Nationwide Group Personal Pension Arrangement Your journey to a brighter future
Saving for your retirement Welcome to the Nationwide Group Personal Pension (GPP) arrangement provided to you by Friends Life. Nationwide wants you to be financially secure, not just now, but also in the future. The Nationwide GPP helps make paying into a pension both convenient and affordable. Nationwide will contribute the employer core contribution of 13%, however if you wish to make contributions of more than the minimum core 4%, Nationwide will also match your additional contributions up to a maximum of 3% of your notional salary. Also, if you contribute using salary sacrifice (see page 5), you will benefit from lower National Insurance payments. This, together with tax benefits and the contributions you get from Nationwide, makes saving into the GPP a good way to start building for your future retirement. Ian Baines, Head of Pensions Friends Life, who has been chosen to provide this scheme for you, cannot guarantee what you ll get back in the future. A pension plan is a long term investment plan set up to enable you to save money whilst you re working and then provide you with an income once you ve retired. Your pension plan is not a savings plan you could get back less than has been paid in. You can t normally access your money until you are 55. Please read the supporting documents listed in the box on the next page as they contain important information to enable you to decide whether to join the scheme. This guide does not constitute financial advice. If you are not sure whether this scheme is right for you, please contact a financial adviser. You may have to pay for financial advice. The Pension Quality Mark is a new award that recognises high quality defined contribution pensions schemes. This has been awarded to the Nationwide Group Personal Pension (GPP).
Contents Why should I join? page 4 How does the GPP work? page 8 How much should I save for retirement? page 10 How can I join? page 11 Further information and help page 12 This brochure should be read together with: The Choosing your investment funds brochure, which is issued together with this document or found online at www.friendslife.co.uk/doclib/bpen218b.pdf. The Fund descriptions, their charges and risk warnings document, which is issued together with this document or found online at www.friendslife.co.uk/doclib/bpen218c.pdf. The Key features document, which is issued together with this document or found online at www.friendslife.co.uk/doclib/mpen1a.pdf. The Key features illustration, which is issued together with this document or found online at www.friendslife.co.uk/doclib/ipenf67210a.pdf. The With-Profits Summary, which is issued together with this document or found online at www.friendslife.co.uk/doclib/cfppfmfp.pdf. The Terms and conditions, which is issued together with this document or found online at www.friendslife.co.uk/doclib/u450.pdf. If you do not have any of this documentation, please call 0345 602 9221. 3
Why should I join? It pays to join Being able to join your employer s pension scheme is part of your employment benefits package. It may be in your best interest to join the scheme but everyone s circumstances are different. It is important that you read the Key features document for more information. Tax relief increases your pension contributions A pension plan provides you with a tax efficient way of saving for your future. The Government encourages you to save towards your pension by offering income tax relief on any contributions you may make. Friends Life claims tax back from the Government at the basic rate. If you are a higher or additional rate income tax payer, you can claim any additional tax relief you are entitled to through your tax return. The value of any tax relief depends on your individual circumstances, and tax rules may change in the future. The Key features provide further tax information. Your scheme may operate on a salary sacrifice basis as explained on page 5. If this is the case, contributions and tax relief work differently. 4
Important information to know about salary sacrifice Without salary sacrifice Your monthly salary is based on your salary level before working out pension contributions There is a pension deduction from your salary A personal pension contribution is paid into your pension plan and receives tax relief as explained on page 4. With salary sacrifice Your monthly salary is reduced by the salary sacrifice contribution you have elected to make There is no pension deduction from your salary No tax or National Insurance will be deducted from the part of your salary that is sacrificed, which may increase your take home pay Your employer will make a pension contribution into your pension plan, this will not receive any further tax relief. Like any financial decision salary sacrifice may not be suitable for everyone. Certain State benefits, notably the State Second Pension, statutory sick pay and statutory maternity pay, are related to total gross earnings and a reduction in your taxable salary may reduce your entitlements. Salary sacrifice will not reduce salary-related payments or benefits that you receive from Nationwide. Nationwide will continue to use your notional salary (this is your basic salary before any adjustments for salary sacrifice) when calculating all other salary related benefits (e.g. salary increase, overtime, bonus payments, life assurance). Salary sacrifice may still have an impact on things which are based on your salary and not received from Nationwide, for example, future borrowing levels. Salary sacrifice is a change to your contract of employment. The minimum period for which salary sacrifice can be applied is one year. Salary sacrifice is organised by your employer, so if you have any questions please refer to the information they will have provided or contact a member of the Nationwide Pensions Team. If you are in any doubt as to whether salary sacrifice is suitable for your circumstances you should seek professional advice. 5
Could you live on the basic State pension? The State pension is designed to cover only your basic needs in retirement and is not paid to everyone as an automatic right. How much you get depends on the National Insurance contributions you have made. The basic State pension is not really enough for the majority of people to live on nowadays. Below we have outlined the current State pension benefits that the Government is paying. Would this be enough for you? Current basic State pension for an individual 113.10* a week. Current basic State pension for a couple (where one partner does not have sufficient National Insurance contributions to qualify for full State pension) 180.90* a week. You may also be entitled to some additional State pension. There is also a means-tested State benefit called the Pension Credit, which guarantees a minimum income after tax of at least 148.35* a week for an individual, 226.50* for a couple. The age from which you can get Pension Credit is gradually increasing so that it is aligned with the State pension age. * 2014/15 tax year figures None of the State pensions are available until you reach State pension age. More information on State pension age can be found at www.gov.uk/browse/working/state-pension. 6
Living longer People in the UK are living longer than ever before. And as medicine continues to advance, we expect life expectancy to increase even further. That means that people are living in retirement for longer than before in fact, you could easily be retired for 30 years or more. People now have higher expectations from retirement too. You may want to visit more of the world, to spend some money on your home, or to buy the car you ve always dreamed of. At the back of your mind, you know you may need to spend a significant amount on care or medical costs too. All of it costs money. So it pays to work out how much you may need for your retirement right now. Here are some examples of the costs you may have to consider: In summary The fact that we are on average living longer is only one of the reasons you should consider joining your company pension scheme. Other factors that we have covered for you to consider are: Your employer contributes. Contributions to a pension are a tax efficient way of saving for your retirement. The State pension may not cover your needs in retirement. Must have Mortgage/rent Heating Water Council tax Food Car/travel Insurance Debt repayments Clothes Nice to have TV/satellite Telephone Like to have Entertainment Eating out Holidays Hobbies Presents 7
How does the GPP work? When you join Nationwide you become a member of the GPP without having to do anything. At this point Friends Life will set up a plan in your name. Any contributions your employer makes as a result of you entering into a salary sacrifice arrangement will be paid into your plan, plus the contribution your employer pays. You can also choose to make additional contributions each year and these too will be paid into your plan. The total pension contributions are invested into the investment fund, or funds, that you choose. If you don t make an investment choice, all of the contributions will be invested in the Balanced Lifetime Investment Programme, which will manage your investments for the life of your plan. Although your employer has made this selection for those who don t make a fund choice, there are no guarantees that this arrangement is the most suitable for your own personal circumstances. For more information about your choices and investment programmes, please see the Choosing your investment funds brochure. You own this plan If you leave your current employer, you are able to keep your pension plan with Friends Life, including any contributions made by your current employer. You can continue to make contributions yourself, and you will get tax relief on these. The range of funds available to you and charges for these funds may be different. If you do leave, we will write to you providing further information. Automatic Enrolment The Government is encouraging people to save for retirement by introducing Automatic Enrolment. If you do not contribute enough to a qualifying pension scheme, you may be automatically enrolled into a pension scheme in the future. Please speak to your employer for further information. 8
How your pension works over time The diagrams below show an example of how your pension plan works with contributions being made, potential investment growth being added, charges being taken out and what you might choose at retirement. Please note that the diagrams are for illustrative purposes only. At retirement Over time the value of your pension plan should grow, and when you take your pension benefits you will normally be able to take up to 25% of your pension fund tax free, Employer s with the remainder contribution being taken as a taxable cash sum, or pension. This is explained in more detail in the Key features document. Your choices will be explained to you in more detail when you get closer to retirement. You can be reassured that should you die before you retire, we will pay out the value of your plan. We recommend that you complete an expression of wish form to nominate who you would like this to be paid to. We will take the nomination into account but are not bound by it. Please contact us if you would like this form; our contact details are shown on the Further information and help page. For further information on what happens should you die before you retire, please see the Key features document. Personal contributions Your contributions Basic rate tax relief Employer s contribution Potential investment growth Pension plan Charges Up to 25% as a tax free sum with the balance being used to: purchase an annuity provide for flexi-access drawdown. Take a lump sum from your pension fund. 25% will be tax free the remainder will be subject to income tax at your marginal rate. Transfer your pension fund to another provider Salary sacrifice contributions Employer contribution from salary sacrifice Additional employer contribution Potential investment growth Pension plan Charges Up to 25% as a tax free sum with the balance being used to: purchase an annuity provide for flexi-access drawdown. Take a lump sum from your pension fund. 25% will be tax free the remainder will be subject to income tax at your marginal rate. Transfer your pension fund to another provider 9
How much should I save for retirement? How much you ll need and how much you can afford to pay in will depend on your personal circumstances. As part of this pack, you will receive a Key features illustration. The aim of the illustration is to give you an idea of how much to contribute to your plan. The charges and growth rates assumed in the illustration are specific to your plan. After joining the plan you will receive a personal illustration that will be based on your own individual details and the level of contribution you have chosen to make. This is designed to give you an idea of how much you could get back when you retire based upon the choices you have made. Our online tool, evaluate with Friends Life, at www.friendslife.community also gives you further information and help. If you do not have a personalised illustration at this stage but would like one, you may request one from Friends Life before you join the plan. The value of an investment is not guaranteed and can go up and down. You could get back less than you have paid in. 10
How can I join? 1 Read all the information provided and decide how much you can afford to pay. 2 If you are not sure the plan is right for your needs you should contact a financial adviser. You may have to pay for financial advice. Please see the next page for further details. 3 Becoming a member of the Nationwide Group Personal Pension Arrangement couldn t be more simple you do not need to do anything, as you will automatically become a member from the first day of the month following the start of your employment. If you do not wish to join, you should cancel your membership by completing and returning the cancellation notice (within 30 days) which will be posted to your home address. Starting your journey to a brighter future now Thank you for reading the information in this brochure. The sooner you start saving for your future the better. Start your journey now. 11
Further information and help Further information If you want more information about the funds in the Choosing your investment funds brochure, you can find fund fact sheets at www.friendslife.co.uk/customer/funds, or you can phone our helpdesk on 0345 602 9221. If you feel you would like advice, you can pay for financial advice from a financial adviser. If you don t have an adviser, you can contact the following organisations: Unbiased: www.unbiased.co.uk Institute of Financial Planning: 0117 945 2470 or at www.financialplanning.org.uk GOV.UK provides impartial UK Government information on pensions at www.gov.uk/browse/working/ workplace-personal-pensions Contact details Please remember your employer will normally be your first point of contact. Friends Life has developed interactive online tools, known as etools, to help you make sense of your pension planning. They can help you to decide which funds to invest in and how much to contribute. Log in to: www.friendslife.community to register online for access to these useful tools: evaluate with Friends Life helps you to consider your attitude to investment risk and forecast your possible future retirement income by looking at a range of scenarios. It also shows you the funds available on your scheme. efinance enables you to manage your personal finances online and gives you access to: Financial Toolbox which allows you to view a snapshot of your financial position, including any investments you may have. Financial Portfolio which allows you to input information about any investments you may have. etutor is an interactive online learning programme, which can help you further with your retirement planning and decisions. If you have any questions, you can: Call us on 0345 602 9221 at the following times: Monday to Friday between 8.30am and 6pm. We may record calls to improve our service. Calls may be charged and these charges will vary; please speak to your network provider. Fax us on 0345 600 0624. Email us at nationwide@friendslife.co.uk. Email is not a secure form of communication and you should not email us with any personal information about you or personal details about your pension with us. For similar reasons, we will not reply by email if to do so would compromise your security. Write to us at Friends Life, PO Box 1550, Salisbury, SP1 2TW. 12
At Friends Life we want you to feel confident about your financial future, ready to face life s challenges and take its opportunities too. We know that everyone has their own individual outlook so, wherever we can, we use our knowledge and experience to offer products, services and options that suit your particular needs. And we aim to make it as easy as possible for you to deal with us. For our complete range of products and services visit www.friendslife.co.uk Friends Life and Pensions Limited An incorporated company limited by shares and registered in England and Wales, number 475201. 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 0345 602 9189 calls may be recorded. www.friendslife.com Friends Life is a registered trade mark of the Friends Life group.. BPEN218/A 08.15 (47594) MB v2.10 Oct 2014 (44319)