CIS INDIVIDUAL PERSONAL PENSION. Reminder of important facts. Pensions

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1 CIS INDIVIDUAL PERSONAL PENSION Reminder of important facts Pensions

2 What is an Individual Personal Pension plan? Your pension plan 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 Individual Personal Pension plan, we would collect an additional payment of 20 from the Government and pay this into your plan. You would then have 100 a month being invested in your plan. 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 Individual Personal Pension plan, we would collect the same additional payment of 20 from the Government and pay this into your plan. 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 can I invest my pension contributions? You can invest your pension contributions in a range of Royal London funds managed by our own fund managers, or in a selection of other funds managed by expert and leading fund managers. Different levels of risk apply to different funds. We recommend that you choose a fund, or combination of funds, that suits your goals and your own attitude to risk. A general principle is that potential return rises with an increase in risk. Each fund is split into units and each contribution you make buys you a certain number of units in the funds of your choice. The value of your plan at any time is the number of units you have in each fund multiplied by the current unit price. The value of your plan can go up and down, reflecting daily changes in the value of the investments held in each fund. It s a good idea to regularly review your investment choice (at least annually). We publish the unit prices on our website royallondongroup.co.uk/rlcis, along with a Fund Guide that includes more information (including charges) on the funds we offer. You can switch the money you ve already saved in your pension pot to a different fund or you can direct future pension contributions to a different fund.

3 What is the Royal London With-Profits Pension Fund? The Royal London With-Profits Pension Fund, referred to here as the with-profits fund, operates slightly differently to our other funds. The value of the investments in this fund will still fluctuate, 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 we hold back some of the profit made when investment returns are good, so that we can increase returns at a later date if investment returns are lower, giving a more stable return. We do not profit from managing this fund in this way all money in the fund goes back to the policyholders. We explain how we manage the withprofits fund in the Principles and Practices of Financial Management (PPFM) of the RLCIS With-Profits Pension 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 is a Market Value Reduction? In certain circumstances it may be necessary to reduce the plan value available to those who are taking money out of the with-profits fund. We would do this by applying a Market Value Reduction (MVR). It is most likely that we ll need to apply an MVR when a large amount of money is being taken out of the withprofits fund at a time when investment values have been particularly depressed. We would only use an MVR in order to maintain a fair level of return to everyone still invested in the with-profits fund. If we didn t apply one, the extra amount given to someone leaving the fund would have to come from other investors who might, therefore, receive less than their fair share. An MVR will not be applied in the event of a death claim or at retirement. How flexible is my Individual Personal Pension plan? You can take up to two contribution holidays in any 12-month period. You can also increase, decrease, stop and restart your pension contributions at any time. However, any contributions you do make must be at least 75 per month. You can make lump sum payments into your plan at any time. You can change where your funds are invested at any time by switching your funds and you can also invest in any number or combination of the funds available. If your employer is contributing into your plan, and you change jobs, you may be able to continue paying into your plan. 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.

4 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. 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. What happens if I am in ill-health? If you took out the Payment Cover for Sickness option with your pension plan, and are still paying for this cover, please contact us if you are unable to work for any significant period. We may be able to pay your pension contributions for you.

5 If you are unsure whether you have payment for sickness 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 access your pension pot. Can I transfer my plan? You can transfer your plan to another pension provider at any time before you take your pension benefits. We will not charge you for doing this. We recommend that you speak to a financial adviser before you transfer your plan. Additional information This guide is a short reminder of the main features of your Individual Personal Pension plan and any important changes that might affect your plan. You should refer to the policy document we sent to you when you took out your plan, 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).

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. MKT2624_RL 04/2015