YOUR PENSION SAVINGS Have BECOME MORE FLEXIBLE!

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1 OCTOBER 2015 Thomson Reuters UK Retirement Plan BRINGING YOU UP TO DATE WITH THE WORLD OF PENSIONS YOUR PENSION SAVINGS Have BECOME MORE FLEXIBLE! Following changes made by the Government, pension schemes now have the scope to offer more freedom to members in how they take their pension savings. There is no requirement for pension schemes to offer these new freedoms, but the Trustee of the Thomson Reuters UK Retirement Plan (which we will call the Plan) along with Thomson Reuters are keen to allow you to benefit from the new pension flexibilities as much as possible. We have therefore been working hard to offer industry-leading choice for this type of company pension scheme. pension schemes now have the scope to offer more freedom NEWSFLASH Hot topics inside... This communication has been produced by the Trustee of the Plan and Thomson Reuters as a general guide to help you understand: PAGE 3 The new pension freedoms the Government now allows pension schemes to offer. PAGE 7 The particular options that the Trustee and Thomson Reuters have agreed to offer through the Plan from 1 October 2015, and the implications for how your pension savings are invested. PAGE 14 Matters you may need to consider when deciding how and when to take your pension savings. PAGE 16 Where you can get help if you need it. PAGE 1 OF 16

2 You are not required to take any immediate actions, but you should note that... If you re age 55 or over, what will you do? If you re age 55* or over... you are able to access your pension savings (whether or not you re still working), or you may prefer to leave your pension savings for now. If you re not yet age 55* but you expect to start taking your pension savings within the next 10 years or so... you can t access your pension savings yet but you should consider how your pension savings are invested to ensure the best possible outcome when you do become eligible to take your savings. If age 55* is further away... it s still worth spending time now to find out more as this could help you to make better decisions for later on. For example, the best way to ensure you build up a decent amount of pension savings and retire at a time that suits you is to start saving as early as you can. Contributions made when you are younger are effectively worth more. This is because the returns earned on earlier contributions are reinvested so that you get growth on this money as well. Leave your pension savings for now and keep working Take your pension savings and keep working (perhaps reduced hours) * If you were an active or deferred member of the Plan on 5 April 2006, you are able to access your pension savings from age 50 rather than 55. Take your pension savings and retire PAGE 2 OF 16

3 PENSION FREEDOMS THE GOVERNMENT NOW ALLOWS PENSION FREEDOMS THE GOVERNMENT NOW ALLOWS In this section we look at the options that the Government now allows pension schemes to offer to their members for accessing their pension savings, normally from age 55. The new freedoms allow pension schemes to offer a choice of any of the following options, or any combination of these options: A combination of the options may provide the best balance between tax efficiency, flexibility and security leaving pension savings for now cash sum flexible withdrawals secure income for life Payments via flexible withdrawals and secure income for life are taxed as income, so it is normally best from a tax viewpoint to combine either of these options with the cash sum option (for a tax-free cash sum). The options will have different impacts on... how long pension savings will last how much tax is paid what is left behind for dependants For details of the options available to you through the Plan, see CHANGES TO THE PLAN FROM 1 october 2015 Although the Government sets no limits on the minimum amounts that can be used for any option, pension schemes and product providers may do so, in particular for the flexible withdrawals and secure income for life options. If you take your pension savings and intend to continue to make contributions to build up further savings, the yearly amount of future contributions that can be made may be limited to 10,000 (see what do you need to consider? ). 1 LEAVE THEM FOR NOW People may qualify on age grounds to access their pension savings, but they don t have to. Pension savings can be left invested, with opportunity to grow. Leaving pension savings invested gives them further opportunity to grow, but they may go down in value as well as up. They can be accessed at a later date, as and when they are needed. PAGE 3 OF 16

4 PENSION FREEDOMS THE GOVERNMENT NOW ALLOWS 2 CASH SUM Cash sums can be taken. This could be spent, invested somewhere else or used to pay off debts. If all pension savings are taken in one go as a cash sum or there is other taxable income, for example salary, this may push income into a higher tax band. It s not all tax free. Normally a quarter will be paid tax free and the remainder will be taxed as income*. * Pension savings that are taxed as income will be added to any other taxable income, for example salary and State Pension. This may take taxable income into a higher tax band. It may sound easy, but there are different ways of taking cash and some technical jargon! Consider the following examples for the treatment of a pension savings account, which has been divided into a taxable portion (purple) and tax-free portion (blue). 1) Take all pension savings in one go Take all pension savings in one go as a cash sum. Tax-free portion The cash sum is known as a Small Pot if less than 10,000 Taxable portion or an Uncrystallised Funds Pension Lump Sum if greater. Usually a quarter of the cash can be taken tax free and the Cash sum remainder will be taxable. If a cash sum is taken but not spent immediately, where will it be put? Will it be secure and continue to grow, and how will it be taxed? 3) Take the tax-free portion Take all of the tax-free portion as a cash sum (this is known as a Pension Commencement Lump Sum). Put the taxable portion into a flexible withdrawals arrangement (this is known as designating to flexi-access drawdown). The taxable portion is said to be crystallised, and can be used to provide taxable benefits at a future date. Tax-free portion Taxable portion Cash sum 2) Take part of your pension savings Take just part of pension savings (including both tax-free and taxable portions) as a cash sum, and leave the rest untouched. The part taken is known as an Uncrystallised Funds Pension Lump Sum and a quarter of this cash can be taken tax free whilst the remainder will be taxable. The untouched savings are said to be uncrystallised, and can be taken at a future date. Tax-free portion Tax-free portion Taxable portion Taxable portion Cash sum Uncrystallised savings Crystallised savings 4) Take just part of the tax-free portion This is like option 3 but using just part of pension savings. Of the part of pension savings used, take the tax-free portion as a cash sum (this is known as a Pension Commencement Lump Sum). With the remaining part of pension savings used, put this taxable portion into a flexible withdrawals arrangement (this is known as designating to flexi-access drawdown). The designated taxable portion is said to be crystallised, and will be taxable when taken at a future date. The untouched savings are said to be uncrystallised, and can be taken at a future date. Cash sum Tax-free portion Tax-free portion Taxable portion Taxable portion If all pension savings are spent, what is there to live on after stopping working? Crystallised savings Uncrystallised savings PAGE 4 OF 16

5 PENSION FREEDOMS THE GOVERNMENT NOW ALLOWS 3 FLEXIBLE WITHDRAWALS Pension savings can be put into a flexible withdrawal arrangement (this is known as designating to flexi-access drawdown) and then cash can be withdrawn as and when needed. The withdrawals are taxed as income*. Pension savings will remain invested with opportunity to continue to grow, although the amount can go up and down in value. Flexible withdrawals are taxed as income, so this option is often combined with a tax-free cash sum. There are currently no Government limits as to the cash amount that can be withdrawn each time or on the number of withdrawals, so care must be taken that pension savings don t run out. Care must be taken to ensure pension savings don t run out too quickly. This could happen if too much is withdrawn, people live longer than they expect or the investments don t perform as expected. Withdrawals don t need to be taken they can be indefinitely deferred. It may also be possible for pension savings designated to flexi-access drawdown to later be used to purchase a secure income for life, for example for security that pension savings won t run out. There are tools available to help with retirement planning. For example, the Government s free pension guidance service, Pension Wise provides a life expectancy calculator to determine how long an individual s pension savings would need to last ( gov.uk/making-money-last). How much to withdraw, how much the taxman will take, how to invest the remaining pension savings and whether pension savings will run out are complex matters. It is vital that independent financial advice is considered. * Pension savings will be taxed as income at the time cash is withdrawn, not at the time they are put into a flexible withdrawal arrangement. PAGE 5 OF 16

6 PENSION FREEDOMS THE GOVERNMENT NOW ALLOWS 4 Secure income for life Pension savings may be taken as a secure regular income for the rest of an individual s life, by purchasing a lifetime annuity *. Lifetime annuities have not always been seen as good value but a lot of people welcome the security of knowing how much they will receive and that their pension savings won t run out (a risk that s possible with the flexible withdrawals option). Once purchased, annuity options can t normally be changed. Secure income for life is taxed, so this option is often combined with a tax-free cash sum. It s often possible to get better annuity rates (higher income) by shopping around, and also if in poor health or a smoker. It s a very important, one-off decision and independent financial advice should be considered. There are annuity options, for example whether the income will increase and what will be paid to dependants following death. * Not all annuities are lifetime annuities, some pay an income for a fixed period only and so are not guaranteed for life. The regular income from the lifetime annuity is taxed. The amount of income available will depend on the value of the pension savings and an individual s circumstances, for example their age and sometimes their health. There are options with lifetime annuities. For example, the income could increase each year and continue (at a reduced level) to a dependant following the person s death. The options added may result in a lower starting income. PAGE 6 OF 16

7 CHANGES TO THE PLAN FROM 1 October 2015 CHANGES TO THE PLAN FROM 1 October 2015 So far we have set out the different options that the Government allows pension schemes to offer. However, pension schemes are not obliged to make these options available. The Trustee has worked with Thomson Reuters to offer as much flexibility as practicably possible through a company pension scheme of this type. In this section we explain the options available through the Plan from 1 October The pension industry is still developing in this area, and the Government has indicated that further regulation or legislation may come out which could affect how some aspects of flexible acess operate. We will continue to monitor the position. Depending on the impact of any new legal and regulatory conditions on the provision of flexibilities from within the Plan, we may need to change or withdraw the flexibilities we offer in the future. OPTIOnS FOR YOUR PENSION SAVINGS WITHIN THE PLAN Normally from age 55*, you will have the following options for your pension savings in the Plan. You will also have the flexibility to choose a combination of the options, to provide an outcome that suits your circumstances. * Some members are able to access their pension savings from age 50 - see note on page 2. You may take all or part of the tax-free portion as a cash sum (this is known as a Pension Commencement Lump Sum), putting the taxable portion into the Plan s flexible withdrawals arrangement. You may use all or just part of your pension savings in this way. Flexible withdrawals You may put your pension savings into a flexible withdrawals arrangement (this is known as designating to flexi-access drawdown). It s common for these arrangements to apply additional charges to reflect the extra administration requirements. You can use the Plan s flexible withdrawals arrangement (for all or part of your pension savings, and usually for the taxable portion taking the tax-free portion as a cash sum), or you may transfer to an alternative arrangement of your choice outside the Plan. Our aim in designing the Plan s flexible withdrawals arrangement was to offer an option that is competitive in terms of cost, gives continuity in terms of how your pension savings are invested and the convenience of staying in the Plan. In terms of additional charges, designating pension savings to the Plan s flexible withdrawals arrangement will cost you 125 followed by an annual charge of 175 (or 70 if no withdrawals are taken during the year). Charges are inclusive of VAT and may be subject to change over time. You can contact Capita for more information. Leave them for now You may leave your pension savings for now, with opportunity to grow. Cash sum You may take all of your pension savings in one go as a cash sum. This would include both the tax-free and taxable portions (this is known as a Small Pot if less than 10,000 or an Uncrystallised Funds Pension Lump Sum if greater). Normally a quarter will be tax free and the rest will be taxable. You may take the tax-free portion as a cash sum (this is known as a Pension Commencement Lump Sum), using the taxable portion as secure income for life by purchasing an annuity outside of the Plan with an annuity provider of your choice. If choosing this option, you must use all of your pension savings in this way. Thinking about your spending needs in retirement (financial planning) can help you to decide how and when to take your pension savings. Think about how much tax you will pay, and the balance you need between security and flexibility. For example, you may wish to combine the cash sum option with either (or both) the flexible withdrawals and secure income for life options. PAGE 7 OF 16

8 CHANGES TO THE PLAN FROM 1 October 2015 Secure income for life Think about whether you need income from your pension savings to last. Remember that only secure income for life is guaranteed not to run out before you die. You may use your pension savings to purchase a lifetime annuity* outside of the Plan (i.e. the lifetime annuity will be in your own name). It s common to do so for the taxable portion, taking the tax-free portion as a cash sum. You should shop around for lifetime annuities, as annuity providers will offer different rates (income) and options. In practice, annuity providers will have minimum limits on the amount of pension savings you may use for this option. Think about what will be left to your dependants/ beneficiaries when you die (see what about your dependants/beneficiaries? ). If you choose to leave your pension savings for now or you put them into flexible withdrawals, remember that they are invested and may go down in value as well as up. If you choose flexible withdrawals or secure income for life, it s important to consider shopping around (see shopping around ). Transfer You may transfer all of your pension savings to another pension arrangement of your choice**. The common reasons that you may choose to transfer include: if you have left employment with Thomson Reuters and you wish to consolidate your pension savings into a pension scheme with your current employer; if you want to choose a combination of options that the Plan does not offer; and if you wish to put your pension savings into an alternative flexible withdrawals arrangement outside the Plan. If you wish to take the tax-free portion as a cash sum and put your pension savings into an alternative flexible withdrawals arrangement outside the Plan, you may do so by transferring your entire pension savings to the alternative flexible withdrawals arrangement and arranging to receive the tax-free cash sum from that arrangement. In practice, alternative flexible withdrawals arrangements will have different minimum limits on the amount of pensions savings that you may transfer and some may insist that you take financial advice. Deciding how and when to take your pension savings is complex. It is vital that you consider getting independent financial advice. * The annuity market is developing in response to the new pension freedoms and so it may be worth exploring this option even if you have previously considered it as you may find there are different types of annuity now available. ** If you are able to access your pension savings before age 55 and you transfer, you may lose the right to access your pension savings at the earlier age. If you are unsure, refer to Capita for confirmation. PAGE 8 OF 16

9 CHANGES TO THE PLAN FROM 1 October 2015 example... consider Sarah example... consider Tom Sarah takes a quarter of her pension savings as a tax-free cash sum (and uses this to pay off her mortgage). Tom has built up only a small amount of pension savings She puts the remainder of her pension savings into flexible withdrawals within the Plan but doesn t immediately take any withdrawals, as she s still working. Sarah continues to make contributions to build up further pension savings. He decides to take all of his pension savings in one go as a cash sum Tom receives one quarter tax-free and the remainder is taxed as income example... CONSIDER JOHN example... CONSIDER DIANE For John, an important factor is certainty about his level of income. For tax efficiency, he takes the tax-free portion of his pension savings as a cash sum. John uses the remainder of his pension savings to purchase an annuity to give a secure income for life. He takes independent financial advice to help shop around for a good annuity deal. Diane has built up substantial pension savings, and having taken independent financial advice wants more flexibility than the Plan is able to offer. For tax efficiency, she wishes to take a quarter of her pension savings as a cash sum. She then wishes to use part of the remainder to provide a secure income for life (by purchasing an annuity) and she wishes to put the other part into flexible withdrawals. Diane takes a transfer of her entire pension savings to another pension arrangement recommended by her independent financial adviser that is able deliver this flexibility. PAGE 9 OF 16

10 CHANGES TO THE PLAN FROM 1 October 2015 CHANGES TO THE PLAN S INVESTMENT OPTIONS The pension freedoms have implications for how your pension savings are invested, and the Trustee has made appropriate changes to recognise this. Detailed information on the Plan s investment options is available in the members booklet. As a reminder, through the Plan you can: Make your own choice from the range of investment funds currently available. You can invest your entire pension savings in a single investment fund or split them as you like. Choose to invest in a Lifestyle Profile that automatically evolves with you over your lifetime. This seeks to provide a good level of growth for your pension savings when you are a long way off taking them whilst protecting the value of your pension savings as you near retirement. This involves progressively changing the balance of assets in the years running up to your pension account s retirement age (described on page 13) so as to lock in gains made and consolidate your pension savings at a time when any losses incurred would be hard to make up. We have made changes to the Lifestyle Profiles, partly to allow for the varying risk preferences of the Plan s members, but also to ensure the Lifestyle Profiles are compatible with the different ways in which pension savings can be accessed. The Lifestyle Profiles invest in a mixture of some of the Plan s funds (labelled as TRRP funds). As part of the changes, the mixture of TRRP funds represented by each pie chart across will be combined into a single fund. This means that the number of funds and the number of units shown on your pension statement may change in future, although your exposure to the underlying assets will remain unchanged. Whilst this fund restructuring is being undertaken you will not be able to make any changes to your investments (expected to be from 2 November 2015 to 27 November 2015). If you re more than 10 years before you expect to start taking your pension savings Experience suggests that people are unlikely to know at this stage how they intend to take their pension savings, so the main consideration is the growth of your pension savings. In terms of growth, you may now choose between three Lifestyle Profiles (more details across) or make your own choice from the investment funds offered. The pie charts across show for the three Lifestyle Profiles the different mix of investments used when looking to grow your pension savings (this is referred to as the growth phase). GROWTH PHASE OF LIFESTYLE PROFILES (growing your pension savings) 1 Cautious Growth 10 Year Lifestyle Profile 12% Index-Linked Gilts 6% Corporate Bonds (Active) 14% UK Equity 12% Long Gilts 21% Overseas Equity TRRP Cautious Growth Fund 35% Diversified Growth (Active) This Lifestyle Profile may suit those who prefer a more cautious approach to investing (i.e. smaller and less frequent ups and downs in value than the other two profiles). However, the potential for growth in value is also expected to be lower than the other two profiles. The changes for lifestyle protection start 10 years from your pension account s retirement age. 2 Balanced Growth 10 Year Lifestyle Profile 30% Overseas Equity 20% UK Equity TRRP Balanced Growth Fund 50% Diversified Growth (Active) 3 Balanced Growth 5 Year Lifestyle Profile 30% Overseas Equity 20% UK Equity TRRP Balanced Growth Fund 50% Diversified Growth (Active) This Lifestyle Profile may suit those who prefer a balanced approach to investing, accepting ups and downs in value in search of growth. The potential for growth in value is expected to be higher than for the Cautious Growth 10 Year Lifestyle Profile. The changes for lifestyle protection start 10 years from your pension account s retirement age. This Lifestyle Profile is similar to the Balanced Growth 10 Year Lifestyle Profile but the changes for lifestyle protection start just 5 years from your pension account s retirement age. This Lifestyle Profile may therefore suit those who prefer a balanced approach to investing, accepting ups and downs in value, but who wish to stay invested in growth assets for longer, accepting the volatility in fund value in search of a bigger expected pension account size. PAGE 10 OF 16

11 CHANGES TO THE PLAN FROM 1 October 2015 If you re expecting to start taking your pension savings within the next 10 years or so It is important that you begin to think about how you may take your pension savings, and that this is reflected in how your pension savings are invested. If your pension savings are invested in one of the Lifestyle Profiles and you know that you intend to take your pension savings either as a cash sum / flexible withdrawals or alternatively as a secure income for life via the purchase of a lifetime annuity, then it is important that you notify Capita of how you wish to take your pension savings and at what age. This is to ensure the appropriate lifestyle protection is applied to your investments in the years approaching your pension account s retirement age. How does it work? If you confirm to Capita that you intend to put your pension savings into flexible withdrawals or to take them as cash, the investment of your pension savings will automatically be switched over a 5 or 10 year period* (prior to your pension account s retirement age) from the TRRP Growth Fund (Cautious or Balanced) to the TRRP Consolidation Fund. SWITCHING PATTERN OF LIFESTYLE PROFILES (consolidating your pension savings) The following charts show for the 5 and 10 year Lifestyle Profiles the pattern of automated switches from the mix of investments used for the growth phase to those used for the protection phase. Figure 1-5 year period 100% 80% 60% 40% 20% 0% Years to pension account retirement age TRRP Consolidation Fund or Annuity- Matching Portfolio TRRP Balanced Growth Fund If instead you confirm to Capita that you intend to purchase an annuity (with or without a tax-free cash sum), the investment of your pension savings will automatically be switched over a 5 or 10 year period* (prior to your pension account s retirement age) from the TRRP Growth Fund (Cautious or Balanced) to a portfolio of investments considered less likely to fall in value compared to the price of annuities (referred to as the annuity-matching portfolio). * The Lifestyle Profiles use either 5 or 10 year switching periods. Figures 1 and 2 across show the respective switching patterns. Figure 2-10 year period 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Years to pension account retirement age TRRP Consolidation Fund or Annuity- Matching Portfolio TRRP Growth Fund (Cautious or Balanced) PROTECTION PHASE OF LIFESTYLE PROFILES (protecting the value of your pension savings) The following pie charts show the different mix of investments used by the Lifestyle Profiles when looking to protect your pension savings (this is referred to as the protection phase). TRRP Consolidation FUND Annuity-Matching Portfolio 12.5% UK Corporate Bonds (Active) 12.5% Long Gilts 25.0% Index-Linked Gilts 50.0% Diversified Growth (Active) This fund may suit those who intend to put their pension savings into flexible withdrawals or to take them as cash. 25% UK Corporate Bonds (Active) 25% Long Gilts 50.0% Index-Linked Gilts This portfolio may suit those who intend to use their pension savings to purchase an annuity (with or without a tax-free cash sum). PAGE 11 OF 16

12 CHANGES TO THE PLAN FROM 1 October 2015 If you make no investment decisions If you feel unable to make a choice about how to invest your pension savings, you will by default be invested in the Balanced Growth Lifestyle Profile. For most people this will be the 10 Year Lifestyle Profile although you may have previously been defaulted into the 5 Year Lifestyle Profile, in which case you should check that this remains appropriate for you. If you make your own investment choices If you have made your own choice from the investment funds available, you may wish to consider whether to reduce the potential volatility (size and frequency of ups and downs in value) over the years approaching your pension account s retirement age. Alternatively, you could consider switching to a Lifestyle Profile so that the reduction in potential volatility is managed for you. If you don t know how you intend to take your pension savings If your pension savings are invested in one of the Lifestyle Profiles and you don t tell Capita how you intend to take your pension savings, then by default the lifestyle protection appropriate to a cash sum / flexible withdrawals will apply*. The lifestyle changes to less volatile investments will complete at your pension account s retirement age and if you do not take your pension savings, they will remain invested this way until you reach age 75. If Capita still haven t heard from you by the time you reach age 75, the Trustee will assume that taking your pension savings as a secure income for life via the purchase of a lifetime annuity at age 80 is appropriate for your circumstances. In anticipation of the purchase of this annuity, your pension savings will automatically start to be switched into investments that are considered to be less volatile and less likely to fall in value compared to the price of annuities. Think about when and how you intend to take your pension savings, and the implication this has for how they are invested. Take control to ensure an appropriate outcome for you! * If your pension savings are currently invested in a Lifestyle Profile and as at 1 October 2015 you are already in the lifestyle protection phase, then your pension savings are automatically being switched to investments more suited to taking your pension savings as a secure income for life via the purchase of a lifetime annuity. If you prefer the lifestyle protection appropriate to a cash sum / flexible withdrawals to apply, you will need to notify Capita. If you feel unable to make a choice about how to invest your pension savings, you will by default be invested in the Balanced Growth Lifestyle Profile. PAGE 12 OF 16

13 CHANGES TO THE PLAN FROM 1 October 2015 THE RETIREMENT AGE FOR YOUR PENSION ACCOUNT A very important investment consideration is your pension account s retirement age. It is important that this reflects the age from which you expect to start taking your pension savings, as this determines the timing of the investment changes for lifestyle protection under the Lifestyle Profiles. What is the retirement age for your pension account? The Plan s default retirement age of 60 will apply unless you inform Capita otherwise. You can check what your pension account s retirement age is by looking at your last pension statement or by logging onto Hartlink: You should note that for new members joining the Plan, the default retirement age will be linked to their state pension age. For men this is currently age 65. For women, state pension age has started to rise, from age 60 in 2010 to 65 in November From December 2018, state pension age will rise for both men and women, until it reaches 66 in April 2020 and 67 between 2026 and After this, the state pension age will be linked to life expectancy and will be reviewed every five years by the Government. Why is this an important consideration? If, for example, you take your pension savings before your pension account s retirement age, the lifestyle changes to move your pension savings to less volatile investments will not have completed, leaving its value open to greater possibility of fluctuations in value before you access your savings. Conversely, if you take your pension savings much later than your pension account s retirement age, the lifestyle changes to move your pension savings to less volatile investments will have been completed for some time. This may mean that your pension savings remain invested in low risk/ less volatile funds for longer than expected and you could lose out on some potential for investment growth. It s important that the retirement age for your pension account is when you expect to start taking your pension savings, otherwise the investments may not be invested in a way that matches your plans. Review the retirement age for your pension account If you expect to take your pension savings either before or after your pension account s retirement age (and still wish to benefit from the lifestyle protection), you should notify Capita in writing so your target retirement age can be changed on your account. You should continue to review this from time to time. Please note that changing your target retirement age will have implications for the projection of your pension savings in annual benefit statements, as for example your pension saving will remain invested for a shorter or longer time. COMMUNICATION / EDUCATION THROUGH THE PLAN The Trustee and Thomson Reuters are considering further ways to support you in managing your pension savings. For example, in understanding how much you should be saving to achieve the income in retirement that you think you will need, and in planning how to take your pension savings. Further details will follow in the coming months. PAGE 13 OF 16

14 WHAT DO YOU NEED TO CONSIDER? WHAT DO YOU NEED TO CONSIDER? Deciding when and how you take your pension savings are complex matters, and with the greater choice now available there are also more considerations. Independent financial advice can help both at the point of taking your pension savings but also with managing them beforehand. For details of how to find an independent financial adviser see what help is available?. How much will you need to live on? It s really important to check whether you ll have enough money to live on when you stop work. Your retirement income is likely to be less than your working salary. However, the amount you need to live on will usually also be less. 1 Start by adding up all of your income and savings: Your pension savings, those in the Plan and any others you may have. Your State Pension (see what help is available? ) - remember to think about when your State Pension will become payable. Any non-pension savings or income you may have, for example ISAs and income from property (rental, equity release or from downsizing). To help people understand their choices in taking their pension savings, the Government has introduced a free and impartial service called Pension Wise. This help is available online, over the phone or face-to-face (see what help is available? ). If you are considering taking your pension savings, you should access the guidance available from Pension Wise and consider taking independent financial advice to help you decide which option (or combination of options) is most suitable for you. If you do engage the services of an independent financial adviser, please note that you will be responsible for the associated costs. In this section we look at some of the issues you will need to consider and which you can discuss with an independent financial adviser. To help people understand their choices in taking their pension savings, the Government has introduced a free and impartial service called Pension Wise Work out how much income this might provide For a guide how to do this, visit Remember that your income will be subject to tax. Estimate how much you ll need to live on when you stop work For help with thinking about your main costs, visit www. moneyadviceservice.org.uk/en/tools/budget-planner. Remember to consider any debts you may have. How does your expected income compare with how much you ll need to live on? If there is a shortfall, what actions can you take? For example: Continue working to a later age, perhaps on reduced hours Increase savings before stopping work Adjust your spending expectations PAGE 14 OF 16

15 WHAT DO YOU NEED TO CONSIDER? Think about financial planning. What other income / savings do you have and how much do you need to live on? With regard to tax, your dependants may inherit your pension savings or continuing annuity income tax free if you die before age 75. If you die after this age, any payments will be taxed how much tax they pay will depend on their circumstances and the options they choose. Any unspent cash treated as part of your estate may be subject to inheritance tax. How you decide to take your pension savings can affect State benefits that you may be receiving, for example Working Tax Credit and Child Benefit. To whom do you wish to leave any remaining pension savings when you die? Think about reviewing your beneficiary nomination from time to time, particularly if your circumstances change. See Hartlink You might not receive a full State Pension (see what help is available? ). You might live longer than you expect. A 65 year old today is expected to live until 87 (man) and 89 (woman) according to the Office for National Statistics. WHAT ABOUT YOUR DEPENDANTS/BENEFICIARIES? The options you choose for your pension savings will affect how much is left to your dependants/beneficiaries when you die. If you leave your pension savings untouched, they pass on to your dependants/beneficiaries who can take them as a cash sum in accordance with the rules of the Plan. BUILDING UP FURTHER PENSION SAVINGS You could take all or part of your pension savings and continue to make contributions to build up further pension savings, particularly if you are still working. The options you choose when taking your pension savings can limit the yearly amount of future payments you can make to build up further pension savings; currently, the normal yearly limit on payments to build up further pension savings is 40,000 but this will normally reduce to 10,000 if you take the taxable portion of your pension savings (both amounts applicable to the 2015/2016 tax year). If you re working for Thomson Reuters and wish to take your pension savings from the Plan but continue to build up further pension savings, then when liaising with Capita on taking your pension savings make sure you let them know that you wish to continue paying in. If you take a cash sum but don t spend it all before you die, it becomes part of your estate, i.e. everything you own. If you put your pension savings into flexible withdrawals within the Plan but don t withdraw them all, your remaining pension savings pass on to your dependants/beneficiaries who can take them as a cash sum. If you purchase a lifetime annuity to provide a secure income for life, any cash sum or continuing income payable to your dependants/ beneficiaries will depend on the options you choose for that annuity. Remember that the way you take your pension savings can limit your ability to continue payments to build up further pension savings. Ask Capita for further information if this is likely to be an issue for you. PAGE 15 OF 16

16 WHAT DO YOU NEED TO CONSIDER?/WHAT HELP IS AVAILABLE? SHOPPING AROUND If you decide to use your pension savings to purchase a secure income for life or put them into flexible withdrawals, you don t have to take the options offered through the Plan. It s important that you consider shopping around. Shopping around = making sure you get the outcome that s best for you With secure income for life, options and rates vary between lifetime annuity providers. Also, if you are in poor health or are a smoker, you may be able to get better annuity rates (higher income). With flexible withdrawals, comparison of products is less clear. You need to understand the options available with each product and check the charges payable. A financial adviser can help you with this. PENSION SCAMS Watch out for pension scams: Claiming you can have cash before age 55 (unless you fall under the category of member mentioned on page 2); Offering you one-off investment opportunities; Contacting you out of the blue; Or even promising cash in advance. Visit to find out more. STOP PRESS In our next communication we take a look at the pension announcements made in the Chancellor s Summer Budget WHAT HELP IS AVAILABLE? Capita For information about the Plan or to take your pension savings, contact the Thomson Reuters Member Services Centre operated by Capita: thomsonreuterspensions@capita.co.uk (from the UK) or (from overseas) Thomson Reuters Member Services Centre, Capita, Hartshead House, 2 Cutlers Gate, Sheffield, S4 7TL, United Kingdom Hartlink For information on the investment options or to manage your pension savings online, visit: Independent financial advice It s important that you consider getting independent financial advice before making any decisions with your pension savings. For help in finding an independent financial adviser in your local area, visit: Pension Wise The Government s free guidance service, to help you understand the options and how they work. You ll be able to get help online, over the phone or face-to-face. For information and to contact Pension Wise, visit: State Pension To find out how much State Pension you might get and when, visit: Financial guidance For information and guidance on general financial matters such as saving and debt, visit: Pension guidance For free guidance with pension savings, visit: Life expectancy For information on rising life expectancy, visit: For a life expectancy calculator, visit: IMPORTANT NOTES This guide has been produced by the Trustee and Thomson Reuters for information purposes only. It does not give financial advice. The Trustee will monitor the options available through the Plan, and may make changes to or withdraw the options from time to time. PAGE 16 OF 16