Severn Trent Group Personal Pension

Transcription

1 Severn Trent Group Personal Pension May 2014 Note: We cannot provide individual financial planning advice

2 Severn Trent Group Personal Pension 1. Who s BlackRock? 2. How can I plan for my retirement? 3. How does the Severn Trent Group Personal Pension work? 4. Risk versus reward 5. Your investment options 6. Future help It is important to emphasise that we are not making any personal recommendations in this presentation 2

3 Who s BlackRock? Billion Prudential BlackRock L&G Aviva Standard Life We manage over 2.5 trillion for clients as at 31 Dec 2013 Market Cap Source: FT.com 06 Jan

4 How can I plan for my retirement?

5 Retirement Plan Why do I need one? 2,000 1,800 1,600 Working Retired per month 1,400 1,200 1, Income Outgoings Outgoings Income Basic State Pension Income Food Council tax Bills Sky TV Car Going out Holiday Family Travel costs Mortgage Spare cash Based on a gross salary of 27,000 5

6 State Pensions Full Basic State Pension 2014/15 You need 30 qualifying years e.g. paid or credited with National Insurance Contributions (NICs) Single person: Married couple: per week (approx 5,880 per annum) per week (approx 9,410 per annum) State Second Pension (S2P) Previously SERPS (S2P from 2002) State Pension Age is increasing Flat Rate Pension for all Government proposals recently confirmed in the Budget to change the basis of State pensions to provide a single flat rate pension of approximately per week from 2016 Further information on State Pensions can be found at Source: 6

7 How does the Plan work?

8 Severn Trent Group Personal Pension Company and member contributions paid into Account with BlackRock How much to save and where to invest is member s decision 8

9 Contributions Severn Trent Group Personal Pension contributions Employee contributions % Employer contributions % Total % You can pay more than the stated Employee Contribution but additional contributions will not be matched 9

10 Severn Trent Pension (DC Section) v Severn Trent GPP DEFINED CONTRIBUTIONS Employee Contribution Employer Contribution 3% 4% 5% 6% 7% 7.5% Over 7.5% Variable depending on Company policy but subject to a maximum of 10% Employee Contribution Employer Contribution 3% 6% 4% 8% 5% 10% 6% 12% 7% 14% 7.5% 15% Over 7.5% 15% FUND CHOICE 1 Lifestyle option + plus a variety of funds. 2 Lifestyle options plus replication of funds. EXPENSES Administration costs paid by Severn Trent. No change. INCAPACITY BENEFITS Incapacity pension part funded by member s account, and part funded by Severn Trent. Income protection insurance : 50% x pensionable pay for up to 5 years followed by a lump sum of 3 x pensionable pay. DEATH IN SERVICE BENEFITS TAX RELIEF 2 x pensionable pay. Spouse s and children s pension part funded by member s account and part payable by Severn Trent. All tax relief reclaimed at source (no action needed by member) 6 x pensionable pay. Member s account to provide any Spouse s and children s pension. All tax relief reclaimed at source if member participates in SMART. Otherwise, member responsible for reclaiming higher rate tax relief 10

11 Would you swap 48 for 180? pm (6%) 48 pm (3% net) You 12 pm 180 pm Based on 24,000 pensionable pay Your Account Plus Nat Ins saving 12% x 60 = 7.20 pm 11

12 or 120 for 450? 120 pm (7.5% net) You 300 pm (15%) 30 pm 450 pm Based on 24,000 pensionable pay Your Account Plus Nat Ins saving 12% x 150 = 18 pm 12

13 Pension benefits Pension income from Severn Trent Group Personal Pension & Other Pension Plans Top up State Pension (S2P; formerly SERPS) Full Basic State Pension (currently c 5,880 pa) 13

14 Taking benefits at retirement Tax free cash (25% x Account Value) Regular income Pension annuity and/or drawdown options available plus Budget 2014 announcements! Minimum age of 55 before you can take benefits 14

15 Recent annuities at age 65 on 100,000 Single Life level pension 5,792 per year Joint Life 50% Spouse s level pension 5,325 per year Joint Life 50% Spouse s pension escalating at 3% pa 3,528 per year 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 April

16 Severn Trent Group Personal Pension Estimated pension at age 65 in today s money year old: 1. 3% contribution + 6% Severn Trent contribution = 6540 pa % contribution + 15% Severn Trent contribution = 16,320 pa year old: 1. 3% contribution + 6% Severn Trent contribution = 4,644 pa % contribution + 15% Severn Trent contribution = 11,604 pa year old: 1. 3% contribution + 6% Severn Trent contribution = 2,928 pa % contribution + 15% Severn Trent contribution = 7332 pa Source: Moneyadviceservice.org.uk. Assumes 24k salary, 7% pa investment growth, 1% AMC, annual salary increase 2.5% & inflation at 2.5% pa, level pension with no lump sum taken

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

18 Risk versus reward

19 Don t panic...you re not expected to suddenly become an investment expert overnight Help is at hand 19

20 Risk and reward Equities (Stocks & Shares) Potential investment risk Fixed Income (Gilts/Bonds) Multi-Asset Cash Potential investment return 20

21 Long term returns versus inflation Gross Total Return (Adjusted for Cost of Living) GBP Retiring now? Equities Gilts Cash Rebased to 100 (%) Original investment of 100 on 31 December 1972 to 31 December 2013, gross income reinvested. Adjusted for cost of living. Source: Barclays Equity Gilt Study, Datastream 21

22 Your Investment Options

23 Diversified Lifestyle Option Growth Period Switching Period % Invested 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Diversified Pre-Retirement Cash Retirement (65 TRA)

24 Adventurous Lifestyle Option Growth Period Switching Period % Invested 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Adventurous Pre-Retirement Cash Retirement (65 TRA)

25 Severn Trent Lifestyle Options Level of Investment Risk in Growth Period 7 6 AMC* 5 Adventurous Lifestyle 0.32% 4 Diversified Lifestyle 0.41% * During growth phase only 25

26 Self Select - Core BlackRock STGPP Funds Fund Type AMC Additional p.a. Expenses 7 Emerging Markets Equity 100% equities (Overseas only) 0.25% 0.07% 6 Overseas Equity 100% equities (Overseas only) 0.17% 0.02% 6 Ethical Equity 100% equities (Overseas only) 0.30% 0.00% 5 Global Equity 100% equities (40% UK / 60% Overseas) 0.17% 0.01% 5 UK Equity 100% equities (UK only) 0.09% 0.01% 4 Property 100% UK commercial property 0.67% 0.02% 3 Diversified Growth Multi-asset (cash + 3.5%) 0.65% 0.06% 2 Pre-Retirement 100% bonds (Gilts / Corporate Bonds) 0.15% 0.01% 2 Inflation Linked 100% bonds (Index Linked Gilts) 0.10% 0.01% 1 Cash 100% deposits/money market instruments 0.09% 0.03% Capital Risk AMC = Annual Management Charge

27 Self Select - full fund range > 60 funds Multi-Asset Funds DC Balanced Growth DC Diversified Growth DC Diversified Growth Plus DC Cautious Diversified Growth DC Aquila Balanced Index DC Aquila Consensus Index Fixed Income Funds DC Pre-Retirement DC Sterling Bond DC International Fixed Interest DC Global Bond DC High Income Bond DC Index Linked Gilt DC Long Gilt DC Aquila >15yr Corporate Bond DC Aquila >15yr Gilt Index DC Aquila >5yr Index Linked Gilt Cash Funds DC Cash Other Equity Funds DC Strategic Accumulation DC 50/50 Global Growth DC 60/40 Global Growth DC 70/30 Global Growth DC American Growth DC European Growth DC Japanese Growth DC Pacific Growth DC Overseas Equity DC Inst Emerging Markets DC UK Growth DC UK Income DC UK Equity Optimum DC Alpha Smaller Companies DC UK DC UK Special Situations DC Gold & General DC Aquila World ex-uk Index DC Aquila 70/30 Global Index DC Aquila 50/50 Global Index DC Aquila UK Index Property Funds DC Property Active Guest Manager Funds KAMES Ethical INVESCO Pensions Managed INVESCO Pensions Global Equity JP Morgan Global Dynamic JP Morgan Continental Europe Select Equity JP Morgan Emerging Markets Equity Newton Global Equity Newton UK Equity Russell Sterling Corporate Bond Russell UK Equity Threadneedle Pensions Managed Threadneedle Pensions UK Equity Passive Guest Manager Funds HSBC Amanah LGIM Global Equity 50:50 Index LGIM Global Equity 60:40 Index LGIM Consensus Index LGIM UK Equity Index LGIM World (ex UK) Index LGIM Japan Index LGIM Asia Pacific (ex-japan) Index LGIM Pre-Retirement LGIM AAA-AA-A Corporate Bond 27

28 Future help

29 FOR FINANCIAL PROFESSIONAL USE ONLY NOT FOR PUBLIC DISTRIBUTION 29

30 FOR FINANCIAL PROFESSIONAL USE ONLY NOT FOR PUBLIC DISTRIBUTION 30

31 Pension Calculator (Target Plan) 31

32 Step 1 set your target annual net income Helpline

33 Step 1 or use target income calculator 33

34 Step 1 - target income calculator 34

35 Step 2 - Current Forecast 35

36 Step 3 - consider your options 36

37 Step 3 - consider your options 37

38 Step 4 - take action 38

39 Step 4 take action 39

40 Summary Severn Trent contributes to your pension plan Lifestyle or Self Select investment options Access to your account online 24/7 including calculator 40

41 And finally. If you have recently joined the plan you should shortly receive your joiner pack at your home address If you have any further questions please contact BlackRock via the options overleaf 41

42 Future Help Website: Helpline * BlackRock * uk.gpp@blackrock.com * Helpline staff cannot give advice but can provide help and information; answer questions about pensions; and deal with administrative queries and requests 42

43 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. References to Tax in this document are based on our interpretation of current tax law and HMRC practice. Tax law and tax rates may change in the future and so may the basis on which reliefs are granted. 5. 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. 6. 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. 7. 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. 8. Unless otherwise specified, all information contained in this document is current as at 1 April