Lifetime Annuity and Scheme Pension Lifetime Annuity and Scheme Pension Key Features This document shows the main points about your policy. Please read it with your Personal Example and keep them with your documents relating to your Lifetime Annuity or Scheme Pension policies. The Personal Example shows how the policy would work for you. The Financial Services Authority is the independent financial services regulator. It requires us, Canada Life Limited, to give you this important information to help you to decide whether the Lifetime Annuity or Scheme Pension policies are right for you. You should read this document carefully so that you understand what you are buying and then keep it safe for future reference.
Lifetime Annuity and Scheme Pension The Lifetime Annuity and Scheme Pension are annuity policies that use the money from your registered pension scheme to provide a regular income for your lifetime. You should remember that you can choose to buy your annuity policy from any pension annuity provider. This is called the open market option. Its aims To use the money from your registered pension scheme to buy a policy that pays you a guaranteed income for the rest of your life. To give you the choice of providing an income to your spouse, civil partner or dependant(s) after your death. To provide you with a range of options to suit your circumstances. Your commitment You decide that the value of your registered pension scheme will be paid into the policy. You cannot change your mind or decide to go to another insurance company once the policy is finalised. You make a decision about the type of pension benefits that you want. As you cannot change your mind later, it is worth taking your time and discussing your options with your professional adviser now. Risks Once your policy is set up, you cannot change it or cash it in, even if your circumstances change. Your income will stop when you die, unless you have chosen for it to continue. (Please see What happens to my income when I die? section of this document). Inflation may reduce the spending power of your income, especially if you choose an income that does not increase. If you choose to have your income change in line with the Retail Prices Index (RPI) your income could go down if the price of goods and services included in that index are lower now than they were one year earlier. The total income that we pay you (before tax) may be less than the premium that we received to set up your income. This could happen if you die shortly after the policy is set up. Income tax rates may change in the future. If you are a taxpayer and income tax rates go up, the income paid to you after tax will be smaller. The amount of income you receive will depend on: your age and main residential address; the choices you make about the income you receive (please see the What income options are available to me? and What happens to my income when I die? sections of this document); and the medical and lifestyle information supplied (this only applies if you have chosen an enhanced annuity please see the What is an enhanced annuity? section of this document). If you provide us with any information that is inaccurate or your doctor is unable to confirm your medical and lifestyle information, this may result in your income being reduced from the start of the policy. 2
Questions and Answers What income options are available to me? You may be able to take part of your fund as a tax free pension commencement lump sum. Your professional adviser will be able to explain the details. You can choose for your income to increase, either by a fixed percentage every year, or vary in line with inflation. Your income can be paid monthly, quarterly, half yearly or yearly into your bank account. It will be paid either: in advance, where the first payment will be paid as soon as possible after the policy is set up; or in arrears, so for example, if you choose monthly the first payment will be paid one month after the policy is set up. What happens to my income when I die? When you die, there will be no further payments unless you have chosen a death benefit. Options include: Second annuitant s pension* you can choose to provide an income for your spouse, civil partner or dependant after your death. This can be at the same level or a lower percentage, for example 50% of the amount paid to you. Guarantee periods you can choose to have your income guaranteed for a period of up to ten years from the start of the policy. This means that, should you die within the guarantee period, your income will continue to be paid until the guarantee period ends. Annuity protection you can choose to have a lump sum payable on your death before your 75th birthday, which protects some or all of the purchase money. You need to bear in mind that if you choose any of the options shown above, or an income that increases each year, the level of income at the start of your policy will be lower. * If the second annuitant s pension is to be paid to someone other than your spouse or civil partner, you should be satisfied that they are your dependant and will remain your dependant until you die. If they do not qualify as your dependant when you die, the second annuitant s pension will not be paid. If your circumstances change after your policy is set up, the benefits cannot be altered. A dependant can be: a person who is not your child but is financially dependant on you, or you rely on each other financially; or a person (who can be your child) that is dependant on you because of physical or mental impairment. 3
What is an enhanced annuity? If you qualify for an enhanced annuity you may be able to receive an income that is significantly higher than through a standard annuity. The amount of increase you receive will depend on your personal circumstances. You could qualify due to your lifestyle or medical conditions or a combination of these. Qualifying medical conditions range from the less severe such as high blood pressure or cholesterol to more serious conditions including cancers, heart conditions, diabetes and strokes. You will need to answer a few questions or complete a questionnaire so we can see if you qualify. If you select a second annuitant s pension they may qualify for an enhancement, even if you do not. If you tell us about an illness, or are diagnosed with one, after the policy is issued we are not able to increase your income. What is the most that can be paid into my policy? The maximum premium for our enhanced annuity policy is 1 million. If you have more than one enhanced annuity policy with us and the total premiums are more than 1 million we may have to reduce your income payments from the start of the policy. For standard annuity policies the maximum premium is normally 2.5 million. We can accept a larger premium but we must agree to do this before we provide you with a personal example. How is the premium paid? The premium must be paid to us by cheque or telegraphic transfer from the Trustees/ Administrator of your registered pension scheme(s), or from the insurance company holding your money. What are the charges? Your Personal Example which forms part of this document will show how the purchase money is applied to your annuity/scheme pension and what if any adviser charge payments you have instructed Canada Life to make. Adviser charge payments We can make deductions from the purchase money to pay any fees due to your professional adviser. These deductions will only be made if we receive written instructions from you (for example on your application form). 4
What about tax? Income payments Your income is treated as earned income and will normally be paid after deduction of tax under the Pay As You Earn (PAYE) system. Annuity protection The annuity protection lump sum death benefit is paid after the deduction of tax, currently 55%. Payment made following your death, for example a guarantee period or annuity protection When you apply for an annuity with us you should tell us who you would like to receive any payment. If an amount is to be paid we will look at your nomination before we decide who should receive the payment. We do this so that the payment does not fall within your estate for inheritance tax purposes. Please see section 4 of the policy provisions for more information regarding the relatives and parties that may receive this payment. If the policy is not issued in your name, for example it has been issued in the name of your pension scheme, it will be the scheme that decides who will receive the payment. We have based the information about tax on current law, the law may change and depends on your own financial circumstances. Can I change my mind? Once you have bought your policy it is a final decision, there is no chance to cancel. But you have a period of at least 30 days from when you received this document in which you can review and consider your choices before the contract is concluded. We will refund any money received in full back to your pension scheme(s) subject to their acceptance. 5
How to contact us You should contact your professional adviser in the first instance. If you have any questions you can contact us in the following ways: Phone: 0845 6060708 (lines are open Monday to Friday 9am 5pm) E-mail: customer.services@canadalife.co.uk Head office address: Customer Services Annuity Servicing Team Canada Life Limited Canada Life Place Potters Bar Herts EN6 5BA Website: www.canadalife.co.uk 6
Further information How to complain If you need to complain about any part of the service we have provided, please write to us at the address on page 6. If you are not happy with our response you can contact: The Financial Ombudsman Service South Quay Plaza 183 Marsh Wall London E14 9SR Phone: 0845 080 1800 Email: complaint.info@financial-ombudsman.org.uk Website: www.financial-ombudsman.org.uk Making a complaint will not affect your right to take legal action against us. Compensation We are covered by the Financial Services Compensation Scheme (FSCS). This is the UK s statutory fund of last resort for customers of authorised financial services firms, such as Canada Life Limited. If you have a valid claim against us and we are not able to meet our responsibilities in full, you may be entitled to compensation from the FSCS. Currently the scheme covers 90% of the value of a valid claim. For further information on the scheme you can get a copy of this leaflet by writing the FSCS or by visiting their website. The Financial Services Compensation Scheme 7th Floor, Lloyds Chambers Portsoken Street London E1 8BN Phone: 020 7741 4100 Email: enquiries@fscs.org.uk Website: www.fscs.org.uk Please contact us if you would like any information on compensation arrangements. Law English law applies to these policies. Terms and conditions This document is a brief guide to the key features of the Lifetime Annuity and Scheme Pension policies, including the enhanced versions. You can read the full terms and conditions in the relevant policy provisions. The policy provisions and policy schedule, together with the application form; the latest accepted personal example; and for enhanced annuities the confirmation schedule or any other medical information we rely upon, makes the legally binding contract between you and us. 7
Canada Life Limited, registered in England no. 973271. Registered office: Canada Life Place, Potters Bar, Hertfordshire EN6 5BA Telephone 0845 6060708 Facsimile 01707 646088 www.canadalife.co.uk Canada Life group consists of Canada Life Limited, Canada Life Asset Management Limited (both authorised and regulated by the Financial Services Authority), Canada Life International Limited and CLI Institutional Limited (Isle of Man registered companies authorised and regulated by the Isle of Man Insurance and Pensions Authority). All promotional material produced is approved by Canada Life Limited. 8246 1012R