ADVISERS GUIDE TO END STATE SWITCHING

Transcription

1 RETIREMENT ACCOUNT ADVISERS GUIDE TO END STATE SWITCHING This information is for UK financial adviser use only and should not be distributed to or relied upon by another person.

2 THE RETIREMENT ACCOUNT FROM SCOTTISH WIDOWS IS DESIGNED TO HELP YOU MEET YOUR CLIENTS RETIREMENT NEEDS. IT OFFERS A WIDE CHOICE OF INVESTMENT SOLUTIONS FROM OUR SIMPLE GOVERNED INVESTMENT STRATEGIES TO OUR PANEL OF DISCRETIONARY FUND MANAGERS. END STATE SWITCHING IS AVAILABLE ON SCOTTISH WIDOWS PENSION FUNDS AND THE FUND SUPERMARKET AND MAKES IT SIMPLER TO MOVE CLIENTS HOLDINGS ACROSS THOSE FUNDS. This guide should be read in conjunction with other Retirement Account literature. If you have any further questions, please speak to your Scottish Widows Account Manager, or visit our website 1

3 PAGE 3 INTRODUCTION PAGE 4 STEP 1 HOW TO PERFORM AN END STATE SWITCH PAGE 6 STEP 2 IS THE CONTROL ACCOUNT IN OR OUT? PAGE 9 STEP 3 REGULAR PAYMENTS PAGE 10 STEP 4 SELECTING FUNDS PAGE 12 STEP 5 REMOVING FUNDS PAGE 13 STEP 6 MIRRORING FUND SELECTION PAGE 14 STEP 7 REVIEW INSTRUCTION SCREEN PAGE 15 STEP 8 SUBMISSION AND CONFIRMATION PAGE 17 APPENDIX RESTRICTIONS 2

4 INTRODUCTION We ve developed new functionality on Retirement Account, making it simpler to move clients holdings across internal and external asset classes where you want to restructure your client s Scottish Widows Pension Funds and Fund Supermarket holdings. You can now input your client s desired investment outcome, and our system will calculate the required sells, switches and buys across our Fund Supermarket and Scottish Widows Pension Funds. We call this End State Switching. There s no need to diarise to check if sale proceeds have been received into the Control Account before actioning buy transactions. As part of the switching process, you can also amend the value in the relevant Control Account, and mirror the new asset split across to any existing regular payments. This guide details how you can do an End State Switch, and how our system executes trades. 3

5 STEP 1 HOW TO PERFORM AN END STATE SWITCH First, you need to log on to the Adviser Extranet and search for your client s Retirement Account policy number under Existing Business. Click on the Manage Investments button in the Manage Investments section: Choose the relevant policy element and click on the Switch button in the Actions Available section. NB the Retirement Planning and Retirement Income elements will need to be added separately if you want to action an End State Switch on both elements. 4

6 Next, click on the select button in the Tell us your target fund allocation box. A drop down will then appear and you can now select the policy part(s) you wish to rebalance. If there is only one policy part, then only that one will show. If one or both policy parts have pending transactions, then an orange warning will appear instead of the tick box and you will not be permitted to proceed. (Pending transactions include trades, claims, or designations). Policies invested in Governed Investment Strategies, Adviser Portfolio or involving non-sterling funds are not supported by this switch type and a red warning triangle will appear on the policy part(s). Once you ve selected the part(s) to switch from, click Next and you will be prompted to confirm whether the Control Account will form part of your End State Switch instruction. If there are 2 valid policy parts available, the system defaults to show the Pension Fund first before the Former Protected Rights. 5

7 STEP 2 IS THE CONTROL ACCOUNT IN OR OUT? You can choose whether the Control Account is part of the fund selection (and so will have to have a percentage nominated) or whether the Control Account is separate to the fund selection (and so can be stated as a monetary amount or a percentage). An example request for Control Account In would look like: Current Split %Split SW Cash 15% SW American 15% SW Jupiter Income 15% SW Newton Oriental 5% SW Newton American 20% SW Property 15% Control Account 15% A request for Control Account Out would total only the funds to 100% and the Control Account would be separate and look like: New Split %Split Jupiter Strategic Bond 15% SW Property 15% SW American 10% M&G Global Macro Bond 15% Investec UK Alpha 15% Jupiter UK Growth 15% Liontrust UK Smaller Companies 15% Control Account 3,000 Control Account In Journey If your request has the Control Account IN as part of the End State Switch, click on Yes: 6

8 Where the Control Account has been entered IN as part of an investment, our system needs to convert the Control Account percentage into a cash amount in order to process the End State Switch instruction see below a generic example of how the conversion works, which can be found on the Review Instruction screen later in the process, but is shown here for your information. When the Control Account is included as a percentage in the new asset allocation, the Control Account will show as a fund choice instruction. Also, in the Investment split table, the total invested in funds plus the Control Account is used to make the total invested in the policy. The Control Account becomes part of the fund mix in this instance allowing you to select the desired percentage. 7

9 Control Account Out Journey If you don t want to include the Control Account as part of the new instruction, click on No. In the Review investment split table, the Control Account will now be shown separately from the amount invested in funds and will not appear as a separate row under the investment funds. You can still edit the amount desired in the Control Account by clicking on Edit in the Control Account box the amount can be expressed as a monetary amount or as a percentage. NB regardless of whether the Control Account is chosen as being in or out, if the Control Account has a negative balance, a warning will appear on screen: The Control Account needs to be brought to a minimum of 0 before proceeding. This can be done as part of the End State Switch. If there is any investment in sharedealing with StockTrade, a Discretionary Fund Manager, Commercial Property or a Fixed Term Cash Deposit, these will be displayed as part of the overall policy part value but are excluded from the End State Switch instruction. 8

10 STEP 3 REGULAR PAYMENTS If there are existing regular payments on the policy, a further prompt will appear after the Control Account question as you have the option to mirror the new fund allocation to be used for future regular payments each month. How this Works Certain rules apply when mirroring regular payments to the policy. You can only mirror if the new fund allocation is made up of: the Control Account plus not more than 19 Scottish Widows Pension Funds OR the Control Account plus not more than 18 Scottish Widows Pension Funds and not more than 20 Fund Supermarket funds. 9

11 STEP 4 SELECTING FUNDS Place the desired percentage in the white box under New Allocation, which will also provide the new monetary value alongside it. (You have the option to retain the existing fund selection and simply change the allocation %). 10

12 If the request has a change in fund choice, on the same screen you will also be able to add funds using the +Add Funds button: The Add Investments box pops-up. Search using SEDOL code functionality or by typing the fund name in the white box. The system will allow the policy to hold up to a maximum of 100 funds (by counting the undeleted existing funds plus any newly added funds). Note that this is further restricted if you are mirroring across to regular payments see Step 3 for details. Alternatively you can select Previous, this will return you to the switch type screen and retains any information entered onto the fund allocation screen. Fund Supermarket trade dates When a Fund Supermarket fund is newly added to the fund allocation and a regular trade is requested to be mirrored, a trade date for the Fund Supermarket fund(s) is required before confirming. (We normally recommend 5 days after the contributions are in). Any day between 1 and 28 can be selected. This is required so the contributions are in so the trade does not fail. This question will pop up if the system recognises that there are new Fund Supermarket funds in the policy. Once you re happy with the trade date you have selected from the dropdown, you need to select the funds. Alternatively you can select Previous, this will return you to the switch type screen and retains any information entered onto the fund allocation screen. 11

13 STEP 5 REMOVING FUNDS On the same screen you will also be able to remove funds that are no longer required: Remove existing funds by clicking on the dustbin alongside the desired fund under the Remove heading. The fund will be struck through and this will give an instruction to the system to sell 100% out of that fund. This action can be reversed by selecting Undo. Clicking on the dustbin against a newly added fund will return it to the fund picker. If the fund picker says you have reached the maximum of 100 funds, you are not able to undo the deletion of an existing fund. An error message will appear stating you must delete a newly added fund before undoing a deleted existing fund. Alternatively you can select Previous, this will return you to the switch type screen and retains any information entered onto the fund allocation screen. 12

14 STEP 6 MIRRORING FUND SELECTION If you selected both policy parts (Pension Fund and Former Protected Rights) of the element on the Switch Type screen at the start of the instruction, the next screen will ask if you would like to mirror the Former Protected Rights policy part to the same fund allocation as entered for the Pension Fund part. NB If two policy parts are chosen, the End State Switch will always begin with the Pension Fund side first and Former Protected Rights will always display the Control Account as chosen for Pension Fund. You can either select Same as Pension Fund or choose to Amend existing fund allocation for Former Protected Rights. If you choose Same as Pension Fund, the Former Protected Rights policy part will show, pre-populating with the funds/ trades and percentages as already chosen for the Pension Fund. You are, however, still able to amend the funds and/or Control Account if desired. If the Former Protected Rights choice is not to mirror the Pension Fund part, you can select Amend existing fund allocation, and then you can manually update the existing Former Protected Rights policy part to suit the request. You will now follow the same steps as per the Pension Fund part, adding in the fund choice(s) as desired from Steps 4 and 5. Once you are happy with the Former Protected Rights policy part fund allocation, select Next. 13

15 STEP 7 REVIEW INSTRUCTION SCREEN You will now be at the review instruction screen. Here you can review your selection. If you had selected to mirror the fund allocation to regular payments, and the Control Account was chosen as in, then a sentence will confirm the new fund allocation and Control Account percentages will be applied to future regular payments. If the Control Account was chosen as out you will be shown how the system will apply the new fund allocation to future regular payments, excluding the Control Account. If you want to make any changes at this stage simply hit button marked Previous which sits beside Submit instruction at the bottom right of the screen. 14

16 STEP 8 SUBMISSION AND CONFIRMATION When you are ready to proceed, select Submit Instruction. A pop up confirmation box will appear giving you the option to submit or cancel. NB When you hit Submit this will start the process and this cannot be reversed. After final submission, you will get to the Instruction Received screen, which will detail all the trades you have requested, and give you the options to print, to view pending trades, or to return to the Manage Investments screen for that policy. 15

17 End State Switch instructions normally take between 3 and 10 days to complete. You can track progress shortly after submitting your instruction, on the Pending Trades screen. The confirmation documents will be sent in the post in due course. Please remember that you ll need to return to Manage Investments to enter another End State Switch on the other element, if required. 16

18 APPENDIX RESTRICTIONS An End State Switch can only be processed if the following is true: The element is not undergoing a designation. The element is not claimed, or undergoing a claim (i.e. death notification). There are no pending trades. The policy is not linked to a portfolio. The policy/policy part is not solely invested in sharedealing with Stocktrade, the Discretionary Fund Managers, Commercial Property or Fixed Term Cash Deposits with or without the Control Account. The policy/policy part is not solely invested in the Control Account. The policy/policy part has sufficient funds to be able to disinvest into a negative Control Account to recover it to a minimum 0.00 balance. There is no ongoing bankruptcy order. There is no investment in non-sterling ( ) funds. It is advised to not enter an End State Switch at the same time as a monthly platform charge or regular trades are being processed as it will likely cause the End State Switch fund trades to fail. INFORMATION The information in this guide is based on Scottish Widows understanding of current tax rules and pension legislation. These may change in the future. Charges, terms and limits may change. Full terms and conditions are available on request. For up to date information and literature supporting the Retirement Account, visit This information is for UK financial adviser use only and should not be distributed to or relied upon by any other person. 17

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20 Scottish Widows Limited. Registered in England and Wales No Registered office in the United Kingdom at 25 Gresham Street, London EC2V 7HN. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number /17