key features of your capital and income bond

Transcription

1 PROTECTION PENSIONS INVESTMENTS SOLUTIONS key features of your capital and income bond The Financial Services Authority is the independent financial services regulator. It requires us, Skandia, to give you this important information to help you decide whether our Capital and Income Bond is right for you. You should read this document carefully so you understand what you are buying and then keep it safe for future reference.

2 contents at a lance about skandia 4 enabling intelligent investment choice aims 5 the capital and income bond and its benefits your commitment 6 what you have to do as the investor risks 7 factors that could affect your bond s performance questions and answers 8 Q1. could the capital and income bond be right for me? 8 Q2. is my money guaranteed? 8 Q3. what might I get back? 8 Q4. where can I find out about charges? 9 Q5. do you charge for fund switches? 9 Q6. what funds can I invest in? 9 Q7. what are unit-linked funds? 10 Q8. how will I know how my bond is doing? 10 Q9. can I take money out? 10 Q10. how do I make payments or withdrawals? 11 Q11. what happens to my bond if I die? 11 Q12. what about tax? 11 Q13. what if I put my bond into a trust? 12 Q14. can I change my mind? 12 other information 13 contact details 13 complaint procedures 13 about the terms and conditions 14 compensation scheme 14 classifying our investors 14 2

3 please read this document carefully The purpose of this Key Features Document is to give you a clear and balanced summary of the information you need to help you make a decision about the Capital and Income Bond. Reading financial literature can be daunting, so we try to make our brochures and other documents as clear as possible, with no small print. If technical expressions are unavoidable, we also include an explanation in plain English. We test our literature regularly to make sure that it can be understood by our customers. Please read this Key Features Document in conjunction with your personal Key Features Illustration, enclosed. 3

4 about skandia Skandia Life Assurance Company Limited, who provides this Capital and Income Bond, is part of the Skandia UK Group of companies, which is owned by Old Mutual plc. Old Mutual is an international financial services group with its headquarters in London. As a FTSE 100 Company, it is one of the 100 largest companies listed on the London Stock Exchange. Having launched in the UK in 1979, the Skandia UK Group now manages 24 billion of investors money* in pensions, tax-efficient investments and protection products. * As at 31 March enablin intelli ent investment choice If the name Skandia is not familiar to you, that s because we don t sell or promote our products directly to customers. Instead we deal only through financial advisers. We believe that decisions about your financial future are so important that you should always seek expert financial advice. We do all we can to make sure that the people who are advising about our products fully understand them and the benefits and risks that need to be considered. We also try to make our product information as clear as possible in order to ensure you have all the information you need to make an intelligent investment choice. 4

5 key features of your capital and income bond aims the capital and income bond and its benefits The Capital and Income Bond aims to provide a flexible method of investing your money, with the potential for growth, over the medium to long term. It is designed to allow your capital to grow while you take regular, tax-efficient withdrawals. With a choice of more than 400 unit-linked funds from more than 40 fund management groups*, the Capital and Income Bond enables you to spread and adapt your investments, as you wish, according to your financial goals and your attitude to risk. Because it is structured as a life assurance policy, it also offers the opportunity to take advantage of certain tax benefits, depending on your personal circumstances and requirements. When used in association with a trust, it can help to reduce your inheritance tax (IHT) liability. Your financial adviser will have discussed these tax issues with you. The Capital and Income Bond enables you to: have easy access to your money, either through tax-efficient regular withdrawals of up to 5% per year of your original investment or through one-off payments switch funds within your bond normally free of administration charges keep track of your investments conveniently and simply, with just one set of policy documents no matter how many funds you invest in cash in the whole or part of your bond whenever you wish benefit from life assurance cover of up to 101% of the value of your bond with the option of adding extra life cover if you wish. See Q6 what funds can I invest in? See Q1 could the capital and income bond be right for me? See Q9 can I take money out? See Q5 do you charge for fund switches? See Q11 what happens to my bond if I die? * Fund management groups are investment management companies that employ the expertise of specialist fund managers to run their portfolio of investments on behalf of both private and institutional investors. Examples are: Fidelity, BlackRock, Invesco Perpetual, Schroders and JPMorgan. 5

6 your commitment what you have to do as the investor You should be sure that you understand the features and risks of this product so you can decide whether it is likely to meet your needs and expectations in terms of income, capital growth and taxation planning. You must invest an initial sum of at least 10,000. You need to choose the fund or funds in which to invest your money. Your financial adviser can help you decide which funds are appropriate. To ensure that the Capital and Income Bond and your chosen funds continue to meet your needs, you should monitor their performance regularly, consider new funds that become available and make whatever changes (fund switches) may be necessary. Your financial adviser will be able to help you with this. Because this bond is designed to be a medium- to long-term investment, you should hold it for at least seven years. You can cash it in earlier but there are charges for doing so. You will also need to keep us informed about any future change of address or contact details so we can maintain efficient records for your benefit. See Q6 what funds can I invest in? See Q4 where can I find out about charges? o online Go online now to find out more about the Capital and Income Bond and the range of funds available for you to invest in: REGISTER ONLINE When you become a policyholder you can manage your investment simply and conveniently by registering online for personal valuations, fund performance reports and access to fund switching. If you are a trustee or representing a company which will be the policyholder then you will not be able to register for online facilities at this time. 6

7 key features of your capital and income bond risks factors that could affect your bond s performance All types of investment involve some risk. The Capital and Income Bond gives you access to a wide variety of investment funds, the value of which may fall as well as rise. This means that we cannot guarantee the amount you get back when you cash in your bond. It may be less than forecast in the enclosed personal Key Features Illustration, or less than you invested, for the following reasons. CHOICE OF FUNDS The funds available for you to invest in all have specific objectives and associated risks. These differ according to the assets held within them. If you choose emerging market funds, for example, that are invested in parts of the world with less well-established economies, their value could be subject to considerable price variations known as volatility. Similarly, some funds, such as those investing in property, can be difficult to sell and you might not be able to sell or switch from such funds when you want. Your Key Features Illustration accompanying this document describes the objectives and risks that relate to the funds you have chosen. If you don t review the choice of funds within your bond regularly and monitor their performance, they may fail to meet your expectations. If the funds in your bond do not match your attitude to risk (willingness to accept potential losses), they may not perform as you anticipate. CHARGES AND WITHDRAWALS The effect of charges may be higher than illustrated. For example you might decide to switch to funds with higher charges than those in your Illustration, or investment management costs may increase in the future. If you take greater withdrawals than originally planned, the value of your fund will be less than in the Illustration. TAX CHANGES Tax rules could change in the future. CANCELLATION RISK If you decide to cancel your bond within the first 30 days, its value could fall in the meantime and you will get back less than you invested. The section your commitment (facing page) will help you understand how you can manage some of these risks. See Q6 what funds can I invest in? See Q4 where can I find out about charges? 7

8 questions and answers Q1. could the capital and income bond be ri ht for me? If you are looking for a combination of investment growth and income and you can afford to commit a minimum lump sum of 10,000 for at least seven years, this could be the right investment for your needs. It involves more risk than bank or building society savings accounts, but the potential for growth is greater. Because the bond does not have a fixed term, it can stay with you for life. As your attitude to risk and your financial objectives change, you can switch your fund choices accordingly. If you have any questions about the suitability of this bond, its features and the funds you are intending to invest in, we recommend you speak to your financial adviser. Q2. is my money uaranteed? No, the value of your investment in the bond can go down as well as up and you may not get back the original amount invested. Q3. what mi ht I et back? The personal Key Features Illustration enclosed with this document gives examples of what you might get back. The projections shown are based on a range of assumptions about future growth rates, none of which are guaranteed. The amount you get back will depend on: how much you have invested how long your money has been invested the investment performance of your chosen fund or funds how much you have previously withdrawn the charges we have taken and also tax deductions from the funds any tax due when you cash it in. We work out the value of your bond daily, based on the total number of units you have in each fund. If the unit prices rise or fall, so will the value of your bond. See risks on page 7 See Q12 what about tax? 8

9 key features of your capital and income bond Q4. where can I find out about char es? Your personal Key Features Illustration enclosed gives details of the charges made for managing your bond and the investments within it, how the charges are taken, and the effect they could have on the value of your bond. Skandia, as provider of the bond, makes deductions to cover its set-up, administration and taxation costs. Fund management charges are reflected in unit prices. Your financial adviser s commission is paid for out of the charges made by Skandia. It does not represent an additional charge to you. These charges may be increased if the costs associated with your bond, or the funds within it, increase. If we have to do this we will let you know. Reasons could include, but are not limited to, changes in taxation and the law. EARLY ENCASHMENT We also make an Early Encashment Charge under certain circumstances. These include: if you cash in your bond, or withdraw more than 5% a year within the first seven years of making your initial investment or a top-up payment on death, in certain circumstances when the applicant, or one of the people whose lives are assured, was aged over 75 when a payment was made into the bond. The actual amount of any Early Encashment Charge will vary, depending on a number of factors. Q5. do you char e for fund switches? We do not normally make an administration charge for fund switches. We reserve the right to introduce a charge in the future, however, if the administration costs make this necessary. If we have to do this we will let you know. Q6. what funds can I invest in? The Capital and Income Bond offers you a choice of more than 400 unit-linked funds, managed by more than 40 fund management groups. They cover a wide spread of UK and overseas investments, including shares, government stocks, fixed interest securities such as gilts, corporate bonds and eurobonds and/or commercial property. Your financial adviser can help you choose the most suitable funds for your circumstances and needs. You can invest in up to 99 funds initially, and then in as many as you wish once your bond has started. You can change your choice of funds whenever you wish. You can get information about individual funds from your financial adviser or from us at See inside back cover of this document for your Key Features Illustration See Q7 what are unit-linked funds? See Q11 what happens to my bond if I die? For more information about the Early Encashment Charge see explaining the MultiBOND range, available from your financial adviser See Q7 what are unit-linked funds? See Q5 do you charge for fund switches? 9

10 Q7. what are unit-linked funds? Unit-linked funds are offered by life assurance companies as a way of making a range of investment opportunities available to their customers within an insurance product. Investing in this way means that you can take advantage of certain tax benefits not always available when making similar investments directly. Skandia s unit-linked funds invest on your behalf in a wide range of collective investment schemes, such as unit trust funds, and also directly into stocks and shares. These are known as the underlying funds or underlying assets. We work out the value of your bond daily, based on the total number of units you have in each unit-linked fund. If the value of the underlying fund rises or falls, so will the value of Skandia s unit-linked funds and your bond. The charges and tax applied to unit-linked funds are different from those applied to the underlying funds, which is why the prices quoted in the press will be different. In spite of these differences the amount you get back is directly linked to the performance of the underlying funds in which Skandia has invested your money. Q8. how will I know how my bond is doin? When you become a bondholder you will be able to register on our website at for: personal valuations fund performance reports fund switching facilities. If you don t have internet access, you can find out how your bond is performing either by asking your financial adviser for an update or by calling our valuation line on Q9. can I take money out? You can make withdrawals of up to 5% per year of the amount you have invested, without any immediate tax liability. You can take this payment monthly, quarterly, half-yearly or yearly. The minimum withdrawal we can pay is 50 and at least 500 must remain in the bond after any withdrawal. If you withdraw more than 5% per year during the first seven years, we will make a charge. You can find more details in the technical guide. As well as reducing the value of your bond, withdrawals may affect your life assurance cover. You should also consider any tax implications. To meet withdrawals, unless you specify otherwise, we will partially cash in the policies which make up your bond. Your bond is divided into between 10 and 100 separate policies. This can have tax advantages when you make withdrawals, since you can cash in individual policies without affecting the rest. See Q12 what about tax? See explaining the MultiBOND range, available from your financial adviser See Q11 what happens to my bond if I die? See Q12 what about tax? 10

11 key features of your capital and income bond Q10. how do I make payments or withdrawals? You must make all payments by cheque payable to: Skandia Life Assurance Company Limited. You can add to your investment whenever you like by making further payments of at least 1,000. If you want to make additional payments, take one-off withdrawals or switch funds either contact your financial adviser or write to us at our Head Office address. See contact details on page 13 You can cash in your bond at any time by writing to us at our Head Office, enclosing your policy documents. You should talk to your financial adviser first. Q11. what happens to my bond if I die? The bond is structured as a life assurance policy, which you can set up to cover your own life ( single life basis), or yourself and others ( joint life basis). In the case of joint lives you can decide whether the policy should pay out when the first person dies ( joint life first death ) or the last ( joint life last death ). When the relevant person whose life is assured dies, we will pay out 101% of the cash value of your bond. (So, if the cash value of your bond at death is 20,000, for example, the total amount paid out will be 20,200.) If you have chosen the option of adding more life cover, we will pay either the sum assured or the agreed benefit otherwise payable, whichever is greater. If you have put your bond under trust, we will pay the benefit to the trustees. Such payments may in certain circumstances be subject to an Early Encashment Charge. Q12. what about tax? PERSONAL TAX You will not normally have to pay any basic rate income tax or capital gains tax in connection with your bond. For more information about life cover see explaining the MultiBOND range, available from your financial adviser See tax under trust in Q12 what about tax? See Q4 where can I find out about charges? You may withdraw up to 5% of your original investment (plus any top-ups) each year for at least 20 years without any immediate liability to income tax but see TAX ON FUNDS (overleaf ). If you withdraw more than 5% a year, or withdraw over the years more than you invested, you may be liable to tax.* When you finally cash in your bond, you may have to pay income tax on any gain you have made. This could also affect your right to age-related personal relief and any entitlement to children s tax credit.* * The tax position of your bond may change in the future. You may be subject to additional taxes or costs which are not accounted for within the contract. Please refer to your financial adviser for advice about tax liabilities. continued over page 11

12 On the death of the life or lives assured, your bond is treated for tax purposes as though you had fully cashed it in just before the death. If you have set up your bond under trust it will be treated accordingly for tax purposes. See tax under trust below TAX UNDER TRUST Trusts offer a means of holding and managing assets, such as your bond, for people who may not be ready or able to manage it themselves. Used in conjunction with a will, they can also help ensure that your assets are passed on in accordance with your wishes after you die. When you set up your bond under trust, any liability to income tax will depend on several factors, including the type of trust and when the bond is cashed in. If you are thinking of cashing in a bond set up under trust, you should speak to your financial adviser as there may be a potential income tax liability. We strongly recommend that you speak to your financial adviser before making any decisions regarding trusts. For further information about setting up your bond under trust see explaining the MultiBOND range, available from your financial adviser TAX ON FUNDS The various funds that your money is invested in are subject to taxation on income and gains. This tax is paid by Skandia and is accounted for in the unit price quoted. This means that if you are a basic rate taxpayer you will normally have no further tax to pay on the proceeds (income and gains) of your investment. If you are a higher rate taxpayer, and you cash in all or part of your bond or take withdrawals exceeding the annual 5% allowance, you may have to pay tax.* The rate of tax payable on such withdrawals is the difference between the basic tax rate and the higher tax rate. In the tax year commencing 6 April 2009, this difference is 20%. * Please refer to your financial adviser for advice about tax liabilities. Q13. what if I put my bond into a trust? Putting your bond into a trust particularly for inheritance tax planning may mean that restrictions are necessary on certain features of the bond. Details of any such restrictions can be found in the relevant trust literature and in the trust documents. It is important for trustees to ensure that any changes they make to the bond do not breach trust conditions. Your financial adviser will be able to provide the relevant information. Q14. can I chan e my mind? Yes. When we notify you that your application for the Capital and Income Bond has been accepted and send you the appropriate documentation, we will remind you that you have 30 days to change your mind and cancel your application. You can do this by writing to the customer service centre at the address shown on the facing page in contact details. If you decide to cancel, we will give you your money back. If however the value of your investment has fallen in the meantime, you will not get back the full amount you paid in. 12

13 key features of your capital and income bond other information contact details If you need any further information about this product, please contact your financial adviser in the first instance. If you wish to contact us directly, you can do so in the following ways: Phone: Fax: By writing to: Skandia Life Assurance Company Limited PO Box 37 Skandia House Portland Terrace Southampton SO14 7AY. complaint procedures Customer satisfaction is very important to us at Skandia, but if you do have any cause to complain about the services provided, either by your financial adviser or by Skandia, there are clear procedures laid down by the Financial Services Authority to ensure that your complaint is dealt with fairly. You should write in the first instance either to your financial adviser if your complaint relates to the advice you have been given or if it concerns the service you have received from Skandia, to the Skandia Compliance Officer at the address above, and we will do everything we can to resolve the problem. If you are not satisfied with the response you receive you can complain to: Financial Ombudsman Service South Quay Plaza 183 Marsh Wall London E14 9SR Complaining to the Ombudsman will not affect your legal rights. 13

14 other information (continued) about the terms and conditions This Key Features Document gives a summary of the main features of the Capital and Income Bond. It does not include all the definitions, exclusions, or policy Terms and Conditions. For a copy of the policy Terms and Conditions, the investor s guide, explaining the MultiBOND range or for more information about the fund range, please ask your financial adviser or contact us directly. We reserve the right to amend certain contractual terms, some without prior notice, as explained in the policy Terms and Conditions. If we do so we will let you know in writing. The contract you are applying for is subject to the law of England and Wales. If your application is accepted, we will send you the policy Terms and Conditions confirming the law applying to the contract. You can also obtain a copy of the Terms and Conditions from your financial adviser. All our literature and future communications to you will be in English. We provide all disclosure documents in accordance with the pre-contract disclosure requirements applying in the United Kingdom. compensation scheme The Financial Services Compensation Scheme (FSCS) acts as a safety net for customers of financial services providers. If Skandia Life Assurance Company Limited cannot meet its liabilities, the FSCS may arrange to transfer your policy to another insurer, provide a new policy or, if these actions are not possible, provide compensation. For long-term insurance (such as pension plans and life assurance), the level of compensation you can receive from the scheme is as follows. Until 31 December 2009: the first 2,000 of a claim is protected in full above this amount, the Scheme covers payment to 90% of the value of a policy in liquidation. From 1 January 2010: the Scheme covers payment to 90% of the value of a policy in liquidation. There is no different protection for the first 2,000 of a claim. Further information about compensation arrangements is available from the Financial Services Compensation Scheme website classifyin our investors Under Financial Services Authority (FSA) rules we classify all our investors as retail clients, which means you benefit from the highest level of regulatory protection. 14

15 00000 Skandia Life Assurance Company Limited, which provides this Capital and Income Bond, is authorised and regulated by the Financial Services Authority. Skandia s products are available only through professional financial advisers. Skandia Life Assurance Company Limited is a provider of long-term life assurance. Calls may be monitored and recorded for training purposes and to avoid misunderstandings. Skandia Life Assurance Company Limited is registered in England & Wales under number Registered Office at Skandia House, Portland Terrace, Southampton SO14 7EJ, United Kingdom. Authorised and regulated by the Financial Services Authority with FSA register number VAT number Skandia fund platform gives you access to MultISA and MultiFUND provided by Skandia MultiFUNDS Limited and to products provided by Skandia Life Assurance Company Limited. When printed by Skandia this item is produced on a mixed grade material, which uses a combination of recycled wood or paper fibre from controlled sources and virgin fibre sourced from well managed, sustainable forests. PDF6153/ /July 2010