Policy Document. Stakeholder Pension Plan BC/CA

Transcription

1 Policy Document Stakeholder Pension Plan BC/CA

2 Contents 1. Introduction 2. Payments 3. Transfers-in 4. Policy schedules 5. Fund options 6. The Lifestyle Option 7. Units, ownership of assets, changes to funds and restriction on Prudential's liability 8. Using payments to buy units 9. Change of investment instructions for future payments 10. Switching between funds 11. Selling units for benefits or a transfer-out 12. Delays in buying, selling or switching units 13. Arrangements 14. Benefits payable to you 15. Benefits payable on your death 16. Life cover 17. Transfers-out 18. Charges 19. General Appendix A. Charges B. Minimum amounts C. Notices, instructions and requests from you to us D. Maximum number of funds 2 Policy Document

3 1. Introduction 1.1 About the Policy Certain words, expressions and abbreviations used in the Policy are shown in bold print. The meanings of these words, expressions and abbreviations are given in section 1.4. Where the words: > Prudential, we, us, and our are used, they refer to The Prudential Assurance Company Limited (the Provider, Stakeholder Scheme Manager and Scheme Administrator of the Scheme). > you and your are used, they refer to you, as a member of the Scheme, and the planholder named on each Policy schedule. Because the Scheme has been set up by a Deed Poll, you, as a member, have a direct legal relationship with us. The Policy has no effect unless one or more Policy schedules have been issued in respect of it. Payments to the Scheme are accepted under the Policy and are used to provide certain benefits for you. All payments to the Scheme will be made to us. Any options or provisions in the Policy will be exercised only in such a manner and to the extent permitted by the Rules and in the form and at the time permitted by the Rules. Your benefits under the Scheme are provided through the Policy. We will pay all the benefits due under the Policy direct to the person entitled to the benefits under the Rules. The Policy offers a variety of investment options in respect of the payments accepted under it. The investment options consist of a range of funds managed by companies within the Prudential group, and a number of funds linked to external companies. Details of the investment options available to you can be found in the Fund Guide. We also produce a document called a "Statement of Investment Principles". This contains information about the investment rationale of the Scheme and a copy is available from us on request. Prudential's decision is final as to whether any investment option will be made available under the Policy. Policy Document 3

4 If you are self-employed or not employed, references in the Policy to employer payments and to any other special conditions which apply to employees will not be relevant. The Policy reflects some of the terms set out in the Rules. Where the Policy reflects the terms set out in the Rules, every effort has been made to ensure that the Policy reflects those terms as accurately as possible. However, in the event of any conflict between such information, the Rules (being the governing document) will in most circumstances override the Policy. An example of a circumstance when the Rules may not be overriding is when the Government makes changes (either overriding legislation which we must implement or optional changes which we can make available if we so choose) which do not have to be reflected in the Rules in order for them to be operative. In such cases, we may reflect the up-to-date position in the Policy before we change the Rules. Any reference to an Act of Parliament includes any new legislation by which it is replaced or changed. It also includes any regulations or orders made under the Act or under the replacement Act. Prudential will administer the Scheme so that it meets the requirements for an automatic enrolment scheme in relation to you, where your employer has chosen to use the Scheme to comply with its obligations to you under the automatic enrolment legislation. We produce a yearly declaration concerning the operation of the Scheme. A reporting accountant appointed for the purposes of the Scheme then independently audits this declaration. 1.2 Important points about instructions and items sent to us (a) There are a number of references in the Policy to notices and instructions you must give us. In some cases, these must be in writing and we will give you forms to use. You can obtain any forms by contacting us (see section 1.3). In some instances you will be able to give us notices and instructions by telephone or via the Prudential Stakeholder Website. More information about this can be found in sections 1.2(b), and the appendix. 4 Policy Document

5 (b) In the case where you use the Prudential Stakeholder Website to send us an instruction or to carry out a transaction, we cannot be held to have received the instruction or carried out the transaction if for any reason our electronic platform is not operational. When you successfully send us an electronic instruction or carry out a transaction, we will give you confirmation. If you do not receive that confirmation within three hours, it is strongly recommended that you send the instruction or request the transaction by alternative means, for example in writing or by telephone, to ensure that we get it. (c) In some circumstances, there may be a delay in buying or selling units. This is explained in section 12. (d) A number of sections of the Policy refer to the unit price dates used for transactions once we have all of the information and other items we need from you and others, to enable us to carry out the transaction. If the day we receive all of the information and items we need is not a working day, we will treat them as being received on the next working day. Similarly, if we receive information, instructions or items after 5.00 p.m. (London time) on a working day, we will normally treat the information, instructions or items as being received on the next working day, except that: > information or instructions received through the Prudential Stakeholder Website after 5.00 p.m. (London time) on a working day, will normally be treated as being received on that same working day; and > cheques received after 3.30 p.m. (London time) on a working day, will normally be treated as received on the next working day. 1.3 Contact details If you wish to contact us, you can do so by: > telephoning the Prudential Stakeholder Customer Service Centre on: ; or > sending an to: stakeholder@prudential-pensions.co.uk; or > writing to: Prudential Stakeholder Customer Service Centre, Lancing, BN15 8GB; or Policy Document 5

6 > visiting the Prudential Stakeholder Website. You should always quote your National Insurance number. Telephone calls may be monitored or recorded for security, quality purposes, staff training and/or dispute resolution. 1.4 Meaning of certain words, expressions and abbreviations Certain words, expressions and abbreviations in the Policy have specific meanings. Where any of these words, expressions or abbreviations are used they are shown in bold print. The meanings of these words, expressions and abbreviations are as follows: appendix. This is at the end of the Policy; it contains details of charges, minimum payments and any other restrictions. arrangement. Payment types are grouped into one or two separate benefit packages as described in section 13. These packages are called "arrangements". "automatic enrolment legislation". The legislation in Part 1 of the Pensions Act 2008 and regulations made under that Part, which provides for pension scheme membership for jobholders. "automatic enrolment scheme". A pension scheme which meets the requirements set out in section 17 of the Pensions Act 2008 and regulations made under that section. chosen pension date. This is the date on which you expect to take your benefits from the Scheme. If the Scheme is being used as an automatic enrolment scheme, your employer will notify us of the chosen pension date for your plan. If the Scheme is not being used as an automatic enrolment scheme, you select the chosen pension date for your plan. dealing cycle. This is the timeframe within which Prudential or an external company carries out a valuation of a fund, buys and sells units, and then (if applicable) makes the proceeds of a sale ready for reinvestment in another fund and/or for payment of benefits. Different companies have different dealing cycles, largely due to the different times at which they carry out their fund valuations. The dealing cycle or the combination of two dealing cycles, in the case of a switch between funds affects the timescales for buying and selling units for whatever purpose. 6 Policy Document

7 default fund. This is the investment option to which payments will be automatically applied in the event that you do not state your own choice from among the funds available. Details of the default fund can be found in the Fund Guide. The default fund does not represent a recommendation by Prudential and you should consider and choose funds to suit your needs. When considering your options you should seek financial advice. A financial adviser can assess your personal circumstances, talk you through your options and make a recommendation based on this information. employer. Your current employer, if you are employed. external companies and externallylinked funds. External companies are companies or other entities that are either: (a) managers of collective investment schemes (such as unit trusts and OEICs) operating outside the Prudential group; or (b) life assurance companies outside the Prudential group. Prudential (or other companies within the Prudential group) has entered into agreements with certain external companies so that funds that invest in externally-managed collective investment schemes and funds with investment performance linked to funds of external life assurance companies, may be offered under the Policy. These funds are called externally-linked funds. fund. This means one of the pension funds we make available for investing payments. The funds include Prudential funds and a number of externally-linked funds. The funds available under the Policy are set out in the Fund Guide and are subject to change from time to time. HMRC. Her Majesty's Revenue & Customs. life cover amount. If life cover applies to you, this is the amount of life cover that you have. The life cover amount will be shown on the Policy schedule(s). "opt-out period". This is the period specified in regulation 9 of the Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010, during which you may elect to stop payments to the Scheme and receive a refund of any payments you have made to the Scheme. Policy Document 7

8 payment due date. This is the date by which any regular payment must be received by the Scheme. For personal payments deducted by your employer, the payment due date is the 22nd of the month following the month in which the payment was deducted from your earnings. For employer payments, the payment due date is a date agreed between the employer and us, normally the 22nd of the month following the month to which the payment relates. In any other case, the payment due date is the date agreed between you and us. pension credit and pension credit rights. If you become divorced or your civil partnership is dissolved and you are awarded a pension credit in respect of your exspouse s or ex-civil partner s benefit under a Registered Pension Scheme, you can transfer this pension credit to the Scheme. If on divorce or dissolution your ex-spouse or ex-civil partner is awarded a pension credit in respect of your benefits under the Scheme, he or she may become a member of the Scheme in order to benefit from the pension credit. In either case, moneys representing the relevant pension credits are invested under a policy for the individual and he or she will then have pension credit rights under the Scheme. plan. The stakeholder pension plan that has been set up for you under the Scheme. plan charge. This is the charge we make under the Policy. It is explained in the appendix. plan year. A period of 365 or 366 days, commencing on a date normally agreed between the sponsor or employer and us. Policy. This document together with the appendix and Policy schedule(s). The Policy is issued to you. The Policy contains terms providing for the receipt and investment of payments and for the payment of your benefits. Policy schedule. A document which forms part of the Policy. Among other things, it sets out details of the payments to be made to your plan and the investment options selected. It is a very important document because it provides evidence of the contract. "Prudential". The Prudential Assurance Company Limited, which is a member of the Prudential group. It should be noted that in the context of the Policy, "Prudential" does not include "Prudential Financial Planning", which is an advice service provided through another company from within the Prudential group. 8 Policy Document

9 Prudential funds. These are funds that are managed within the Prudential group. Prudential group. Prudential plc and its subsidiaries as defined in the Companies Act "Prudential Stakeholder Website". The website at: "qualifying scheme". A pension scheme which meets the requirements set out in section 16 of the Pensions Act 2008 and regulations made under that section. "reasonable notice". This means that we must tell you before we make a change and we must give you a reasonable amount of time, given all of the circumstances, to take any action or make any decisions which are needed, or which you may wish to take, on account of the proposed change. When giving reasonable notice, we will take account of all the circumstances of the change: for example, the length of notice that we can give may be influenced by legislative or regulatory requirements, or by an external entity such as an external company. Registered Pension Scheme. A pension scheme registered in accordance with section 153 of the Finance Act 2004, or deemed registered in accordance with paragraph 1 of Schedule 36 to the Finance Act Rules. The Rules of the Scheme, as amended from time to time. Scheme. The Prudential Stakeholder Pension Scheme. sponsor. The employer or other sponsoring organisation which set up the grouped membership through which you have joined the Scheme and taken out your plan. If you change employment after joining the Scheme, you may not necessarily have any further connection with the sponsor. "Stakeholder Regulations". The Stakeholder Pension Schemes Regulations 2000 (SI 2000/1403) as amended. Technical Guide. The explanatory guide issued to you once you are accepted to membership of the Scheme. unit. The value of each fund is divided into equal parts, and each part is called a unit. unit price. Units in funds are bought and sold at the unit price. The unit price which applies on any particular day will be the price which is calculated by reference to the valuation (or adjusted valuation) made on that day. Policy Document 9

10 unit price date. This is the date on which the unit price used in relation to buying and selling units as part of any particular transaction is set. The unit price date which applies is determined by reference to the date on which we receive all of the information (and the payment if applicable) necessary to carry out the transaction. The unit price date used may vary between the different funds due to the different dealing cycles of the companies to which the funds are linked. This is explained further in the Unit Price Dates leaflet available from us. "working day". This is any day that Prudential is open for business. It does not include: > Saturdays; > Sundays; > Bank Holidays; and > any other public holiday and days that we, or any other organisation that performs any administrative or investment function on our behalf, are not open for business (for example, around public holidays). 2. Payments 2.1 Types of payments The following payments to the Scheme can be accepted under the Policy: (a) payments by you or on your behalf. In general, payments made on your behalf by a third party are treated as payments made by you; (b) payments by your employer, if you are employed; (c) payments representing rebated basic rate tax relief on your personal payments; (d) transfer payments in respect of you (including transfers-in of pension credit rights) from other pension schemes and policies allowed under the Rules; (e) any other payments that HMRC allows and we agree. All payments to the Scheme will be made to us. 10 Policy Document

11 Payments from you or your employer may be a series of regular payments or specified single payments. Regular payments may be for a specified amount or may in some circumstances be a percentage of your earnings (see section 2.4). 2.2 Applications (a) If the Scheme is being used as an automatic enrolment scheme, you will not be required to complete an application form before you join the Scheme. If the Scheme is not being used as an automatic enrolment scheme, you will be required to complete an application form (and whatever other forms we need) before you join the Scheme. We will accept your application, provided you are eligible and the application complies with all regulatory requirements. If these conditions are not met, we are not under any obligation to accept your application, and we can return any money sent to us in respect of your application. (b) You may be required to complete a separate application form for each new type of payment that is made. One application form can cover several types of payment made at the same time. (c) Applications may be made via the Prudential Stakeholder Website or by telephone (see section 1.3). Paper application forms are also available from us. 2.3 Required information Depending on whether or not the Scheme is being used as an automatic enrolment scheme, we cannot accept payments until we receive all the information and completed forms we require. Some information may be received by us direct from your sponsor or employer. 2.4 Regular payments as a percentage of earnings (a) If your regular payments are described as a percentage of earnings, then your payments will be based on a definition of earnings already agreed with us by your sponsor or employer for your grouped membership. (b) The definition of earnings may be based on basic earnings or may include fluctuating amounts such as bonuses and overtime. (c) You can obtain details of the definition of earnings selected for your grouped membership from your sponsor or employer. Policy Document 11

12 (d) If you cease to be employed by an employer connected with the sponsor and decide to continue making regular payments, you will not normally be able to continue to link regular payments to earnings. 2.5 Payment due date (a) Where payment is made through your employer, all payments (whether regular or single payments) made by you or your employer must be received by us on or before the payment due date. In order to help ensure that the payments are received on time, we will normally agree an expected payment date with your employer which will be some days before the payment due date. (b) Where payment is being made by direct debit mandate from your own account, or by other means agreed with us, there is no requirement for payment to be made by the payment due date. However, we will inform you of nonreceipt of such payments. Where payment is being made by direct debit mandate, we will buy units in anticipation of receipt of your payment. If the payment by direct debit mandate is subsequently not received, we will sell the units that had been bought in advance. (c) The non-receipt of regular payments made by your employer may have serious consequences for any life cover for you. Section 16.8 contains further information on this. 2.6 Increasing, reducing, stopping or suspending payments (a) You can at any time increase or reduce your regular payments, stop making regular payments or suspend payments for a period specified by you. You should give us at least 30 days notice of your intention to increase, reduce, stop or suspend payments, so we can make the necessary arrangements. (b) Your employer can also increase, reduce, stop or suspend regular payments, subject to your contract of employment. This may affect any life cover you have taken out. (c) If the Scheme is being used as an automatic enrolment scheme, you can decide to stop making payments within the opt-out period. Special rules apply. Your employer will tell you 12 Policy Document

13 what you need to do. If your opt-out is valid, you will receive a refund of any payments you have made to the Scheme and your employer will receive a refund of any payments it has made to the Scheme in respect of you. You will be treated as if you had never made any payments to the Scheme. (d) If you wish to resume regular payments after a period of suspension, you will have the following options: (i) maintain your current investment instruction for future payments; or (ii) change your investment instruction for future payments (see section 9); or (iii) change your investment instruction for future payments and switch some or all of the units held under your plan and use the value realised to buy units in a different fund or funds (see sections 9 and 10). Note: If you redirect future payments to the lifestyle option or if payments are being allocated to the lifestyle option as the default fund relevant to your plan, all existing units allocated to your plan will be included in the automatic switching when this is carried out (see section 6.3). 2.7 Payment limits Minimum payments are covered in the appendix. There is no maximum payment that can be made to the Scheme. There is, however, a limit set by the Government above which a tax charge will apply. This is covered in more detail in the Technical Guide. 2.8 Payments by you (a) While you remain employed by an employer connected with the sponsor, that employer will normally deduct your personal payments from your salary via payroll. Your employer will send the payments to us, normally by direct transfer from its own bank or building society account. (b) If you cease to be employed by an employer connected with the sponsor (or if you are self-employed or not employed), then regular payments by you or payments made on your behalf, must normally be made by bank or building society direct debit mandate. Other payment methods are possible but not cash, credit card or debit card. Policy Document 13

14 (c) If the Scheme is being used as an automatic enrolment scheme, you will make payments to the Scheme that will, as a minimum, equal the difference between the payments made by your employer and the minimum payments required under the automatic enrolment legislation. This does not prevent you from increasing, reducing, stopping or suspending payments in accordance with section General (a) Payments under an arrangement are used to buy units under your plan in the funds selected. (b) The final regular payment payable to your plan is normally the last payment due immediately before the chosen pension date. (c) If you have not taken benefits from an arrangement by the chosen pension date, you can continue to make payments (subject to choosing a new chosen pension date). (d) Once all the units under an arrangement have been sold to provide benefits or a transfer-out, no further payments can be accepted to that arrangement. Any further payments will be held under a new arrangement. 14 Policy Document (e) Subject to section 2.9(f), in the case where you are phasing benefits (see section 11.2), further payments can be accepted to any remaining arrangement until the units under that arrangement are sold (or further subdivided) to provide benefits. (f) No payments can made be to your plan after your 75th birthday. 3. Transfers-in You can arrange to have benefits from other pension schemes or policies under which you have rights to be transferred to the Scheme. We will ensure that we comply with the Rules and we meet all regulatory requirements before accepting the transfer payment. Any such payment will be accepted under your plan as a single payment. On the date that all of the necessary forms and requirements have been completed and satisfied and the transfer-in has been received by us, we will use the money to buy units under your plan, using the unit price(s) described in section 8.

15 4. Policy schedules 4.1 Content of Policy schedule We issue one or more Policy schedules in respect of your plan. Between them all, the Policy schedules issued will contain the following information: > your chosen pension date for your plan; > details of any regular payments and of any single payments that you have agreed will be made into your plan; > details of any transfers-in from other pension schemes and policies received by your plan; > how payments will be split between the funds selected; > details of any life cover that you have taken out. 4.2 Issuing Policy schedules A Policy schedule is issued when: > you or your employer start regular payments for the first time; > you or your employer change the rate of existing regular payments; > you add life cover to the Policy or the existing level of life cover is changed; > you or your employer make a single payment; > we receive, on your behalf, a transfer-in from another pension scheme or policy. You should keep all in-force Policy schedules together with the Policy. We will issue a replacement Policy schedule if for any reason a previous Policy schedule was incorrect or needs to be updated. Policy Document 15

16 5. Fund options 5.1 Constitution of funds Prudential funds are established by us but may be linked to similar funds established by other companies within the Prudential group. The Prudential funds available and the company to which they are linked may change from time to time. Externally-linked funds are established by us (or another company within the Prudential group) but are either: (i) invested in units or shares of externally-managed collective schemes by means of agreements between the relevant external company and us (or another company within the Prudential group); or (ii) linked to funds of external companies which are life assurance companies. These links are made available by means of agreements between the relevant external company and us (or another company within the Prudential group). This means that although all payments in respect of you are invested in the Policy, the investment return will reflect the performance of the corresponding external fund, subject to deduction of charges. You do not have any contract with the external company. Section 7.3 describes how funds can be closed or withdrawn and how new funds can be added. 5.2 Valuation of fund assets Funds may be valued on each working day, but may at the relevant company s discretion, be valued at longer intervals. Assets may be valued in different ways and the decision of the relevant company, whether us (or another company within the Prudential group) or an external company, on all valuation issues is final. The value of each Prudential fund is determined by us or another company within the Prudential group. We base the value of the externally-linked funds on the values that the external companies decide upon in respect of their own corresponding funds. In all cases, the valuation used must be demonstrably fair. 16 Policy Document

17 5.3 Fund values and unit prices (a) Prudential funds The value of a Prudential fund is either based on the value of the assets relating to it, or, where the Prudential fund is invested solely in funds operated by another company within the Prudential group (for example, unit trusts or OEICs operated by another company within the Prudential group), on the unit price supplied to us by the other company. Certain adjustments are then made to that value. Any such adjustments must be permissible within the terms of the Stakeholder Regulations. In some cases, there will be a range of values that can be placed on assets and therefore on the value of a Prudential fund. A number of factors will be relevant. The main factor when deciding how to value an asset is whether the total amount being paid into a Prudential fund (including any underlying fund) is more or less than the total amount being paid out. If more money is being paid in, we, or the relevant company from within the Prudential group, may need to buy more assets. In such a case, the purchase price of assets will normally be used in valuing the Prudential fund (or underlying fund). If, however, more money is being paid out of the Prudential fund (including any underlying fund), the sale price of assets will normally be used in valuing the Prudential fund (or underlying fund). We, or the relevant company from within the Prudential group, also have complete discretion to choose to base the value of the Prudential fund on asset values that lie between the purchase and sale prices. Because of the potentially daily switches between purchase and sale valuation bases, there may be day-to-day fluctuations in the unit price, even though the market appears to be relatively stable. (b) Externally-linked funds External companies value their own underlying funds. Policy Document 17

18 We base the value of each externallylinked fund on the unit price or prices supplied to us by the relevant external company. Where the external company provides unit prices based on both purchase and sale valuations of their underlying fund, we have discretion to choose the unit price on which to base the value of the externally-linked fund (including a unit price that lies between the values supplied by the external company). Otherwise, the value of the externally-linked fund is based upon the single unit price supplied by the external company. (c) General Other methods of valuation may be used. In choosing any other method we (or another company within the Prudential group) or the external company, will act in a fair and reasonable manner. Asset valuations and unit price calculations are carried out with care, but on some occasions mistakes may occur. If this happens, the unit price will normally be corrected once the mistake has been detected and it is our practice to do so in relation to the Prudential funds. If, however, the mistake is due to an error outside our control and we are unable to obtain compensation for the mistake (for example, an error in pricing the fund underlying an externally-linked fund due to factors outside the external company's control), we reserve the right not to correct the mistake retrospectively. 5.4 Calculation of unit prices The unit price is the value of the fund divided by the number of units in issue (subject to any rounding). If, for any reason, the value of a fund cannot be obtained by valuing the assets, the unit price may be calculated by making an adjustment to the previous day s unit price. This adjustment will reflect the way in which the values of the underlying assets may have changed. When calculating unit prices for Prudential funds, we: > round our calculations up by one tenth of a penny or less, if we decide to value the relevant Prudential fund on the basis of the purchase price of assets; and 18 Policy Document

19 > round our calculations down by one tenth of a penny or less, if we decide to value the relevant Prudential fund on the basis of the sale price of assets. When calculating unit prices for externally-linked funds, we round our calculations in accordance with the rounding methods used by the relevant external company. Irrespective of the basis of the fund valuation and/or rounding methods, the same unit price will be used for both buying and selling units on any day. In some circumstances, a charge called a dilution levy may be applied to a fund. This type of charge covers the cost of either buying assets (where more people are investing than disinvesting) or selling assets (where more people are disinvesting than investing). If such a charge applies, it will normally be collected via the unit pricing process. A dilution levy is not designed to make a profit, but to cover expenses. Any dilution levy will be in line with reductions in members rights permitted by the Stakeholder Regulations. 6. The Lifestyle Option 6.1 General (a) The Lifestyle Option is an investment option that uses a combination of the funds available under the Policy. It: > links investment under the Policy in early years to funds which aim to provide growth ahead of inflation, but which carry a relatively high degree of volatility risk; and then > gradually changes the investment under the Policy to funds designed to provide a lower degree of volatility risk and greater stability as you approach your chosen pension date. (b) The Lifestyle Option changes investments under the Policy automatically, without the need for you to request switches or change your investment instructions for future payments. Policy Document 19

20 6.2 Profiles (a) The Lifestyle Option uses a combination of funds known as a "profile".there are standard profiles designed by us. There may also be profiles specifically designed for your grouped membership. Details of the profiles available under your plan are set out in the Fund Guide. (b) Certain funds may not be used under the Lifestyle Option. Conversely, there may be certain funds that are accessible only via the Lifestyle Option. 6.3 Selection and coverage of the Lifestyle Option (a) You can select the Lifestyle Option at any time. (b) You can cancel or override the Lifestyle Option at any time (see section 6.7). (c) If you select the Lifestyle Option, it must apply to all arrangements and all payments to your plan. This means that all payments to your plan will be applied to the funds specified by the relevant profile, and all units allocated to your plan will be included in the automatic switching when this is carried out. (d) When you select the Lifestyle Option, all existing units allocated to your plan at that date will be switched immediately to the funds specified by the relevant profile. You will not be able to select any other funds outside of the relevant profile. 6.4 Automatic switches and fund selection for payments (a) The Lifestyle Option works by making automatic switches for a set period up to your chosen pension date. Units already allocated to your plan are automatically switched in pre-set proportions into the pre-selected funds at regular intervals; under the standard profiles designed by us switches are always carried out monthly. (b) We choose the days on which the automatic switch and redirection is made. Switching will normally take place over the same dates each month, except where the usual dates are not working days. (c) On the day selected by us, we sell either: > all the units then allocated to your plan under the Lifestyle Option; or 20 Policy Document

21 > the amount needing to be switched. The value realised is used to buy new units in line with the relevant profile. (d) The sale of existing units and the purchase of new units cannot normally take place on the same day, but we will effect all transactions as soon as reasonably possible. For example, the new units may be bought on a date and using the relevant unit price(s) some days later than the date the original units were sold. This is because there is a lead-time involved in making unit prices available and the new units cannot be bought until the value realised by the sale of the existing units is known. Where external companies are involved, transmission of data to and from these companies may extend the lead-time. The prices of units can, as always, go up or down during that time and this risk is borne by you. No interest will be payable during the period between the sale of the existing units and the purchase of the new units. (e) The exact unit price dates and the time lapse between the sale and purchase of units will depend on the funds involved and the dealing cycles of the companies involved. Details can be found in the Unit Price Dates leaflet available from us. (f) The proportions are not monitored or realigned in the period between the dates on which the automatic switches take place. (g) Payments made to your plan are automatically split between the preselected funds at the relevant stage of the profile. 6.5 Delay in selling and buying units Section 6.4(d) explains that there will normally be a time lapse between selling and buying units under the Lifestyle Option. In addition to this time lapse, there may on occasions be a delay in selling and/or buying units in the circumstances described in section 12. If a delay under section 12 applies at the time we expect to carry out automatic switches and redirections under the Lifestyle Option, we will process the switches and redirections at the end of the period of delay (unless in our opinion this would not be fair and reasonable), using the relevant unit price(s) then applicable. Policy Document 21

22 6.6 Change to chosen pension date effect on the Lifestyle Option (a) If your chosen pension date is changed (see section 14.1), we will adjust the pre-set switches and the investment of future payments according to the relevant profile, so that they are scheduled around your new chosen pension date. (b) A change to your chosen pension date may require an adjustment to the way your plan is then split between the funds. Except where a delay under section 12 applies (and subject to section 1.2), we will make any required switches at the next date(s) on which automatic switching is due to take place. Future payments will immediately be directed to the funds in the new proportions according to the profile. 6.7 Cancelling or overriding the Lifestyle Option (a) You can, at any time, cancel the Lifestyle Option by requesting us to remove it or by removing it yourself via the Prudential Stakeholder Website. If this happens, all automatic switching will cease and we will stop allocating payments to the Lifestyle Option. If you cancel the Lifestyle Option, you need to give us new investment instructions for future payments. Unless you request a switch of existing units when you cancel the Lifestyle Option, your existing savings will remain invested in the funds to which they were allocated under the Lifestyle Option. (b) You can temporarily override the Lifestyle Option by requesting a switch under section 10. The Lifestyle Option will then be overridden until the next date on which automatic switching is due to take place. At that time the relevant profile will be reinstated. 6.8 Changes to the Lifestyle Option We can change the terms of the Lifestyle Option. We will give you (if you have selected the Lifestyle Option) at least one month's notice of any intention to change the terms of the Lifestyle Option. We will act fairly and reasonably in the way that we do so, having regard to our duty to protect your interests and those of other policyholders. 22 Policy Document

23 Section 7.3(d) explains that we can decide that certain funds will no longer be available. We will, where reasonably possible, give you (if you have selected the Lifestyle Option) at least one month's notice of any proposed fund changes that may be relevant. 6.9 The Lifestyle Option and your personal circumstances We are unable to accept any responsibility for the appropriateness of any of the fund selections and pre-set switches and redirections under the Lifestyle Option, to your own particular circumstances. This applies irrespective of whether you have selected the Lifestyle Option as your investment choice or whether payments have been allocated to it as the default fund relevant to your plan. 7. Units, ownership of assets, changes to funds and restriction on Prudential's liability 7.1 Units Units are not property capable of ownership. They are our method of recording the amounts and dates of payments and they enable us to calculate the value of your benefits. 7.2 Ownership of assets (a) Prudential funds We, or another company within the Prudential group, own all the assets of the Prudential funds in our own right and not as trustee for policyholders. But when we make decisions relating to the investment and valuation of assets, we will always act in good faith in attempting to protect the interests of all affected policyholders and shareholders. We aim to strike a fair balance between the interests of: (i) our policyholders and our shareholders; (ii) different classes of policyholder; and (iii) individual policyholders. Policy Document 23

24 (b) Externally-linked funds All the assets of the underlying funds of external companies are owned by those companies. Any policies issued by them to enable us to offer externally-linked funds are owned by us. Any contracts involving external companies are with us. There is no contractual relationship between the external companies and you. 7.3 Changes to funds (a) Changes to units We can change the way we record units and change the number of units issued in the case of any particular fund (for example, we may combine or divide the existing units) and make corresponding changes to the unit price, but we will not do so in any way that disadvantages you. If we make such a change, we will notify you at an appropriate time, taking into account all the circumstances of the change. (b) Changes to investment objectives The investment objectives of any one or more of the funds can be changed at any time. We will give you reasonable notice, if we make a material change to the investment objectives of a fund and there are units of that fund then held under your plan. The investment objectives are outlined in the Fund Guide. (c) New funds We can, at any time, introduce new funds. Any new funds may be subject to different terms. We may also introduce new fund options that are linked to or invest in assets other than collective investment schemes and life assurance company funds. We do not give you notice when we introduce new funds or new fund options. Information about the current funds is available in the Fund Guide. 24 Policy Document

25 (d) Closing, merging, changing, winding-up and withdrawing funds or investment options We can also: (i) close any one or more of the funds to future investments (including switches under sections 6.4 and 10); (ii) merge or wind-up any one or more of the funds; (iii) change the default fund; (iv) withdraw the option to invest in any one or more of the funds; (v) withdraw or close to future investments (including switches under section 10) investment options such as the Lifestyle Option. (e) Notice to you and replacement fund We will exercise our power to close, merge, change, wind-up or withdraw a fund or an investment option only for important legal or commercial reasons (for example, if a fund becomes too small for it to be cost-effective for us to operate that fund). We will act fairly and reasonably in the way that we do so, having regard to our duty to protect your interests and those of other policyholders. Before we exercise this power, we will give you reasonable notice, if at that time: > there are any units of the affected fund held under your plan; or > your plan is invested in the affected investment option; or > the affected fund or investment option is one of the principal features of the Scheme. A fund would, for example, be considered a principal feature if it was the only fund of its type available under the Scheme. We will seek your instructions for any amounts that need to be disinvested from the relevant fund. If we do not receive instructions within the timescale specified in the notice, we will switch the units in the relevant fund and redirect future payments either: (i) to units of the fund that has the most similar investment objectives to the closed, merged, wound-up or withdrawn fund; or failing that (ii) to the Prudential Cash Fund (or any successor fund having the same or similar investment objectives). Policy Document 25

26 If we change the default fund, we will at the end of the notice period (unless you instruct us otherwise) switch units and redirect future payments to the new default fund. Where the fund to be closed, woundup, merged or withdrawn is used under the Lifestyle Option, we reserve the right not to give any notice if we are providing a replacement fund and this replacement fund has broadly similar investment objectives to the closed, wound-up, merged or withdrawn fund. 7.4 Restriction on Prudential's liability Prudential's liability under any fund that it makes available under your plan cannot exceed the value of the units allocated to your plan as derived from the assets underpinning that fund, whether these assets be real assets, an interest in another fund or an interest in a reinsurance policy effected by Prudential to reinsure its liability under a fund. In particular, for an externally-linked fund or a fund that is provided by, or invests solely in funds operated by, another company within the Prudential group (a "Group Fund"), Prudential's liability under your plan is limited to the value of the units of that externally-linked fund or Group Fund that are allocated to your plan, as derived from the assets underpinning that externally-linked fund or Group Fund. So, for example, if the external company, or the other company within the Prudential group providing or operating the Group Fund, was to become insolvent and as a result the value of the units of the externally-linked fund or Group Fund allocated to your plan was significantly reduced, Prudential could only pay out under your plan up to the reduced value of those units. In addition, we are not liable for any losses caused by the acts and omissions of an external company in respect of its own fund and/or the externally-linked fund. 26 Policy Document

27 8. Using payments to buy units 8.1 General When buying units, payments are allocated to the funds in the way requested by you. The maximum number of funds in which you can invest at any particular time is set out in the appendix. The allocation between the funds that you have selected is set out in the relevant Policy schedule. If you do not make a choice, payments are used to buy units in the default fund. 8.2 Unit price dates We will buy units once we receive the relevant payment together with all of the information and forms we require. The information and forms may be sent via the Prudential Stakeholder Website. The unit price dates used depend on the funds selected. Details can be found in the Unit Price Dates leaflet available from us. A later unit price date may be used if there is a delay under section 12, or if we do not have all of the information and forms we need to buy units when we receive the payment as explained in section 8.3. Section 1.2 explains how we treat items received on a day which is not a working day or after a certain time on a working day. Where payment is being made by direct debit mandate, we assume that the payment has been received by us on the payment due date and buy the units on the relevant unit price date. If the direct debit mandate fails, we will make an appropriate adjustment to your unit holding. Irrespective of the means that are used to send the information and forms, our decision on whether we have received all of the information and forms we need is final. Policy Document 27

28 8.3 Missing information If we do not have all the information and forms we need when we receive the payment, we will either: > hold the money in a separate account outside the Scheme. In such a case, the units will be bought once we receive all the items we require, using the unit price date(s) in accordance with section 8.2; or > return the money to the person who paid it. No interest is paid on money held or returned in either of these circumstances. 9. Change of investment instructions for future payments If you want to change your investment instructions for future payments, you should either: (a) instruct us by telephoning the Prudential Stakeholder Customer Service Centre (see section 1.3); or (b) instruct us using the Prudential Stakeholder Website. The next payment we receive after carrying out your change of investment instructions will be invested according to your new instructions. The maximum number of funds in which you can invest at any particular time is set out in the appendix. 10. Switching between funds 10.1 Instruction You may instruct us to sell some or all of the units held under your plan, and to use the value realised to buy units in a different fund or funds. You should either: (a) instruct us by telephoning the Prudential Stakeholder Customer Service Centre (see section 1.3); or (b) instruct us using the Prudential Stakeholder Website. The maximum number of funds in which you can invest at any particular time is set out in the appendix. Where there is more than one arrangement under your plan, the new units will be allocated to the same arrangement as the original units. 28 Policy Document

29 Once a switch instruction has been received by us, you cannot withdraw it unless we agree. We may allow you to revoke a switch instruction if we have invoked our powers to delay buying and selling units under section Unit price dates and dealing cycles (a) When we receive an instruction to switch, we will sell and buy the relevant units on the relevant unit price date(s), unless a delay applies as described in section 12. (b) The exact unit price dates used for selling and buying the units depend on the funds selected. The unit price dates will be determined by us based on the dealing cycles of the relevant companies. Details can be found in the Unit Price Dates leaflet available from us. For example, the new units may be bought on a date and using the relevant unit price(s) some days later than the date the original units were sold. This is because there is a lead-time involved in making unit prices available and the new units cannot be bought until the value realised by the sale of the existing units is known. Where external companies are involved, transmission of data to and from these companies may extend the lead-time. The prices of units can, as always, go up or down during that time and this risk is borne by you. No interest will be added to the value realised from the sale of units for the interim period between sale and purchase. (c) The sale of existing units and the purchase of new units cannot normally take place on the same day, but we will effect all transactions as soon as reasonably possible. Policy Document 29