outstanding Set-up Charges. In determining this amount we will take into account the potential impact of future falls in unit prices due to investment performance. 7. What choices will I have on retirement? When can I take my benefits? When you took out your Plan you will have told us the age at which you expect to retire your chosen retirement date. You can not normally take benefits before age 55. You can usually take benefits even if you are still working. If you have an agreed early retirement age or cannot work because of ill-health you may be able to take your benefits earlier. You need to take your pension benefits by age 75 under this plan. If you have not done so we will write to you shortly before your 75th birthday to let you know what will happen to your benefits upon reaching age 75. You do however have the option of a transfer out of this Plan before age 75 into a scheme offering additional options after age 75. How can I take my benefits? There are currently several options available and you should speak to your financial adviser for help in determining which one suits you best. This is important as shopping around could help you obtain a higher pension income. You can convert all or part of your pension fund into an annuity. An annuity is a product that will give you an income for as long as you live and can be purchased with any provider in the market. This is known as the Open Market Option. The level of annuity income you receive will depend upon a number of factors such as the type of annuity purchased, the provider selected, your health etc. You are strongly advised to speak to your financial adviser to assess which is most appropriate for you. Please note that another provider may apply a minimum fund size for taking such business. If you select a dependants annuity or a guaranteed annuity, your pension income will be smaller. If you select an increasing annuity, your pension income will initially be smaller, but will increase over time. You can normally take up to 25% of your pension fund as a tax-free cash sum so long as you use the balance to provide a pension income at the same time. If you do this the pension income you get will be smaller. You can transfer your pension fund to another registered pension scheme. Other registered pension schemes may allow additional retirement options and you should speak to your financial adviser to assess whether this is appropriate for you. This is an important decision and you are strongly recommended to speak to your financial adviser. The Money Advice Service publish a consumer factsheet, Your pension it s time to choose, which is available on their website An illustration of the potential retirement benefits you might get when you retire is enclosed with this Key Features document. 5

6 8. What happens to my Plan if I die before retirement? What will be paid on my death? We will use the full value of your Plan to provide benefits. How will the benefits be paid? The value of your Plan will be paid as a lump sum as described below. If you have set up a trust for your Plan we will pay the lump sum to that trust. By putting your Plan in trust you can arrange for the benefits to go to the people you want to receive them, and it may speed up the payment of benefits. If you would like to set up a trust for your Plan, please contact us for the relevant forms. If you have not set up a trust, the lump sum will normally be paid to your family members or any others we select, at our discretion, in accordance with the scheme rules. At any time before your death you can give us details about who you would like the lump sum to be paid to. We will take your wishes into account in making our decision. 9. What about tax? What about tax when money is paid into my plan? This is a registered pension scheme and must follow HM Revenue and Customs (HMRC) rules on contributions and benefits. If these are not followed you could end up paying more tax than you planned to. When you make contributions into your pension plan you are normally entitled to tax relief on the contribution. To obtain this tax relief you pay your contributions to us net (after deducting basic rate tax from the amount of the contribution). We then claim back from HMRC the basic rate tax deducted and use it to increase the contribution into your pension. If you are a higher rate tax-payer then you can claim additional tax relief (based on the difference between basic rate and higher-rate tax) through your self-assessment tax return. You are entitled to tax relief provided your total gross pension contributions do not exceed the greater of 3,600 or your relevant UK income for the tax year. If you are transferring money from another pension Plan into this one then you will not receive any tax relief as this money will already have benefited from tax relief. Any transfer payments received into your Plan will not form part of your annual allowance. Annual Allowance The annual allowance is 40,000 for the tax year 2014/15. If the value of the increase in your pension savings over a pension input period is greater than the annual allowance for the tax year, you may be subject to a tax charge on the excess, known as the annual allowance charge. Each Plan under a scheme has a pension input period. Pension input periods are normally 12 months. Any contributions will be tested against the annual allowance for the tax year in which the pension input period ends. The annual allowance charge is charged at your highest marginal rate of income tax. The initial pension input period will start on the date of your first contribution and end on the following 5 April. Subsequent periods will normally be aligned to the tax year (for example starting on 6 April and ending on 5 April). In some circumstances the end date of the pension input period may be different to the 5 April; for example if you joined prior to 6 April 2011 or if you have nominated or if the scheme administrator has notified you of a different end date. You may be able to reduce the annual allowance charge by carrying forward any unused annual allowance from the previous three tax years. This only applies if you were a member of a registered pension scheme during those tax years. If you think you may be affected then we strongly recommend that you receive individual tax advice before investing. For more information about tax and in particular the annual allowance please refer to your financial adviser. Are there any tax implications whilst my money is invested? Any growth in the value of the money in the investment funds you choose is free of UK taxes on capital gains and investment income, as long as it remains invested. But bear in mind that these funds cannot claim back tax credits on dividends received from any investments they make in UK shares, or any withholding tax paid on any non-uk investments. If the fund(s) hold any overseas investments then tax may be payable in the country where they are held. This tax will be charged to the appropriate fund(s). What about tax when I take my benefits? The pension you receive will be taxed through the PAYE system as pension income. The amount of tax you have to pay will depend on your income tax rate at the time the pension income is paid. 6

7 Lifetime Allowance The standard lifetime allowance amount is 1.25 million for the tax year 2014/15. Your lifetime allowance is reduced each time you take benefits. If when you take benefits, or at age 75 if earlier, the value of benefits being taken exceeds your remaining lifetime allowance then the excess will be subject to a tax charge, known as the lifetime allowance charge. Your personal lifetime allowance may be higher than the standard lifetime allowance if you have been granted one or more types of lifetime allowance protection by HMRC. Further types of protection from the lifetime allowance charge may be available if you apply to HMRC within announced timescales, meet any eligibility criteria and continue to comply with any conditions HMRC require. Further information on the HMRC requirements is available at: pensionsavings-la.htm The amount of the lifetime allowance charge depends upon the circumstances in which benefits are taken. If you think the lifetime allowance charge could apply to you or protection may apply, we recommend you seek financial advice. What about tax when I die? The payment of a lump sum will not normally incur any tax liability although tax charges may apply if, when you die the value of all lump sums paid from your pension Plan(s) is more than the lifetime allowance (see above). In some circumstances, the value of the benefits may also form part of your estate for inheritance tax purposes. Further Information How to contact us Your financial adviser will normally be your first point of contact. If you have any questions, you can phone us or write to us. Call us on between: Monday to Friday 8am to 8pm. As part of our commitment to quality service, telephone calls may be recorded. If you wish to exercise your right to cancel your Plan or to write to us for any other matter please use the following address: Friends Life PO Box 582, Bristol BS34 9FX, United Kingdom. Customer status Friends Life will treat you as a retail client. This means that you have the highest degree of protection available under the Financial Conduct Authority rules. This includes access to complaints and compensation procedures. However you will not be covered for wrong advice unless this product was personally recommended to you by a financial adviser authorised by the Financial Conduct Authority. How to complain If you are not satisfied with any aspect of the service that you have received from us, please contact us using any of the methods detailed in the How to contact us section. Information regarding our formal complaints procedure is also available from the same contact points. Complaints that we cannot settle may be referred to the Financial Ombudsman Service at: Exchange Tower Harbour Exchange Square London E14 9SR Phone: Mobile: (calls to this number are charged at the same rate as 01 or 02 numbers on mobile phone tariffs) complaint.info@financial-ombudsman.org.uk Website: Making a complaint will not affect your right to take legal proceedings. Compensation Your plan is covered by the Financial Services Compensation Scheme. This means that if we are unable to pay claims/benefits because of financial difficulties you may be able to make a claim. You are covered for 90% of the claim, without any upper limit. For further information please see org.uk or telephone or Terms & conditions This Key Features document gives you a summary of the Friends Life Personal Pension Plan. It does not include all the definitions, exclusions, and terms and conditions. These are shown in the Friends Life Personal Pension Plan booklet. If you would like a copy of the booklet please ask your financial adviser or contact us. Financial Services register details Friends Life Limited is entered on the Financial Services register. Financial Services register number: You can look up our Financial Services register details through the Financial Conduct Authority website: 7

8 Financial advisers We recommend that you seek financial advice before you make any decisions about this plan. Please note that your financial adviser may charge you for any advice provided. Where you have received information or advice from a financial adviser they will provide you with information regarding their identity, the capacity in which they are acting and their address for future communications. Law and language This Plan is governed by the law of England and Wales. Your contract will be in English and we will always write and speak to you in English. Key Features document information If the illustration supplied to you contains an expiry date and you wish to apply after this date, you should ask for a further illustration and Key Features document from your financial adviser. The date when the Key Features document was produced is shown at the end of the document. If you are not sure if you have the most up-to-date version, please contact your financial adviser. Visual impairment Large Text, Braille and Audio Tape versions are available on request. Friends Life, PO Box 582, Bristol, BS34 9FX. Telephone number Friends Life Limited An incorporated company limited by shares and registered in England and Wales, number Registered office: Pixham End, Dorking, Surrey RH4 1QA. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Telephone calls may be recorded. Friends Life is a registered trade mark of the Friends Life group. PPPKFDLAM (46940)