ING LIFELONG INCOME To live long is good. To live long and well is better! ing.be/personalbanking
You want to take full advantage of your pension but with a certain degree of financial security. That s completely natural. But Have you ever wondered what to do with your savings and your investment income over the coming years and decades? How can you spare yourself any financial bother until the end of your days? Targeted exclusively at the over-50s, ING has developed a package which offers the utmost lifelong convenience. Thanks to ING Lifelong Income, a product governed by Belgian law developed by NN Insurance SA/nv, you can receive a regular income which is guaranteed for life. 2
Income guaranteed for life... Doubtlessly you have already considered putting some money aside to provide security in your old age. Yet how can you know precisely how much you will need? ING Lifelong Income guarantees the regular (monthly, quarterly, six-monthly or annual) payment of a set income amount guaranteed for life that ideally supplements your future income. By choosing ING Lifelong Income you are ensuring an appreciable supplementary income. You can thus guarantee your spending power and truly enjoy your pension. The terms of the contract are straightforward: lifelong really means that the money you invest will provide you with this income without any restrictions in time. Year after year you will receive the proceeds from your investment each month (or according to the frequency of your choice), with a very reassuring regularity. ING Lifelong Income in a nutshell: 50,000 euros. This is the minimum amount of the single premium to be paid in order to subscribe to ING Lifelong Income. 50 years. This is the minimum age to subscribe. 79 years. This is the maximum age to subscribe. 1.75%. This is the conversion rate 1 to calculate your income on an annual basis if you subscribe at the age of 50 2. 0.10%/year. This is the increment applied to the conversion rate 1 to calculate your income over the age of 50. Logically, the later you subscribe, the higher the rate applied (see table below) 2. 4.65%. This is the conversion rate 1 to calculate your income on an annual basis if you subscribe at the age of 79 2. 1.10%. The guarantee fees that guarantee payment of the lifelong income and which will be deducted from your reserve 3 on an annual basis. Age when you subscribe Conversion rate applied 2 Guaranteed minimum income for an instalment of 50,000 4 Guaranteed minimum income for an instalment of 100,000 4 Guaranteed minimum income for an instalment of 150,000 4 50 years 1.75% 70/month 140/month 210/month 60 years 2.75% 110/month 220/month 330/month 65 years 3.25% 130/month 260/month 390/month 70 years 3.75% 150/month 300/month 450/month 75 years 4.25% 170/month 340/month 510/month 79 years 4.65% 186/month 372/month 558/month 1 The conversion rate is determined by the age of the insured person at the time of subscription to the policy. This percentage continues to apply for the full duration of the policy. 2 Rate according to the charges valid as at 01/01/2016 (variable subject to prior to subscription), subject to acceptance of your file by the insurance company and to mutual agreement. 3 The reserve is the value of the policy, which is the total number of investment fund units held by the policyholder in the policy that he or she has taken out, to be multiplied by the net asset value. 4 These amounts take account of the applicable premium tax (2%) and entry charges (2%). 3
Income which cannot decrease ING Lifelong Income ensures that your income will never drop 3, provided that you do not decide to withdraw your reserve partially or in full. How? The value of the capital you invest at the outset will evolve over time in line with the performances of the fund in which it is invested, i.e. ING Lifelong Income Yellow. This fund invests up to a maximum of 60% in equity funds and a minimum of 40% in bond funds. Once every three years, ING will assess the value of your reserve. If it is higher than the value of your initial investment (or, where appropriate, the value of your reserve on the previous assessment) ING will then increase the amount of your income. Conversely, ING undertakes to never reduce your income in the event the fund in which your reserve is invested performs poorly. In this way your income will be safe from negative market trends. Even if your reserve were to fall to zero, you will continue to receive your income for life! The capital is not therefore guaranteed. Specifically, its value mainly changes in accordance with the following factors: Each time income is paid out, the value of your contract decreases accordingly. Here, each income payment is part of your reserve; the guarantee fees are also deducted from your reserve (1.10% on an annual basis). Based on the performance of the funds in which the capital is invested. 4
Total freedom for your reserve At ING we are aware that it is always possible that you will need money suddenly. Therefore you remain in absolute control of your reserve. At any time you can recuperate the reserve still available under your contract. In the event of a total withdrawal, however, the income payments will cease straightaway. For withdrawals made during the first four years of the contract, a decreasing penalty will be applied. After the first month of the contract (cancellation free of charge), this penalty is 4.8 % and subsequently decreases by 0.10 % per month. In this way, after 4 years, there is no penalty to pay. Partial withdrawals are also allowed after a period of eight years, in that case your income will be recalculated according to the remaining reserve. There will be no penalty fees to pay. Finally, and in the event of death, ING will transfer the remaining reserve to your beneficiaries. Income and taxation As is the case for any life insurance, the initial capital payment you make is liable to a 2% premium tax. With regard to the payment you receive, only the portion considered as income is taxable (at a rate of 27%, plus municipal tax surcharges). The latter corresponds to any difference between the increased income (on the occasion of a three-yearly revision) and the income set when the contract was signed. The insurer will inform you by means of a tax sheet if an amount is taxable. In that case you must indicate this amount in your tax return. The taxation system is similar in the event of a (partial or total) withdrawal, as it will be considered as a prepayment of future income. The only difference lies in the determination of the taxable income which, in this case, is equivalent to the difference between, firstly, the amount of the contract reserve at the time of the withdrawal and, secondly, the initial premium paid (after deduction of the premium tax, but before the entry charges) minus the untaxed portion of the periodical income already paid out. 5
A concrete example Mr Brown is 70 years old. He subscribes to ING Lifelong Income and pays in an instalment of 100,000 euros (gross, before the deduction of the premium tax and entry charges). With the appropriate conversion rate (3.75%) Mr Brown will receive a supplementary income of 3,600 euros a year, which he chooses to receive every month in the amount of 300 euros. His income is guaranteed for life and is not taxable. After three years, following positive performance of the fund in which the capital is invested, the assessment of the amount available is 120,000 euros. His supplementary income will therefore be recalculated to attain an amount of 4,500 euros a year, i.e. 375 euros a month! From this moment onwards, the «increased» portion, i.e. 900 euros per year, will be taxable as income. The insurer will send a tax sheet to Mr Dubois each year with the amount to be included in his next year s tax return. Even if, during the next review, three years later, the amount of the available reserve is less than 120,000 euros, the monthly income would remain 375 euros, for life. Specifically, Mr Dubois income cannot decrease under any circumstances (provided that Mr Dubois does not make any withdrawals). Let s imagine that Mr Dubois lives for a very long time and that the income payments have consumed all of his reserve; he will continue to be paid the monthly amount of 375 euros. While the income can never decrease, it can, however, increase if, during a subsequent three-yearly revision, the available reserve exceeds 120,000 euros. Upon the death of Mr Dubois, his beneficiaries are then faced with two scenarios: ING pays the reserve still available. This means that the income received has not exhausted the reserve and/or that the fund, in which the capital was invested, has performed well. The reserve is exhausted. Nothing is therefore paid. The below graph shows how the lifelong income can evolve according to the reserve 5. The blocks show the income amount. The annual reserve fluctuates and is represented in the graph by the line. If the value rises after 3 years, the amount of your income will also rise If the value drops after 3 years, your income will not change the trend in the value of the contract: the reserve the basic income is guaranteed for life the increase in your lifelong guaranteed income, in the event the value of the contract increases 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 5 The sole purpose of this graph is to explain how the product works. 6
In summary, ING Lifelong Income is: A supplement to maintain your standard of living. Guaranteed income for life. A reserve available in the event of the unexpected, although not guaranteed. In case of death, payment of the reserve to your beneficiaries. Who is NN Insurance Belgium SA/nv? NN Insurance Belgium (formerly ING Life Belgium) is an insurance company of NN Group with a rich past in Belgium. NN Group is an insurance company and manager of investments listed on the stock exchange with a strong European focus. The group, which is present in over 18 countries and has a staff of approximately 12,000, provides services in the field of pensions, insurance, investment as well as banking services (in the Netherlands) to more than 15 million customers. 7
Additionnal Information Definition ING Lifelong Income is a Branch 23 (investment insurance for which the return is linked to investment funds) single-premium life insurance. This product is developed by NN Insurance Belgium SA/NV and is subject to Belgian law. Objective By opting for ING Lifelong Income you give yourself an additional income that is guaranteed for life. The capital is invested in the ING Lifelong Income Yellow fund (ISIN code BE0948481156) which invests a maximum of 60% in equity funds and a minimum of 40% in bond funds. The aim of the fund is to achieve a capital gain. ING Lifelong Income aims to generate returns by actively managing a portfolio of bonds, shares and money market instruments issued by companies based in the European Union. Assets are only invested in European Union member states that belong to the eurozone, countries belonging to the European Economic Area, or shares issued by companies listed on eurozone stock markets. Investments are mainly in bonds and equities denominated in euros. There is a balance between shares and bonds. The ING Lifelong Income Yellow fund is composed of 4 underlying funds: NN L Euro Fixed Income V Cap (LU354754193) NN Euromix Bond V Cap (LU0541870845) NN L Euro High Dividend V Cap (LU0407160505) NN L Euro Equity V Cap (LU0407160687) Return ING Lifelong Income guarantees you regular payments (monthly, quarterly, twice yearly or annually) of a predefined lifetime annuity that represents the ideal addition to your future income. The amount of the guaranteed life annuity is calculated at the start of the policy according based on: the net amount paid in. the conversion rate applied. The conversion rate is determined using the age of the insured when he or she takes out the policy. At the minimum age of 50, it is 1.75%. This percentage increases by 0.10% for every year the insured is over the age of 50 when the policy is taken out. The maximum percentage applied is 4.65% in the case of an insured aged 79 years. This percentage remains applicable for the rest of the time the policy is held. No profit sharing bonus is granted. How the product works The annuity is taken from your policy s reserve via a reduction in the number of units of which it is composed. The value of your contract will thus reduce with each payment that is made. Guarantee fees are also deducted from your reserve (1.10% annually). Risks Solvency risk: Life insurance policies are special assets that are managed separately from the insurer s other assets. In the event the insurer goes bankrupt, these assets are reserved as a priority in order to fulfil the commitments towards policyholders and/or beneficiaries. Moreover, in the event that NN Insurance Belgium SA/NV defaults on its payments or goes bankrupt, annuity payments may be stopped and you may not be able to recover the entire value of your policy s reserve. ING Lifelong Income is not protected by the Belgian Special Protection Fund for Deposits and Life Insurance. Market risk: This is a general risk that affects all types of investment. The evolution of security prices is essentially determined by the evolution of the financial markets, as well as by the economic evolution of issuers, who themselves are affected by the general state of the global economy and by the prevailing economic and political conditions in their country. Concentration risk: If the investments are made in a specific geographical region, the concentration risk is higher than in the case of investments distributed between several geographical regions. The capital is therefore not guaranteed. Cost of premium and duration Policy with a single minimum gross premium of 50,000 euros (before fees and taxes). This policy is for life and ends upon the death of the policyholder or in the event of full surrender of the reserve. 8
Charges Entry fees: 2% on the premium paid in (after deduction of the 2% tax on premiums). Annual fees: management fees of 0.65% for the ING Lifelong Income Yellow underlying fund and annuity guarantee fee of 1.1% per year. The 4 underlying funds of the ING Lifelong Income Yellow fund entail their own management fees (on average 1.205% per year), which are included in the net asset value of the funds. For withdrawals taking place during the first four years of the policy, a decreasing rate will be applied: 4.80% for the first month, reducing by 0.10% per month. Rates as of 01/01/2016, variable before the policy is taken out and subject to prior notice (via the information sheet). Taxation (in accordance with the applicable legislation) Premium tax: 2% on the premium paid in. As regards the annuity, only the part considered to be income is taxable (up to 27%, with additional local taxes also applicable). This corresponds to the potential difference between the increased annuity (reviewed every three years) and the annuity established when the policy was taken out. The tax regime is similar in the case of surrender (partial or full) and in the event of the policyholder s death. This tax regime applies to an average retail customer who is a natural person residing in Belgium. The tax treatment depends on each customer s individual situation and may be modified at a later date. Net asset value The underlying fund is the ING Lifelong Income Yellow (ISIN code BE0948481156). Each week, NN Insurance Belgium SA/NV sends the asset value to the press and always mentions the asset value in the annual policy statement. The policy s value is also available each week in Home Bank. Complaints department You may send any complaints to ING - Complaint Management, Cours Saint-Michel/Sint-Michielswarande 60, 1040 Brussels. If you are not satisfied with the result you may contact the financial ombudsman, North Gate II, Avenue Roi Albert II/Koning Albert II-laan 8, 1000 Brussels (www.ombudsfin.be) or, for insurance policies, the Insurance Ombudsman, Square de Meeûs/de Meeûssquare 35, 1000 Brussels (www.ombudsman.as). IMPORTANT Before taking out a policy, please read through the following documents: - the life insurance financial info sheet, the general terms and conditions and the management regulations, which are available from all branches or at ing.be (in Retirement> Supplementary income> Lifelong income). - the general investment information and the ING Special Regulations for Trading in Financial Instruments, Savings and Investment Insurance (SRTFI) which are available from all ING branches or at ing.be (in Charges and regulations> Information and regulations> Investments). These documents are available in French, Dutch, German and English. ING Lifelong Income is offered (subject to acceptance by the insurer and mutual agreement) by: Insurance intermediary ING Belgium SA/NV, an insurance broker registered with the FSMA under code number 12381A. Registered office: Avenue Marnix/Marnixlaan 24, B-1000 Brussels - Brussels RPM/RPR VAT BE 0403.200.393. - www.ing.be - BIC: BBRUBEBB - IBAN: BE45 3109 1560 2789. Insurer NN Insurance Belgium SA/NV, an insurance company authorised by the NBB under number 2550. Registered office: Airport Plaza - Montreal Building, Da Vincilaan 19, B-1831 Diegem - www.nn.be - Brussels RPM/RPR - VAT BE 0890.270.057 - BIC: BBRUBEBB - IBAN: BE28 3100 7627 4220. ING Belgium SA/NV (Article 107 3 of the Special Regulations for Trading in Financial Instruments, Savings and Investment Insurance, in short SRTFI ) and NN Insurance Belgium SA/NV do not provide any insurance services to US persons. 9
Does our offer interest you? Would you like to discover how to enjoy lifelong financial freedom? Don t hesitate to contact your Personal Banker at your ING branch. He or she will help you to make a simulation on the basis of your age and the capital to be invested. ING Belgium SA/nv Bank avenue Marnix/Marnixlaan 24, B-1000 Brussels Brussels RPM/RPR VAT: BE 0403.200.393 BIC: BBRUBEBB IBAN: BE45 3109 1560 2789. Publisher: Inge Ampe Cours Saint-Michel 60, B-1040 Brussels. Editing Team & Graphic Studio Marketing ING Belgium 707331E 01/16. ING Bank Belgium and NN Insurance Belgium do not, in principle, provide investment services to US persons.