I want the security of a guaranteed income for my retirement

Transcription

1 Retirement Secure Advantage+ Pension Plan I want the security of a guaranteed income for my retirement A guide to the Secure Advantage+ Pension Plan with optional Lifetime Income Benefit feature, for customers at retirement. Secure Advantage+ Grow. Protect. Secure. An AXA Life Europe product Lifetime Income Secure Advantage+ Grow. Protect. Secure. An AXA Life Europe product Lifetime Income Secure Advantage+ Grow. Protect. Secure. An AXA Life Europe product

2 Secure Advantage+ is a retirement income plan designed around you You ve worked hard and saved hard, and now is the time to make all that pay off by creating an income for your retirement. Quite understandably, you might be hesitating about making such a big decision with your investments. We asked our customers what concerned them about creating an income for their retirement, here s what they said: I don t want to outlive my income in retirement Uncertainty about running out of income is something that concerns many retirees. It can be difficult to anticipate how much income you can withdraw without risking it running out in the future. If this is something that concerns you, you might like to consider using your pension savings to create a guaranteed income for the rest of your life, at least to cover life s essentials. I want an investment that helps prepare me for the unexpected In the last few years, investment markets have experienced both rapid falls and rapid rebounds almost anyone with a pension fund has seen that reflected in the performance of their fund. It s impossible to predict if or when the markets might fall, but if the markets were to become volatile, your fund could see a sharp fall in value, meaning you might not be able to take as much income from your plan as you would like. I want to keep my options open Retirement planning decisions are among the most important financial decisions you will make. The key is flexibility; having a retirement income arrangement that you can change later on. I want my family to have what s left after I m gone Many people expect that their loved ones will inherit any remaining pension investments after their death. However, with some retirement income products, it may not be possible to pass on any unused pension funds to your family. If this is important to you, the key is to ensure you keep control over your pension fund so you can pass on your wealth more easily. Our customers have told us they are very concerned about creating a retirement income that they can t outlive, while also keeping control of their fund and how they are invested. We ve listened, and the result is Secure Advantage+, a new and very different kind of retirement income plan. 3

3 4 I want an investment that helps me prepare for the unexpected I don t want to outlive my income in retirement I want to keep my options open I want my family to have what s left after I m gone

4 Traditionally, there have been two ways you can create an income for your retirement Lifetime Annuities Traditionally, these have been the way to create a retirement income. There are different types of Lifetime Annuities, but in general they work in the same way. You give an insurance company your pension fund, and in return they offer a certain percentage rate of your fund each year as a guaranteed income for the rest of your life. This rate might be fixed (a level annuity), it might go up by a certain amount each year (an increasing annuity) or it might be based on investment returns (an indexlinked annuity). Typically, the less flexibility and the fewer extra features you choose, the higher the level of income you will receive from the annuity. However, having a fixed income for the rest of your life could leave you vulnerable to the effects of inflation. It is also usually a once and done transaction, meaning that once you have bought it, it may not be possible to change your mind or to pass on any of the remaining fund as an inheritance. Income Drawdown These plans keep your pension fund invested (therefore benefiting from any potential growth) and you can take withdrawals when you need them. However, most drawdown plans don t offer a guaranteed income for life. If you were to take too much from your plan, or if the investments perform poorly, your fund could start to run out, meaning your income would reduce or, at worst, stop completely. Secure Advantage+ is an alternative solution With the Secure Advantage+ Pension Plan, you are investing in a new type of retirement income solution. It gives you all the flexibility of an income drawdown plan, with the option to add a Lifetime Income Benefit to your Plan to secure a guaranteed minimum income for life. Eligibility Criteria: The minimum investment into the Plan is 25,000 (including any applicable tax relief). You must be at least 18 years old and a UK resident for tax purposes to invest in the Plan. You must be aged at least 55 before income payments can start. Please see page 20 for the eligibility criteria which apply to the optional Lifetime Income Benefit. Choose how much income to take Flexibility to change your mind Potential for investment growth Secure Income for Life Guaranteed Death Benefit available Annuity Income Drawdown Secure Advantage (optional Lifetime Income Benefit available) 4 (optional Guaranteed Death Benefit available) This is not a complete list of all features of the products chosen and is for illustrative purposes only. Investors should seek professional financial advice based on their individual circumstances. 5

5 With the Secure Advantage+ Pension Plan, you can address your concerns about creating a retirement income head on. So you can look forward to your retirement with greater certainty and optimism. 6 Helping to reduce the effects of market volatility on your investments At the heart of Secure Advantage+ is a range of unique investment Funds which aim to help reduce the harmful effects that extreme market volatility can have on your investments and your retirement income as a consequence. For more on this, see page 7 Make sure you don t outlive your income Secure Advantage+ gives you the option to add a Lifetime Income Benefit to your Plan, creating a guaranteed stream of income for your retirement. This income is guaranteed for life, and has the potential to grow over time. It is available at an additional charge. For more on this, and on the guarantees see page 11 Pass on your wealth to your loved ones Your pension fund might be the largest amount of money you have and it may be reassuring to know we will pay out what remains in the Plan on your death to your Beneficaries. What s more, if you take out our optional Lifetime Income Benefit and you die within 10 years of taking out the Plan, they will also receive a Guaranteed Death Benefit from your Plan. For more on this, see page 13 Keep your options open When you invest in the Secure Advantage+ Pension Plan you remain in control. You can specify how you want to take an income from the Plan, and change how your Plan is invested to suit your needs. For more on this, see page 16 Please note: We use certain terms in this brochure that have a particular meaning in relation to this Plan. They start with a capital letter, and they are defined in the glossary of this Plan s Terms and Conditions, which is available from your financial adviser, or from us.

6 I want an investment that helps me prepare for the unexpected How your pension fund is invested is a factor that will have a significant impact on your income in retirement. When you ve retired the last thing you will want to be doing is worrying how the ups and downs of the stock market are going to affect your income. While there are no guarantees, our Global Strategy range of Funds aims to offer a smoother, more consistent pattern of performance at times of extreme market volatility. The Funds have been specifically designed and managed for AXA Life Invest by AllianceBernstein, one of the world s most respected investment management firms. The Global Strategy Funds can help in three ways: 1. Diversification The Funds invest in a range of assets, including bonds and shares, not just in the UK but globally. By not putting all your eggs in one basket the risk of being too exposed to poor performance in any one asset or part of the world is reduced. 2. Asset Allocation During periods of low market volatility, the Funds are rebalanced to their original asset allocation on a weekly basis. This helps to smooth out the differences in growth rates between the different asset types. 3. Reducing volatility The Funds also use well-researched risk management techniques which aim to ensure that when investment markets are volatile, your Fund s exposure to risky assets is reduced. 7

7 8 How do the Funds work? The Funds are designed to meet the needs of investors with different risk profiles. Each Fund in the Global Strategy range has a certain tolerance for the level of movements in investment markets. This is called the target volatility level. If the markets become volatile, and the target level for a Fund is exceeded, then AllianceBernstein decrease the Fund s exposure to more risky assets (e.g. equity-based investments, government and corporate bonds). At the same time, they increase the Fund s exposure to less volatile assets such as short-term government bonds. And to reduce the chance of missing out on potential growth opportunities, the Fund will return to its original allocation when the volatility in the markets falls back below the target level for that Fund. While these Funds aim to outperform traditional investment funds at times of extreme market volatility, they can underperform them when markets rise. It is important to note that the value of your investment can fall as well as rise, in line with the performance of the Funds you have chosen to invest in. This means you could get back less than you invested. There are restrictions on the choice of Funds we offer and the exposure our Funds have to equity-based investments, which means that the Plan may experience lower potential growth than if it has exposure to investments with a higher equity content. Volatility is below the target level Volatility is above the target level Exposure to more risky assets Exposure to less risky assets

8 Our investment Fund range We currently have four Funds in the Global Strategy range. A Lifetime Income Benefit can only be added to Funds from our Global Strategy range. Each Fund has specific target asset allocations to suit varying risk profiles. They aim to offer a smoother, more consistent pattern of performance at times of extreme market volatility. ALI AB Global Strategy 30/70 GBP ALI AB Global Strategy 40/60 GBP Volatility Target: 5.0% Volatility Target: 5.5% ALI AB Global Strategy 50/50 GBP ALI AB Global Strategy 60/40 GBP Volatility Target: 6.5% Volatility Target: 8.0% (A Lifetime Income Benefit with a Joint Life Option cannot be linked to this Fund) Government and corporate bonds Equities Other Funds available As well as the Global Strategy range, the Secure Advantage+ Pension Plan offers these Funds which may be useful to you. n ALI AB Federated Short-Term Sterling Prime Fund n ALI AB Global Equity Income Portfolio A Lifetime Income Benefit cannot be linked to either of these Funds. Changing your Fund choice With Secure Advantage+, you can spread your investment across our range of Funds, and you can switch your investments from Fund to Fund as you want. We may charge you for this and there may be some time restrictions on switching Funds (see the Delaying Transactions section of this Plan s Terms and Conditions for more information). For more information about our Funds and any specific risks associated with each Fund, please see the relevant Fund Factsheet which is available from your financial adviser, or from us. 9

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10 I want to secure a retirement income that I can t outlive The Lifetime Income Benefit is an optional feature for people who would like to secure a guaranteed income for their retirement. What do we guarantee? With the Lifetime Income Benefit guarantee, we promise to pay a certain minimum income every year that you live, regardless of how your investments perform. These are called Guaranteed Income Payments and they are based on your age when income starts and the value of a notional amount called an Income Base. We deduct a charge for providing the Lifetime Income Benefit, which will reduce the growth potential of the Plan. The guarantees available under this Plan are provided only by AXA Life Invest, If we were to become insolvent, the benefits from your Plan would be affected. Guaranteed Income Payments are paid as partial withdrawals from the Plan, unless the Plan Value reaches zero, when they will be paid from the resources of AXA Life Invest. What could reduce my Guaranteed Income Payments? Taking any of these Guaranteed Benefit Deductions from the Fund linked to a Lifetime Income Benefit will reduce your Guaranteed Income Payments: Transfers; A Lump Sum, such as a tax-free lump sum; One-off Income Withdrawals; Adviser Charges; or Any tax charges. Please see page 20 for the eligibility criteria which apply to the Lifetime Income Benefit From the moment the Plan starts, we can tell you the minimum amount of Guaranteed Income Payments you will receive when you retire. Let s say that you invest 50,000 into one of our Global Strategy Funds, and add a Lifetime Income Benefit to this investment. So on day 1 the Income Base is equal to 50,000.* To work out the Guaranteed Income Payments, we take the Income Base and multiply it by the percentage Guaranteed Income Rate that applies to you. This rate is based on your age when income starts (or in the case of the Joint Life option, the age of the younger of you and your husband, wife or civil partner on that date). Income Base x Guaranteed Income Rate = Guaranteed Income Payment p.a. Your financial adviser will be able to tell you the Guaranteed Income Rate that will apply to you. *This example assumes that the Guarantee Amount Allocated (i.e. after any initial Adviser Charges are deducted from the Plan) is 50,

11 12 With the Lifetime Income Benefit, Guaranteed Income Payments can also grow if the investments perform well. On the eve of the anniversary of the Plan Effective Date, we work out the current value of your investments linked to a Lifetime Income Benefit. If the value is higher than the current Income Base, then we will increase the Income Base and lock in that value. This means that your Guaranteed Income Payments can go up if your Fund performs well. We only work out the Income Base lock-in on this date, and any value the investments reached between anniversaries of the Plan Effective Date will not be taken into account in the calculation. The Income Base (and Guaranteed Income Payments) increase as a result of positive Fund performance 0 65 Age Guaranteed Income Payment Investment Value Income Base lock-in Income Base These are hypothetical examples. The graphs are illustrative, not to scale and are not an indication of likely or possible benefits, or what we think will happen in the future. They are not advice or a recommendation from us. Taking any Guaranteed Benefit Deductions from a Fund linked to a Lifetime Income Benefit will reduce your Guaranteed Income Payments.

12 I want my family to have what s left after I m gone There are two ways that you can help to protect the value of your investment, or continue to benefit from guaranteed income for your loved ones after your death. 1. The Lifetime Income Benefit comes with a Guaranteed Death Benefit feature This means that if you were to die within 10 years of starting the Plan, we would pay to your Beneficiaries the higher of: The current value linked to the Lifetime Income Benefit; and The amount you originally invested in the guarantee, less any Guaranteed Income Payments made and proportionately reduced by any other Guaranteed Benefit Deductions (see page 11 for a full list of these). 2. Set up your Lifetime Income Benefit with a Joint Life Option If you choose the Joint Life Option, we will continue to pay Guaranteed Income Payments, at the same level to your husband, wife or civil partner for the rest of their life. The amount of income paid will be based on the age of the younger of you and your husband, wife of civil partner when income starts. The Joint Life Option is available at an additional charge. We will also pay the value of any amounts invested in the Plan that are not linked to a Lifetime Income Benefit. After 10 years, on your death we will pay what s left in the Plan as a death benefit. This amount will not be guaranteed. 13

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14 15 I want to keep my options open

15 16 You can customise the Secure Advantage+ Pension Plan and how you receive your retirement income in the following ways: Take up to 25% of your Plan tax-free Following some recent changes to pension legislation, if you are aged 55 and over and you have not yet converted your Plan to receive retirement benefits, such as Guaranteed Income Payments, you can do this in two ways: a) You can take one-off lump sums on a regular or Ad hoc basis throughout the life of your Plan. When each lump sum is taken, 25% of the value of each lump sum will be paid tax-free and the balance will be taxed as income; or b) You can take up to 25% of the value of your Plan as a single Tax-Free Lump Sum before you start taking other benefits such as Guaranteed Income Payments. This will mean that you have converted your Plan to provide retirement benefits. Guarantee your retirement income now or later You can add optional Lifetime Income Benefit guarantees when you take out your Plan or decide to do that at any time later on. If they are added at a later date, the benefits and charges may be different to those available when the Plan was taken out. Be flexible about your income You are in the driving seat. You can tell us if you want to receive extra Income Withdrawals in addition to your Guaranteed Income Payments from your Plan. You can take these regularly or on an Ad hoc basis. Transfer your savings elsewhere You always have the flexibility to transfer some or all of your Plan at any time to another pension arrangement or buy a Lifetime Annuity, should your circumstances change. Please see the section Payments that we make out of the Plan in this Plan s Terms and Conditions for more information. As the value of your Plan isn t guaranteed, you may get back less than you invested as the Plan Value goes up and down in line with the value of the underlying investments. If the entire Plan is transferred, the Plan and any applicable guarantees will end. Please note taking lump sums or Income Withdrawals from Funds linked to a Lifetime Income Benefit will reduce the guaranteed benefits which we will pay.

16 What are the charges? The following charges currently apply to the Secure Advantage+ Pension Plan Contract Management Charge We take this charge for managing the Plan. It is a percentage of the Plan Value and is taken monthly in arrears. Fund Management Charge This is the charge levied by the fund management companies responsible for managing the Funds to which your investment is linked. The charge is deducted daily and is reflected in the Unit price for each Fund. Depending on the options chosen, the following may also apply: Lifetime Income Benefit Charge We apply this charge if you choose to add a Lifetime Income Benefit to your Plan. This charge varies according to the Fund(s) you choose and whether you choose the Joint Life or Single Life Option. It is calculated as a percentage of the Income Base and is taken monthly in arrears from the Plan. Change of Allocation Charge If you want to change your choice of Fund to which you ve added a Guaranteed Benefit, we will apply a charge of 100. Fund Switch Charge This is the charge we take for switching between Funds to which no Guaranteed Benefit has been added. The first twelve switches between Funds in any Plan year are free. We will charge 100 for each additional switch. Change of Guaranteed Income Start Date Charge If the Planholder wants to change the date they want Guaranteed Income Payments to start, we will apply a charge of 100. More details on Plan charges can be found on your Personal Illustration or from your financial adviser. 17

17 18 Paying Adviser Charges We recommend that you speak to a financial adviser when you are planning for your retirement. They can talk you through the various options and help you decide on the best course of action for you. Financial advisers charge a fee in return for this advice and related services you receive from them. You and your adviser will agree on the amount of any Adviser Charges and how you will pay them. You can choose to make these payments directly to your financial adviser or they can be deducted from your Plan. If you ask us to, we can take amounts in respect of Adviser Charges from your Plan and pay them to your financial adviser in the following ways. Initial Adviser Charge This is a fee you agree to pay to your adviser when you invest into the Plan, for their advice and any related services in connection with the Plan. If you ask us to take an amount in respect of an Initial Adviser Charge, we will take it from your Payment into the Plan before we invest it in the Funds you have chosen on your Application Form. Ongoing Adviser Charge This is a regular fee you agree to pay to your adviser for the ongoing advice or related services you receive in connection with the Plan. You can ask us to pay this charge every month, three months, six months or yearly. You can stop, re-start and modify, or pay it for a fixed period of time. Ad hoc Adviser Charge This is a one-off fee you agree to pay to your adviser for advice or related services that they provide in connection with the Plan.

18 About AXA Life Invest We are experts in providing investment and retirement solutions with built-in protection to customers throughout Europe. AXA Life Invest 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. Part of the AXA Group AXA Life Invest is a whollyowned subsidiary of the AXA Group. A world-wide leader in financial protection, the AXA Group has been managing investment products with guarantees since In developing and managing the Secure Advantage+ range of Plans, AXA Life Invest draws fully on the skills offered by the AXA Group, although we do not have an automatic right of access to the assets of the AXA Group. You should be aware that the guarantees provided under the Plan are provided only by AXA Life Invest, which means if we were to become insolvent, the benefits from your Plan would be affected. You can find out more about this in the relevant Plan s Key Features Document. The Central Bank of Ireland is responsible for central banking and financial regulation in Ireland and carries out a similar role to the Financial Conduct Authority and Prudential Regulation Authority in the UK. 19

19 20 Income Drawdown with a difference from AXA Life Invest We hope you will see how the Secure Advantage+ Pension Plan is designed to address the concerns of today s investors looking for a retirement income solution by: reducing some of the risks attached to investing; giving you the option to guarantee an income for the rest of your life; helping you to pass on your wealth to your family; and allowing you to keep your options open. Eligibility Criteria: The minimum investment in the Plan is 25,000 (including any applicable tax relief). You must be aged at least 18 and be a UK tax resident to take out the Plan. You must be aged at least 55 to begin taking an income from the Plan. You must be aged between 40 and 80 to add a Lifetime Income Benefit to your Plan. (If the Joint Life Option is chosen, both you and your husband, wife or civil partner must be aged between 40 and 80). We know that before you decide to invest in a Secure Advantage+ Pension Plan, you re likely to have more questions and we encourage you to seek expert advice from your financial adviser. Your financial adviser will also be able to give you a Personal Illustration along with this Plan s Terms and Conditions and Key Features Document.

20 We re here to help Secure Advantage+ Planholders can contact us as follows: Available 9am to 5pm, Monday to Friday. As part of our commitment to quality service and security, telephone calls may be recorded. 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. 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. 15/04_UKV5_DDGTCB