Guidelines on Retirement and Death

Transcription

1 Guidelines on Retirement and Death These guidelines have been produced to assist scheme Members and their Advisers with the options available for payment of benefits on retirement and death from the pension schemes we provide. It does not cover retirement and death benefit options from other types of pension scheme. Please note that neither Whitehall Group (UK) Limited nor Whitehall Trustees Limited give financial advice and nothing in these guidelines should be considered as financial advice. We strongly suggest that you seek advice from an Independent Financial Adviser (IFA) or guidance from the Government s free advice service Pension Wise before making any decisions on your benefits. If you do not already have a Financial Adviser, information can be obtained from or telephone Contents Section Page Retirement Benefits 1. Introduction 2 2. At a Glance 2 3. Pension Age 3 4. The 3 5. Tax Free Lump Sums 5 6. Flexi-Access Drawdown 6 7. Uncrystallised Fund Pension Lump Sum 6 8. Small Pot Lump Sums 7 9. Annuities Retirement Benefits in Payment Prior to 6 th April 2015 (Capped Drawdown) Income Tax and Pension Payroll Risk Warnings In-Specie Payments 11 Death Benefits 14. Introduction Beneficiaries and Successor Beneficiaries Tax on Death Benefits Death Benefit Pension Income Options Death Benefit Lump Sum Options 13 1

2 1. Introduction The pension schemes we operate are known as Money Purchase or Defined Contribution. This means that the level of benefits payable on retirement or death is not fixed or guaranteed, but is dependent on the amount of funds available for you when you retire or die. You are able to choose which retirement option is best for you. Pensions paid in the UK are subject to income tax but not National Insurance. Your pension scheme will be geared to a Normal Retirement Date which is the expected date of your retirement under your contract of employment. We will write to you between four and six months before your Normal Retirement Date. At this point, we will remind you of your retirement options and the value of your pension plan with us. You are not required to commence retirement benefits at this time and it is also important to stress that you do not have to draw your retirement benefits from your pension arrangement and are free to shop around for the best deal to suit you. This is known as the Open Market Option. 2. At a Glance Those Retiring After 5 th April 2015 Those Retired Before 6 th April 2015 Flexi-Access Drawdown 25% of your fund is paid taxfree. You can draw the balance how you choose with no restrictions on amount or frequency. The balance is subject to income tax at your marginal rate. ongoing contributions are limited to 4,000 p.a. where you take a taxable income. Tax Free Lump Sum: Usually 25% of your pension fund Uncrystallised Fund Pension Lump Sum One-off lump sums paid from your pension fund. 25% is tax-free. The balance is subject to income tax at your marginal rate. ongoing contributions are limited to 4,000 p.a. Annuity This option continues to be available. New flexibility allows annuities to fluctuate (called Flexible Annuities). Guarantee periods are unlimited. Short term annuities are available. ongoing contributions may be limited to 4,000 p.a. in some cases. Small Pot Lump Sum Similar to Flexi- Access Drawdown. Designed for withdrawing all of a small fund. Up to three personal pensions or any number of occupational pensions can be paid where each does not exceed 10,000. ongoing contributions are not affected. These options are available from age 55 or on ill-health early retirement. They can only be paid if there is available. Continue receiving Capped Drawdown pension is determined by Government Actuary rates. pension is reviewed every three years. ongoing contributions are not affected. Convert to Flexi-Access Drawdown Your pension becomes unrestricted. ongoing contributions are limited to 4,000 p.a. 2

3 3. Pension Age Retirement benefits can commence at any age from age 55. There is no upper limit to the age at which retirement benefits must commence. Some people have what is known as a Protected Pension Age and they can commence retirement benefits before age 55, i.e. sports people or the police. This right must have existed before 6 th April Ill Health Early Retirement Retirement benefits can be drawn before minimum pension age of 55 on grounds of ill health. To pay ill health early retirement benefits, we must receive a letter from a registered medical practitioner confirming you are (and will continue to be) incapable of carrying on your occupation because of physical or mental impairment. You must have already ceased to carry on your occupation at this time. We also require full details of the impairment. Commencement of ill health early retirement benefits will be tested against the (see below). Serious Ill Health Lump Sum If you have a life expectancy of less than one year, all your uncrystallised funds can be paid as a serious ill health lump sum. If this is paid after age 75, the lump sum will be subject to 45% tax. If paid prior to age 75, it is paid tax free. We must see a letter from a registered medical practitioner explaining the nature of the illness and confirming life expectancy is less than one year. This must be provided before any benefits are paid. Payment of a serious ill health lump sum will be tested against your (see below). 4. The This is the upper limit on the total value of your combined pension arrangements which can qualify for tax exempt treatment. If your pension arrangements exceed this, you will pay a tax charge when you commence drawing retirement benefits in excess of the. The amount assessed against the is the combined value of your retirement benefits consisting of tax free lump sums and amounts used to pay pensions (even if you choose a nil pension). When you commence retirement benefits, the amount used towards payment is called a benefit crystallisation. The is changed by HM Treasury from year to year: Tax Year /07 1,500, /08 1,600, /09 1,650, /10 1,750, /11 1,800, /12 1,800, /13 1,500, /14 1,500, /15 1,250, /16 1,250, /17 1,000,000

4 Your combined pension arrangements are tested against the when you commence drawing retirement benefits or at age 75 if you have any uncrystallised funds at that time. These are called Benefit Crystallisation Events. If your benefits are drawn in stages, a separate test is carried out each time to establish whether you have exceeded the Allowance. Pension Protection There are a number of ways in which excess funds over the can be protected from the Lifetime Allowance Charge. Apart from Individual Protection and Tax Free Lump Sum Protection, these mean no further pension contributions can be paid for you or by you without losing the protection. Date Protection Regime Amount Protected 6 th April 2006 Enhanced or Primary Protection Any funds over 1,500,000 6 th April 2006 Tax Free Lump Sum Protection Accrued entitlement to a tax free lump sum over 25% of your accumulated pension fund 6 th April 2012 Fixed Protection Funds between 1,500,000 and 1,800,000 6 th April 2014 Fixed Protection 2014 Funds between 1,250,000 and 1,500,000 6 th April 2014 Individual Protection 2014 Funds in excess of 1.25 million as at 5 th April Your will equal this figure with an overall maximum of 1.5 million. You will not lose Individual Protection if you make pension contributions, meaning if you suffer a fall in the value of your pension savings you can top this up to your Individual Protection figure by making pension contributions (subject to the Annual Allowance / carryforward rules). 6 th April 2016 Fixed Protection 2016 Funds between 1,000,000 and 1,250,000 6 th April 2016 Individual Protection 2016 This is the same as Individual Protection 2014 except it protects funds in excess of 1 million up to 1.25 million You have to make an application to HM Revenue & Customs for protection and will receive a certificate from them detailing the level of your protection. If you have not already applied for one of the previous protection regimes the opportunity has been lost. Tax free lump sum protection only had to be registered with your pension provider at the time. There are other potential protection regimes where individuals have acquired UK registered pension benefits as a result of a divorce or a transfer from an overseas pension scheme. When you crystallise retirement benefits we will send you a statement detailing the percentage of the Lifetime Allowance you have used-up. We will send you a reminder every year. You must keep these statements safely. The Charge This is the tax charge you pay where your combined crystallisation events mean you have exceeded your Lifetime Allowance. There are two choices of how to pay a Charge: If you take the excess over the as a lump sum, the Charge is 55% of the excess. If you draw the excess as a pension which is subject to income tax, the up-front Charge is 25%. 4

5 Responsibility for the Charge falls jointly between the Scheme Administrator and the Member. The Charge is payable from the pension fund but must be reported via the member s self-assessment tax return. We will provide you with a computation of the charge deducted. Example: David has no pension protection. He had three pension arrangements. In February 2012 he commenced retirement benefits from all of arrangement 1. At that time the fund was worth 500,000. He has used-up 27.77% of his leaving him 72.23%. In May 2012 he commenced retirement benefits from all of arrangement 2. At that time the fund was worth 600,000. He has used-up a further 40% of his leaving him 32.23%. In December 2014 he commenced retirement benefits from all of arrangement 3. At that time the fund was worth 450,000. He has used-up a further 36% of his. He has now used-up a total of % of his. The excess amount crystallised was 47,125. He therefore pays a Charge of 55% on this amount: 25, Note: If he had applied for Fixed Protection in April 2012 the Charge would not apply but he would have to have ceased pension contributions at that time. 5. Tax Free Lump Sums A tax free lump sum of 25% of the value of your pension arrangements being crystallised can be paid at the point you commence your retirement benefits. Please note the following points in connection with tax free lump sums: Tax free lump sums are also called Pension Commencement Lump Sums because they can only be paid at the point of commencing retirement benefits. A period of 12 months is allowed from benefit commencement to make actual payment of the tax free sum. The overall tax free lump sum is subject to a limit of 25% of the unless you have registered for protection. As mentioned above, those with an entitlement to a tax free lump sum greater than 25% on the 6 th April 2006 were able to protect this if it had been registered. In some cases, your tax free lump sum may have been restricted to less than 25%. For example, a transfer of a fund on divorce to a new scheme for the ex-spouse, where the transferring scheme had already paid a tax free lump sum. Tax Free Lump Sum Recycling Regulations do not allow you to receive your tax free lump sum and use this to increase contributions to another pension arrangement, thereby benefiting from tax relief on the tax free lump sum. The rules are as follows: You receive a tax free lump sum You significantly increase the amount of contributions paid to another pension scheme The tax free lump sum and any other lump sums received in the last 12 months exceeds 7,500 The amount of the additional contributions exceeds 30% of the tax free lump sum This recycling was preplanned 5

6 If HM Revenue & Customs consider you have recycled a tax free lump sum then the amount received will be taxable. There are now five potential options available for drawing your retirement benefits. These are explained below: 6. Flexi-Access Drawdown The amount of fund you crystallise can pay a 25% tax free lump sum. The balance is paid to you as a pension which is subject to income tax at your marginal rate. You can choose the amount of pension and frequency you want to receive from the balance of the fund. This will give you a number of options: You may crystallise your entire fund, receive the tax free lump sum and draw a regular pension from the balance. You may crystallise your entire fund, receive the tax free lump sum and draw the balance as ad-hoc pension payments as and when you need them. You may crystallise a proportion of your fund which pays you a tax free lump sum plus a pension and is treated as a Flexi-Access Drawdown Fund where the rest of your fund remains uncrystallised and can be drawn at a later date. You may crystallise your entire fund, receive the tax free lump sum and withdraw all the rest as a pension so you are no longer a member of the pension scheme. Please note the following: Contributions Reporting Requirements The amount of your fund that is crystallised for Flexi- Access Drawdown is tested against your available. Any excess over the available allowance is subject to a Lifetime Allowance Charge. When you commence Flexi- Access Drawdown your future maximum pension contributions are limited to 4,000 p.a. with no Carry- Forward allowance (please refer to our contribution guideline for details). You will receive a statement from us confirming you have commenced Flexi-Access Drawdown. You must give this to any other pension scheme providers to which you are paying contributions (or pay in future) or are accruing benefits within 31 days. 7. Uncrystallised Fund Pension Lump Sum This is similar to crystallising part of your fund for Flexi-Access Drawdown but the parameters are fixed: You receive 25% of the amount crystallised as a tax free lump sum. All of the balance is paid to you as a one-off pension payment which is subject to income tax at your marginal rate. This option is not available to you if you have Tax Free Lump Sum Protection or Primary or Enhanced Protection and an entitlement to a tax free lump sum in excess of 375,000 as at 6 th April 2006 (please see above). Please note the following: 6

7 Contributions Reporting Requirements The amount of your fund that is paid to you as an Uncrystallised Fund Pension Lump Sum is tested against your available Lifetime Allowance. Any excess over the available allowance is subject to a Lifetime Allowance Charge. When you receive an Uncrystallised Fund Pension Lump Sum your future maximum allowable pension contributions are limited to 4,000 p.a. with no Carry- Forward allowance (please refer to our contribution guideline for details). You will receive a statement from us confirming you have received an Uncrystallised Fund Pension Lump Sum. You must give this to any other pension scheme providers to which you are paying contributions (or pay in future) or are accruing benefits within 31 days. 8. Small Pot Lump Sum This is similar to an Uncrystallised Fund Pension Lump Sum but your total fund held with the pension scheme we operate must not exceed 10,000. This means you cannot select this option for payment from the residual balance of a Flexi-Access Drawdown Fund. The parameters are again fixed: You receive 25% of the amount crystallised as a tax free lump sum. All of the balance is paid to you as a one-off pension payment which is subject to income tax at your marginal rate. You will cease to be a member of the pension scheme. Please note the following: Contributions Reporting Requirements The amount of your fund that is paid to you as a Small Pot Lump Sum is tested against your available. Any excess over the available allowance is subject to a Lifetime Allowance Charge. With this option, your future maximum allowable pension contributions are NOT limited to 10,000 p.a. with no Carry-Forward allowance. You will receive a statement from us confirming you have received a Small Pot Lump Sum. You DO NOT need to give this to any other pension scheme providers to which you are paying contributions (or pay in future) or are accruing benefits. 9. Annuity Purchase Your pension is secured with an insurance company. Purchasing an annuity involves removing funds from your scheme with us and giving them to the insurance company who will pay your pension. You can do this with all or only part of your fund. If you use your entire fund you will no longer be a member of the Scheme. You are free to choose any insurance company based in the UK and this is known as the Open Market Option. The insurance company will then pay your pension for the balance of your lifetime. Responsibility for payment of the pension and income tax lies with the insurance company, and we are no longer accountable for these funds. With a 7

8 conventional annuity, when you die any of your fund that has not already been paid to you as a pension is kept by the insurance company within its annuity pool and is used to pay pensions to other annuitants. The level of pension paid by the insurance company is secured by using your fund to purchase Government Gilts. For this reason the underlying level of pension is determined by long term Gilt yields at the time of the annuity purchase, but with additional factors taken into account depending on the features you select. There is a range of features you can select which include the following: Features of Annuities Annual Increases These can be at a fixed percentage or can be linked to increases in the Retail Prices Index (RPI), but the rate of increase must not exceed the higher of 5% p.a. or the annual increase in RPI. Beneficiary's Annuity On your death, the pension continues to be paid to your beneficiaries. A Guarantee Period This is where the pension continues to be paid after your death to your beneficiaries for the remainder of the guarantee period. With-Profit Annuities The level of pension fluctuates in line with the performance of an underlying withprofits fund. Unit-Linked Annuities The level of pension fluctuates in line with the performance of underlying unitlinked funds. Temporary Annuities The pension is paid for a short-term only and then ceases. Flexible Annuities New flexibility will allow annuities to fluctuate. ). Impaired Life Annuities In cases of poor health, increased levels of annuity may be payable due to a shorter life expectancy. These are assessed on an individual basis and require medical evidence. The most common type of annuity is the conventional annuity, which guarantees the pension payments until your death. There are however other types of annuity available: Once you have purchased an annuity, you are deemed to have secured your pension income and you cannot convert to the other pension options described here. Please note the following: Contributions Reporting Requirements An annuity purchased using uncrystallised funds is tested against your available. Any excess over the available allowance is subject to a Lifetime Allowance Charge When you purchase a Flexible Annuity your future maximum allowable pension contributions are limited to 4,000 p.a. with no Carry- Forward allowance (please refer to our contribution guideline for details). If you purchase a Flexible Annuity you will receive a statement from us to confirm this. You must give this to any other pension scheme providers to which you are paying contributions (or pay in future) or are accruing benefits within 31 days. 8

9 10. Crystallised Funds Prior to 6 th April 2015 (Capped Drawdown) Capped Drawdown is pension income drawdown that was available before 6 th April The maximum Capped Drawdown is determined by the Government Actuary s rates and is reviewed every three years (every year after age 75). Your options are: Continue with Capped Drawdown (with reviews every three years) Convert to Flexi-Access Drawdown Your maximum ongoing contribution rate is NOT affected. If you have uncrystallised funds these can be used to pay Capped Drawdown without affecting your maximum ongoing contributions. Your pension is unrestricted. There is no test against the Lifetime Allowance. Your maximum ongoing contributions WILL be restricted to 4,000 p.a. with no carry-forward allowance. You will receive a statement from us as outlined above. You can also use your Capped Drawdown fund to purchase an annuity at any time. 11. Income Tax and Pension Payroll Your pension must be subject to income tax, but not National Insurance and must be paid via PAYE. We operate a pension payroll system used by many of our clients. Our fees are outlined in our Fee Schedule. We will apply a rate of income tax using your existing tax code or P45 if you have one. If you do not know this we will apply an emergency basic rate tax code until HMRC advise us of the tax code applicable, which is used from then on. Any additional tax payable by you must be dealt with via your self-assessment tax return. If you have overpaid income tax via PAYE there are forms available from HM Revenue & Customs for you to reclaim this. It is your responsibility to ensure that sufficient cash is available to cover ongoing pension payments. Our pension payroll can be paid monthly, quarterly, half yearly or annually, in advance or in arrears. Ad-hoc payments can also be made if required although there is an additional fee for these. We pay pensions using a bank account with the Royal Bank of Scotland. For regular payments we require a standing order for the gross amount to be set up from the pension scheme account to the payroll account to reach the account on 15 th of the month. We pay your pension by BACS on 24 th of the month. Please note that no amendments can be made to a regular pension and no one-off payments can be arranged after 16 th of March in each tax year due to the Government s Real Time Information (RTI) requirements. The reason for requiring funds early is to ensure they arrive on time, the amount is correct and they are cleared funds by 24 th of the month. This gives us time to rectify any banking errors or underpayments. If you choose not to use our pension payroll, the gross pension payable needs to be transferred to the relevant payroll account in time for the payroll run. Please note that pension payments made as Flexi-Access Drawdown and Uncrystallised Fund Pension Lump Sums must be reported separately to HM Revenue & Customs under RTI rules. 9

10 Overseas Residents If you are a non UK Taxpayer who is resident in another country, then provided it has a double taxation agreement with the UK, you should be eligible to receive your UK pension gross, without deduction of UK income tax. You will need to complete a double taxation agreement claim form with the tax authorities in your country of residence and once approved by them, this should be submitted to HMRC in the UK for authorisation. The HMRC guidance notes and paperwork to apply for gross payments are known as HS304. We will need a copy of your HMRC authorisation to commence making gross pension payments. There are bank charges involved with making foreign payments which are deducted automatically from your cash account. It should also be noted that payment of pensions abroad can be affected by currency fluctuations. 12. Risk Warnings Unlike conventional annuities where the insurance company guarantees payment of your pension for the rest of your life, it is important that if you are considering Flexi-Access Drawdown, Uncrystallised Fund Lump Sums or a Flexible Annuity, you understand and appreciate the risks involved. Some of the key points are outlined as follows: Are you aware of the implications if you withdraw your entire pension fund in the early stages of your retirement? Are you aware of the income tax implications of the option you have chosen? Are you aware of the inheritance tax implications of the option you have chosen? Are you aware of the capital gains tax implications of the option you have chosen? Are you expecting your pension withdrawals to maintain your lifestyle throughout your retirement? Are you aware of the effect your pension withdrawals may have on any means-tested benefits you receive? Are you aware that, in the event of your insolvency, your creditors will have a claim over the funds you withdraw from your pension? Do you intend to pay future pension contributions in excess of 4,000 p.a.? A pension scheme is designed to produce an income in your retirement for the rest of your life which could be many years. If you withdraw your entire fund early and spend it, you may have no source of income for your old age. You pay income tax on the amount withdrawn in excess of your tax free lump sum. This may be paid at a higher rate than you presently pay. Once the funds are held by you personally, any income generated may be subject to income tax, which is not payable on income on funds in the pension scheme. Once funds are held by you personally they form part of your estate and may be subject to inheritance tax when you die, which is not payable on funds in the pension scheme. Once funds are held by you personally any capital gains on investments you make may be subject to capital gains tax, which is not payable on capital gains in the pension scheme. Your pension scheme may need to support you for many years and may not be sufficient to maintain your current lifestyle. Funds held by you personally will be included in any means-tested benefit calculations and you may no longer qualify for valuable means-tested benefits. Funds held in a pension scheme are usually protected from your creditors if you become insolvent. If you withdraw money from your pension fund, your creditors will be able to claim this. If you do, you will not be able to if you withdraw funds from your pension scheme as Flexi-Access Drawdown, 10

11 Are you aware that other pension products are available to pay your pension income? Are you withdrawing funds from your pension to invest elsewhere? If you are withdrawing funds from your pension to invest elsewhere, are you aware of the tax treatment of these investments? If you are withdrawing funds from your pension to invest elsewhere, are you aware of the fees and charges for these investments? Are you aware that investment scams exist and you should be careful where you invest money withdrawn from your pension? Uncrystallised Fund Lump Sums or a Flexible Annuity. There are many different pension options and products available to you. You need to be careful that you have chosen the best one to suit you. It is possible you could make the investment with the pension scheme and do not have to withdraw the funds. Most investment gains and income received by a pension scheme is tax free. If you make investments personally, it is likely you will have to pay tax on these. Some investments involve high fees and charges. You need to be sure you know all the costs involved before deciding to proceed. You may be approached by individuals offering enticing investment opportunities who encourage you to withdraw all your pension savings to make the investment. You need to be wary of these opportunities as they may be fraudulent. 13. In-Specie Payments Retirement and death benefits do not have to be paid as cash. They can be paid by transferring scheme investments of the correct value to yourself/the beneficiary. The process for payment is as follows: Your fund must be accurately valued to determine which asset(s) to transfer The value of the assets may be used to carry out a test The legal ownership of the assets must be transferred to the correct person(s) There are additional fees for making in-specie payments We will only pay inspecie pension payments on an annual basis Where tax is payable (e.g. a pension payment, or death benefit lump sum) cash must be made available to pay this There are three main reasons why an in-specie benefit payment may be desirous: 1. Where assets are illiquid (for example property or unquoted shares), it may not be possible to sell them within the required timescales. 2. You may not wish to sell assets while values are low and thereby crystallise an investment loss. Assets can be paid in-specie and sold at a later date when values have improved. 3. In the case of syndicated investments (where an investment is held for the benefit of more than one pension scheme member), on the death of one member, the surviving members may not want to sell the assets to pay the death benefits. As an alternative, these benefits could be paid in-specie without having to sell the assets. 11

12 14. Death Benefits: Introduction Your pension scheme can pay benefits to beneficiaries on your death. They will inherit your remaining pension fund. The amount and type of benefits depends on the amount held in your fund, your age when you die and the benefit option chosen by your beneficiaries. Funds held in your pension scheme do not form part of your estate when you die and have separate tax treatment. We require an original or certified copy of the death certificate before we can commence paying death benefits. Death benefits must be paid or designated for payment (i.e. the benefit option selected) within two years of death for those who die before age 75 otherwise any payments made will be subject to the same tax treatment as those who die after age Beneficiaries and Successor Beneficiaries Beneficiaries Death benefits can be paid to anyone so you are free to choose who you want to be your beneficiary(ies). We ask you to nominate your beneficiary(ies) and the proportion of your fund you wish each one to receive when you join your pension scheme. These can be amended at any time. We will then be guided by your nomination. If no nomination is completed then we will pay benefits at our discretion. When paying death benefits we require evidence of identity of the beneficiary(ies): please see our guideline on evidence of identity for details. Beneficiaries can choose either to withdraw the available fund on death as a lump sum or can select a pension option whereby they become a trustee of the pension scheme and the relevant proportion of the deceased member s fund is allocated to them to pay the pension selected. The pension scheme then continues to operate and be invested in accordance with the trustees decisions. Successor Beneficiaries Beneficiaries who select a pension option can nominate their own beneficiaries, known as successor beneficiaries. When they die, any funds remaining in the pension scheme are then paid to the successor beneficiary(ies) in accordance with their chosen benefit option. 16. Tax Treatment Death before 75 On death before age 75 all death benefits whether paid as lump sums or pensions are paid tax free to the beneficiary(ies). Death After 75 On death after age 75 all death benefits whether paid as lump sums or pensions are paid subject to the beneficiary(ies) marginal income tax rate (for the tax year 2015/16, the rate is fixed at 45%). 12

13 Notes Any tax payable must be paid via PAYE (please see above). Tax on benefits paid to successor beneficiaries is determined by the age of the original beneficiary when they die. 17. Death Benefit Pension Income Options There are three options for paying pensions to beneficiaries or successor beneficiaries: 1. Beneficiaries Flexi-Access Drawdown 2. Beneficiaries Annuity 3. Convert Pre 6th April 2015 Capped Drawdown to Options 1 or 2 The pension can be paid in whatever amounts or frequency is chosen The annuity options outlined above are all available Where the beneficiary is already receiving dependant's Capped Drawdown Any uncrystallised funds are subject to a test on the deceased Any uncrystallised funds are subject to a test on the deceased No Test No effect on the beneficiary's ongoing contribution allowance or No effect on the beneficiary's ongoing contribution allowance or No effect on the beneficiary's ongoing contribution allowance or 18. Death Benefit Lump Sum Options There are four options for paying lump sums to beneficiaries or successor beneficiaries depending on whether the deceased was in receipt of retirement benefits and if so, which option they had selected: 1. Beneficiaries Flexi-Access Drawdown Lump Sum 2.Uncrystallised Fund Lump Sum Death Benefit 3. Drawdown Lump Sum Death Benefit 4. Charity Lump Sum Death Benefit The whole fund is paid to the beneficiary in one sum Lump sums are withdrawn from uncrystallised funds The whole fund is paid to the beneficiary from pre April 2015 capped drawdown funds The whole fund is paid tax free to a nominated charity(ies) No test test on the original deceased member No test No test No effect on the beneficiary's ongoing contribution allowance or No effect on the beneficiary's ongoing contribution allowance or No effect on the beneficiary's ongoing contribution allowance or Only permitted if there are no surviving dependants Where all funds are withdrawn from a pension scheme by payment of death benefits leaving the scheme empty of funds, unless there are other members wishing to make contributions the scheme will be wound-up. 13

14 To Proceed - Commencing Retirement or Death Benefits Items Required You may need to arrange investment encashment Benefit Request Form Current valuation of pension scheme assets Evidence of identity for beneficiaries for payment of death benefits to ensure sufficient funds are available to pay your retirement benefits. These guidelines are based on our understanding of current law and HM Revenue & Customs practice, which are subject to change. Please correspond with us enquiries@whitehallgroup.co.uk Whitehall Group (UK) Ltd Warth Business Centre Warth Road Bury Lancashire BL9 9TB Whitehall is the trading name of: Whitehall Group (UK) Limited, a company registered in England and Wales (Registered number ), Whitehall Trustees Limited, a company registered in England and Wales (Registered number ) and Whitehall Corporate Limited, a company registered in England and Wales (Registered number ). All three companies have their registered office at 41 Greek Street, Stockport, Cheshire, SK3 8AX. April 2015 item code