Pension Freedoms. Your clients Unisure income drawdown options. For advisers and employers only

Transcription

1 Pension Freedoms Your clients Unisure income drawdown options For advisers and employers only

2 Important information This presentation is for information purposes and does not constitute a legally binding agreement, contract or representation between Aviva and the employer, trustee or adviser. It includes information about proposed future product and service launches which are currently in development. This information is therefore subject to change. This presentation is based on our interpretation of current law and HMRC practice (within the 2017/18 tax year), which may also be subject to change. The value of investments in a member's plan can go down as well as up and is not guaranteed. Members may get back less than the amount paid in. All information is correct as at August

3 Introduction To meet customer demands for flexible access to cash, we are making continuous improvements to our Unisure UK Company Pension, Company Stakeholder, Personal Pension and Stakeholder Pension: Full and partial uncrystallised funds pension lump sum (UFPLS) launched in 2015 Access to tax free cash through Drawdown launched November 2016 Access to single income withdrawals from Drawdown launched 12 th June 2017 Ability to keep income drawdown beyond age 75 now launched (4 th September 2017) 3

4 Key Points Our In scheme drawdown offers: Fully integrated into the existing product no need to transfer out. Simple access to tax-free cash. Ability to take one off payments from drawdown with TFC or at any point in future. No out of market exposure. No need to make new investment decisions. No extra cost. Same administration team. Delivers the solutions our customers want. 4

5 How it works tax free cash Access to tax-free cash. We crystallise some or all of the member s existing pension fund. 25% goes to the member as a tax-free lump sum, and the remaining amount is moved to an income drawdown fund within the same policy. The member s policy is now split into two pots any uncrystallised accumulation funds and the crystallised income drawdown funds. Current policy Moved to income drawdown funds Tax free cash paid to the customer Revised policy Amount uncrystallised 5 Amount crystallised Accumulation fund. Customer can take another tax free cash withdrawal from this fund Income drawdown fund Money can be accessed at any point through single income withdrawals

6 How it works single income withdrawals Up to 6 single income withdrawals in any 12 month period without charge. Any further withdrawals may be charged. Withdrawals will be taxed as income. The first withdrawal will be taxed at the emergency rate if we do not hold the individuals tax code. Subsequent withdrawals will be taxed at their marginal rate. The customer will trigger the Money Purchase Annual Allowance (MPAA) of 4000 if this is their first flexible withdrawal. We will issue an MPAA certificate if this happens. 6

7 How it works at age 75 Customers can now retain their policy beyond the age of 75 and for their rest of their lives, provided they have designated to income drawdown (before 4 th Sept 2017, we were unable to accept applicants for income drawdown if the client was due to reach age 75 before the end of 2017). If a customer holds both accumulation and income drawdown funds, they must have fully crystallised all their funds by the working day before their 75 th birthday. They can take the money as they wish (UFPLS/annuity/designate to drawdown) but no accumulation funds can remain beyond their 75 th birthday. This means that we cannot accept any further payments in (regular, single or transfer) beyond age 75. Any lifestyling or lifestaging will also stop at age 75. The funds will remain invested as they were at the end of the programme, but all automatic switching will stop. Age 75 Income drawdown funds (inc.withdrawals) Rest of life Accumulation funds Payments in Lifestyling/lifestaging 7 Aviva PLC Private and confidential

8 How it works at age 75 If we receive no instructions from the customer before their 75 th birthday, we will designate any remaining accumulation funds to income drawdown on their behalf on the working day before their 75 th birthday. As a consequence, they will not receive any tax free cash as we will not know their lifetime allowance status. We will have to assume they have no remaining lifetime allowance. The customer will be subject to a lifetime allowance charge. We will make every effort to contact the customer in advance of their 75 th birthday, and will fully explain the consequences of non-contact. Note: this rule only applies if the customer is already in income drawdown before their 75 th birthday. The current rules for non-drawdown customers will continue to apply. We will soon issue a notification of change to the terms and conditions to existing income drawdown customers. It will explain the new age 75 rules and what it means for them. 8 Aviva PLC Private and confidential

9 Retaining existing product features.. Continue to make payments in The customer can continue to make regular and single payments (up to age 75). Payments in will be applied to the accumulation funds. Retain the same plan charges The plan will retain the existing plan charges. There are no additional charges for taking tax free cash or single income withdrawals. Up to 6 can be taken per year. Keep the same policy number The policy remains the same there are no changes to policy number or the way it is administered. Continue to invest The plan will continue with the existing investment funds (with exceptions), incl. lifestyling/lifestaging (up to age 75). The investment applies across the whole policy. 9

10 ..and continued administration Fund switches Customers can switch their investment funds at any time. Any switches will apply across the whole policy (i.e. across income drawdown funds and any accumulation funds). Transfers Transfers-in will be applied to the accumulation fund. The money must be uncrystallised. We cannot accept transfers-in to the income drawdown fund. Transfers-out will apply to the whole policy (both income drawdown funds and any accumulation funds they may have). Some providers may not accept this type of transfer. Annuities A customer can annuitise the value of their plan at any time. They can annuitise either the accumulation fund or income drawdown fund, or both. 10

11 No charges, no minimums and no maximums There are no additional charges for customers using their integrated income drawdown option. The same Scheme AMC and Fund charges continue as normal. There is no minimum limit to access income drawdown. There will be no minimum or maximum single income withdrawal limit. We will simply restrict members to 6 single income payments per year. As you would expect we ll be monitoring experience and we could change our offering in the future. A very simple approach to pricing 11

12 The application process 12

13 The application process Customers will receive a quote pack consisting of: Covering letter A quote which projects the amount of money they will have left in their drawdown pot after they take their tax-free cash A declaration form A change to T&Cs document A leaflet which explains the key risks and considerations. Sample copies are available from your usual Aviva contact.

14 Availability and suitability Products PCLS is available on all UK Unisure pension products except; The Commercial Union Personal Pension, and Joint Venture. Eligibility We will offer this option to; customers aged between 55 and 75. Those aged 75 or over cannot designate any further funds to income drawdown, but they can retain their existing income drawdown fund. Suitability This option is designed for people who want tax free cash and withdraw income as and when they need it. This option is available to customers with protected tax free cash too. Bulk data download and information hosted on third party portals will not reflect the split of funds between Drawdown and accumulation. With Profits and Pension Assured investments are not available within Drawdown funds. Life cover is not supported on Drawdown funds. The Unisure solution is not suitable for customers wanting a regular income drawdown. We only offer single income withdrawals Adviser charging is not available from income drawdown funds. 14

15 We re still working on it We are concentrating our efforts to deliver the things of most value to our customers first. This means that we will continue to make incremental developments to what is available. Below summarises our next set of developments. Income withdrawals My Aviva Age 75 Adviser portal Up to 6 single income payments per year. Committed to deliver before 31 August Delivered 22/5/17 Drawdown information available through My Aviva before end of Customer can view split pots (accumulation drawdown fund value) but no transaction info. System capability to manage accounts beyond a customers 75 th birthday before end of Committed to deliver Sept 2017 Advisors able to view drawdown information for their clients through Adviser portal. Advisers will not be able to view their clients pension policy until we develop the Adviser Portal further. In progress Delivered 04/09/17 In progress 15

16 A recap of where we are across all our platforms Capability My Money NGP contract NGP trust Unisure Full UFPLS Partial UFPLS (first payment) Partial UFPLS (further payment) Integrated income drawdown Expected by Autumn 2017 Small pot encashment Tax free cash solutions Annuities Re-joining after disinvestment 16

17 Company information Aviva Life & Pensions UK Limited Registered in England No Registered Office: Aviva, Wellington Row, York YO90 1WR. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Member of the Association of British Insurers. Firm Reference Number

18 SP Thank you