pensions investments life insurance Policyholder Guide

Transcription

1 pensions investments life insurance Long Term Savings Plan Policyholder Guide

2 About us Established in Ireland in 1939, Irish Life is now part of the Great-West Lifeco group of companies, one of the world s leading life assurance organisations. Great-West Lifeco and its subsidiaries, including The Great-West Life Assurance Company, have a record for financial strength, earnings stability and consistently high ratings from the independent rating agencies. The Great-West Life Assurance Company has an AA rating for insurer financial strength from Standard & Poor s. Information correct as of January For the latest information, please see

3 contents Introduction - Long Term Savings Plans explained 2 Contributions and investment options 4 Charges 10 Your questions answered 12 Our service to you 14 Customer Information Notice - CIN 17 1

4 SECTION 1 introduction This member guide explains your Long Term Savings Plan in short and simple terms. What is a Long Term Savings Plan? A Long Term Savings Plan is a unit-linked regular investment plan. This means your regular payments are used to buy units in our range of investment funds. The value of your plan is then linked to the value of the units in our investment funds. do not want to make regular withdrawals (please see section on withdrawal restrictions). do not need to protect your money and are prepared to risk getting back less than you put in. do not anticipate ever needing to assign the plan or plan benefits as such assignments are not permitted. Warning: If you invest in this product you will not have any access to your money for 12 months from the date of commencement. Is the Long Term Savings Plan suitable for you? The Long Term Savings Plan is designed for people for whom further pensions funding may no longer be tax efficient but who wish to continue saving regularly for their retirement. If your circumstances match these, then the Long Term Savings Plan will be suitable for you if you: want a regular, long-term plan for at least five years. want the convenience of saving from your payroll and have at least 300 a month to save. 2

5 Irish Life Corporate Business Long Term Savings Plan We offer highly competitive terms for long term savings. You will receive first-class communication, such as detailed documentation upon joining and an annual statement which clearly outlines your savings accumulated fund value. As a plan holder, you can check the value of your Long Term Savings Plan at any time by using our internet offering, Pension Planet Interactive. You can choose from a wide range of investment options that cover various risk levels on order to meet your individual needs. You can choose to use one of the available lifestyling strategies that will automatically reduce the risk profile of your funds as you approach the expected maturity date of your plan. Further details of the terms and conditions and investment product information in respect of Irish Life Corporate Business Long Term Savings Plan can be viewed at ie/yoursavings. 3

6 SECTION 2 contributions and investment options How are my contributions invested? Contributions paid into your Long Term Savings Plan are invested in what is called a fund. The purpose of this fund is to ensure that the money has an opportunity to accumulate growth usually called an investment return. When you come to maturity the fund is then made up of the total amount of contributions plus the investment growth, less any applicable charges or the impact of any withdrawals you have made. Regular contributions are made by deduction from your wages or salary by the company payroll. Contributions are flexible and can be fixed or variable, as long as any amount paid is at or above the minimum monthly contribution amount of 300. Contributions can also stop or start without any penalty. Early encashment restrictions You may not make any withdrawals from your Long Term Savings Plan in the first 12 months. After that withdrawals are limited to two withdrawals a year and you must take a minimum of 1000 per withdrawal gross of any exit tax that may apply to the withdrawal. This restriction does not apply on death. Some investment product information Some investment product information An aspect of your savings product is that you will be investing in investment funds. These investment funds will invest in different assets classes such as equities, bonds, cash or property. Each of these asset classes has different characteristics but they all carry an amount of investment risk. The return that you will receive will vary and can be negative or positive. This means that your capital is not secure and that you may receive less than the amount of your original investment in the product Warning: The value of your investment may go down as well as up. 4

7 Warning: If you invest in this product you may lose some or all of the money you invest. Restrictions on the encashment, disposal or redemption of your savings product; Restrictions on fund switches; Restrictions on access to funds invested; Impact of exiting the product early Switches from funds which hold assets that are not immediately redeemable, such as property, may have a deferral period imposed before the switch can be processed. Further details on the type of fund that can be affected and how any deferral period may operate are contained in the additional information in your policy section of the Customer Information Notice later on page 17 of this booklet. You may not exit the product earlier than 12 months as outlined above. After the first 12 months you may exit the policy at any time without any restrictions. The minimum recommended investment period The minimum recommended investment period for investing in your savings plan is five years. The risk that the estimated or anticipated return on the investment product will not be achieved Depending on which fund you choose, the value of your investment can fall as well as rise over the term of your investment. Generally funds that offer the highest potential for growth have the biggest ups and downs. If you choose lower risk funds you are aiming to protect your savings from large falls but the potential for gain is lower than if you choose higher risk funds. Volatility refers to the potential ups and downs that a fund may experience over time. We rate the possible level of volatility for each of our funds on a low, medium and high risk basis. These ratings can be seen on the fund flyer. Volatility is a measure of how the fund return (how the fund performs) is different from the average return of that fund over a period of time. So, the bigger the difference from the average return, the riskier the fund. You should remember that risk and potential return are closely linked. In other words, investments which are higher risk tend to have higher returns over the long term. Our volatility scale assumes that all investments are held on a long term basis and are therefore calculated over 10 years. If an investment is held for a short term, it will usually have a greater level of risk than the volatility scale shown. The potential effects of volatility in price, fluctuation in interest rates, and/ or movements in exchange rates on the value of the investment You can t plan financially without understanding investment risk. Many people, when they hear about risk, think automatically about the chance of being defrauded or not getting all their money back. This capital risk is important, but it isn t the only type. Other types of risk involve uncertainty and unpredictability. When you make an investment, it can be difficult to say with any certainty what you ll get back when 5

8 you finally cash it in. Share prices fluctuate, interest rates vary, and inflation is a risk too. Just concentrating on capital risk and ignoring these other risks can mean you take too cautious an approach. Understanding risk means identifying your own attitude to risk and identifying the different types of risk. Then you can pick up tips to help minimise the chances of things going wrong. Some simple considerations: The greater return you want, the more risk you ll usually have to accept. The higher return you want from your investments, the greater the chance of losing some or all of your initial investment (your capital). This savings product is meant as a long-term investment so the longer you can wait before you need to cash in your investments, the more risk you can afford to take. If you re saving over the shorter-term it s wise not to take much capital risk. So what you are investing for and when you ll need access to your money will have a big impact on what types of investments are right for you. In the past, investments in share-based assets has proven to be the best way to provide growth that outstrips inflation over the long term. However, there is a risk attached with some periods of significant losses in market. Investment funds we offer To help you choose between funds and assess their different levels of risk, we give each of our funds a risk rating on a scale of 1 to 7. This rating reflects the volatility of the fund that is, the potential levels of ups and downs that a fund may experience over time. You should remember that risk and potential return are closely linked. In other words, investments which are higher risk tend to have higher returns over the long term. Our volatility scale assumes that all investments are held for more than ten years. If an investment is held for a short period, it will usually have a greater level of risk than the volatility scale shows. 6

9 low Risk Cash Fund This fund invests in highly secure bank deposits and short-term money market investments. It is intended to be a low risk investment but can fall in value in the event of a bank being unable to repay a deposit or if the fund charge is greater than the return on the assets of the fund. This fund can be used as a safe haven during periods of uncertainty. stability Fund This fund is mainly invested in bonds and cash with a small holding in equities and alternative assets. The Stability Fund is suitable for those who will accept some volatility in the investment performance and want some potential for growth. medium Risk flexible Fund This fund mainly invested in bonds, with some investment in cash, equities and alternative assets such as emerging markets equity and corporate bonds. The Flexible Fund is suitable for those who will accept some volatility in the investment performance and want reasonable potential for growth. core Fund 1 4 The Core Fund invests in traditional assets such as equities, bonds, property and cash. It also invests in alternative assets in order to broaden the asset mix with the aim of reducing the risk level versus a traditional 2 3 managed fund without compromising potential returns. The alternative assets in the Core fund are accessed through external managers. high Risk global consensus Fund (excluding property) This fund is based upon an approach which combines the wisdom of the main investment managers in Ireland. The fund matches the investments that the investment managers make in global equities, bonds and cash but avoids illiquid assets (assets that can take time to sell) such as property. It aims to provide performance that is consistently in line with the average of all Irish managed funds investing in liquid global markets. indexed world equity fund This fund is designed to achieve returns in line with world equities. The fund tracks the FTSE World Index. It is suitable for investors who want to invest 100% in equities but who also want global diversification. Warning: The value of your investment may go down as well as up. 6 Warning: These funds may be affected by changes in currency exchange rates. Warning: If you invest in this product you may lose some or all of the money you invest. 5 7

10 Investment Strategies The Long Term Savings Plan offers two different investment strategies. Both strategies aim to reduce the risk profile of your investment as you approach your chosen maturity date. The Cash Strategy works in its second switching phase to remove any exposure to investment markets completely at maturity date. The Flexible Strategy continues to reduce risk in its second switching phase but a medium level of risk still remains at maturity date. Both of these strategies are described in more detail below. high to low Risk 6-1 cash strategy The Cash Strategy initially invests in the Global Consensus (excluding property) Fund. With 21 years to maturity the strategy starts to gradually move part of your fund into the CORE Fund. With 11 years to go your fund will be invested 100% in the CORE Fund. Over the following 10 years, your fund is moved into the Cash Fund on a gradual basis. With 6 years to go to the maturity of your plan, your fund will be 50% invested in the CORE Fund and 50% invested in the Cash Fund. With 1 year to go to maturity you will be 100% invested in the Cash Fund. The Cash Strategy is suitable for contributors who don t wish to manage their own savings plan investments, and who are happy to take a significant risk with their money in the earlier years, followed by a gradual move to less volatile funds as they approach maturity and who want very little uncertainty in their likely maturity value with one year to go. high to medium Risk 6-3 flexible strategy The Flexible Strategy initially invests in the Global Consensus (excluding property) Fund. With 21 years to maturity the strategy starts to gradually move part of your fund into the CORE Fund. With 11 years to go your fund will be invested 100% in the CORE Fund. Over the following 10 years, your fund is moved into the Flexible Fund on a gradual basis. With 6 years to go to maturity your fund will be 50% invested in the CORE Fund and 50% invested in the Flexible Fund. With 1 year to go to maturity you will be 100% invested in the Flexible Fund. The Flexible Strategy is suitable for contributors who don t wish to manage their own savings plan investments, and who are happy to take a significant risk with their money in the earlier years, followed by a gradual move to less volatile funds as they approach maturity but who wish to maintain some level of risk in their fund even up to maturity in anticipation of greater potential returns. We may add additional investment strategy options or remove them in the future. We will contact you if we need to remove a strategy that you are invested in. Warning: The value of your investment may go down as well as up. 8

11 Warning: These funds may be affected by changes in currency exchange rates. Warning: If you invest in this product you may lose some or all of the money you invest. 9

12 SECTION 3 charges The charges on your Long Term Savings Plan are expressed as a percentage of your fund value deducted each year (called annual management charge). The charges go towards the costs of: setting up and administering the investment; paying sales and commission costs (if these apply); and the expenses of managing your plan An annual management charge is deducted from each of your chosen funds. The charge is deducted and included in the investment price that is published on a daily basis. The fund charges for the fund available in the Long Term Savings Plan are set out in the table below. For the Core Fund part of the fund charge can vary. It is typically the external managers part of the fund charge that varies. The table shows the fixed charge, the estimated average level of the charge that can vary, and the total average estimated fund charge each year. Please read the Customer Information Notice, your terms and conditions document and policy schedule for full details of the charges and the effect they will have on your investment. The estimated average levels of the variable charges indicated below are those expected over the long-term and the actual level of charges may be higher or lower than this. Fixed Charge Variable Charge Total average estimated fund charges each year Cash Fund 0.85% 0.00% 0.85% Stability Fund 0.85% 0.00% 0.85% Flexible Fund 0.85% 0.00% 0.85% CORE Fund 0.85% 0.20% 1.05% Global Consensus (excluding property) Fund 0.85% 0.00% 0.85% Indexed World Equity Fund 0.85% 0.00% 0.85% 10

13 Insurance Levy and Amount invested The current Government levy on life assurance payments is 1% (January 2015). We will pay this levy out of the money we receive from you. We will then increase the amount remaining after the Government levy has been paid by 1% and invest this amount in your plan. 11

14 SECTION 4 your questions answered what happens if... If I change employment? You may leave your Long Term Savings Plan investment in place, however, you cannot make any further payments to your plan. At the plan s maturity date? You do not need to cash in your plan at the intended maturity date. This is a target date set when you start your plan. Usually it is your retirement date as the Long Term Savings Plan is aimed at savings to supplement retirement benefits. You may also continue contributing towards your plan past your maturity date subject to the restriction outlined above. Please note that you may update your intended maturity date at any time by writing to us. To the value of my Long Term Savings Plan if I die? If you die, then on the date we are told about your death we will switch your fund value to the Cash Fund. received all the required documents to process the claim. If I want to cash in some or all of my Long Term Savings Plan? You cannot make any withdrawals from your plan in the first 12 months. After this period, you can cash in part of your Long Term Savings Plan at any stage, subject a maximum of two encashments in any 12 month period. If you want to cash in part of your plan, the minimum amount you can withdraw is 1,000 per withdrawal before any exit tax applies. Under current Irish tax law, tax is payable on returns made on this plan. The exit tax rate is 41% from January Further information on taxation issues in the event of death or withdrawal are included in Section 7 of the Customer Information Notice at the end of this booklet. We will then pay 100.1% of the encashment value of your plan, less for any tax, to the executors or administrators who deal with your estate when we have 12

15 If I want to switch investment funds? You can switch your money between any of the Long Term Savings Plan funds. You can simply write to us or fill in a switch form and send it in to us. You can make up to six switches in any 12 month period. There are no charges applied for fund switches. 13

16 SECTION 5 our service to you Information on your Long Term Savings Plan While you hold an Irish Life Corporate Business Long Term Savings Plan, we will provide you with all the information you need in order to keep you up to date on your plan s progress and make informed decisions on what choices work best for you. In addition to this booklet, containing general information on the workings of your plan, Irish Life Corporate Business will provide you with the following various sources of information, allowing you to continually monitor your plan situation. Annual statement When you join the company pension plan you will be issued with a Member Schedule. This is a schedule of your pension plan details and covers any benefits which relate to your Plan. It also provides you with specific information on any death benefits or ill-health cover if applicable to your pension plan. Your annual statement is also available online in the document library of Pension Planet Interactive. Online information on your pension plan Pension Planet Interactive is an easy to use online tool that gives you access to your pension plan information. It helps you manage your retirement planning more effectively and efficiently. Pension Planet Interactivegives you the following information: key pension plan information your plan value your fund selection fund price history 14

17 documents such as benefit statements and correspondence in the document library information about investment choices. Registration for Pension Planet Interactive STEP 1 STEP 2 STEP 3 Get a registration code Registration for Pension Planet Interactive is very simple. In order to gain access to Pension Planet Interactive, complete the following registration steps online: You can request a Registration Code by accessing www. pensionplanetinteractive.ie Enter your plan number, your date of birth and we will send you a Registration Code by post. Registration Once you have received your Registration Code, access ie again and confirm your phone number and address so we can send your password. Once you have received your password, you can log in. During the first login you will be asked to change your password and enter the answers to 3 security questions. Pension Planet Interactive will also give you your User Name. Finally, read and confirm the terms and conditions. For any future logins you will only need the User Name and your password. You may be required to answer your security questions if any changes are made! WARNING: You should not disclose your user name or password to anybody, please keep them safe. Irish Life will never send letters or s requesting your Pension Planet Interactive login details. If any of your information is incorrect please contact Irish Life immediately at: Irish Life Corporate Business Lower Abbey Street, Dublin 1 Phone: or code@irishlife.ie Website: The details set out in this booklet are based on our understanding of the law at the time that this booklet was prepared. When reading this booklet you should consider that the law can change at any time. This booklet is a general guide to these matters only; therefore, you should always get expert advice when you make any decisions which may affect your Long Term Savings Plan benefits. 15

18 Investment updates Irish Life Corporate Business publishes investment fund information each month on how all our funds are performing. These can be found in the investment centre of our website: contact information for complaints If you have a complaint or any other type of query concerning your Long Term Savings Plan, you should contact: Irish Life Corporate Business Group Affinity Service Team, Lower Abbey Street, Dublin 1. Phone: Fax: code@irishlife.ie Website: www. irishlifecorporatebusiness.ie If you are not satisfied with the outcome of your complaint you may refer the matter to the Financial Services Ombudsman who will decide if the matter falls within their terms of reference. The Financial Services Ombudsman can be contacted at: The Financial Services Ombudsman 3rd Floor, Lincoln House, Lincoln Place, Dublin 2. Lo-call: Fax: enquiries@financialombuds man.ie Website: 16

19 SECTION 6 customer information notice - cin Contents introduction A. information about the policy 1. Make sure the policy meets your needs 2. What happens if you want to cash in the policy early or stop paying premiums? 3. What are the projected benefits under the policy? 4. What intermediary/sales remuneration is payable? 5. Are returns guaranteed and can the premium be reviewed? 6. Can the policy be cancelled or amended by the insurer? 7. Information on taxation issues 8. Additional information in relation to your policy What are the benefits and options under this plan? What is the term of the contract? Are there any circumstances under which the plan may be ended? How are the payments invested? Is there an opportunity to change your mind? Law applicable to your plan What to do if you are not happy or have any questions? B. INFORMATION ON SERVICE FEE c. INFORMATION ABOUT THE INSURER/INSURANCE INTERMEDIARY/SALES EMPLOYEE. d. INFORMATION TO BE SUPPLIED TO THE POLICYHOLDER DURING THE TERM OF THE INSURANCE CONTRACT. 17

20 Introduction This notice is designed to highlight some important details about the plan and, along with the Long Term Savings Plan booklet, is meant to be a guide to help you understand your savings. Full details on the specific benefits and options that apply to you will be contained in your plan schedule, Terms and Conditions booklet and personalised customer information notice, which you will receive when the contract is in place. It is important that you should read these carefully when you receive them as certain exclusions and conditions may apply to the benefits and options you have selected. Any Questions? If you have any questions on the information included in this customer information notice you should contact your Financial Adviser or Irish Life, We will deal with your enquiry at our Group Affinity Service Team, Irish Life Corporate Business, Lower Abbey Street, Dublin 1. A. information about the policy 1. MAKE SURE THE POLICY MEETS YOUR NEEDS The Long Term Savings Plan is an open ended regular payment savings plan with a target maturity date to coincide with your retirement. The purpose of this plan is to build up a savings fund to supplement your retirement benefits. We therefore recommend that you consider your Long Term Savings Plan as an investment for a term of at least five to ten years. By taking out this plan, you are committing to making a regular payment over a relatively long-term. Unless you are fully satisfied as to the nature of this commitment having regard to your needs, resources and circumstances, you should not enter into this commitment. Your Financial Adviser in respect of this plan must indicate whether paragraph a) or paragraph b) below applies. a) This plan replaces in whole or in part an existing plan with Irish Life, or with another insurer, which has been or is to be cancelled or reduced. Your Financial Adviser will advise you as to the financial consequences of such replacement and of possible financial loss as a result. You will be asked at the beginning of your application form to confirm this in writing. Please ensure that you have completed this section of the form and that you are satisfied with the explanations provided by your Financial Adviser before you complete the rest of the application form b) This plan does not replace in whole or in part an existing plan with Irish life or with any other insurer. 2. WHAT HAPPENS IF YOU WANT TO CASH IN THE POLICY EARLY OR STOP PAYING PREMIUMS? You cannot encash your plan in the first 12 months. You can cash in your plan at any time after this, subject to any delay periods mentioned below. Your plan has a surrender value, before any exit tax is due, equal to the number of units allocated to the policy multiplied by the investment price of the units of the funds. The minimum partial withdrawal is 1,000 before tax. You may stop making payments at any stage, either temporarily or completely. Please see Section 7 for further details on taxation. In certain circumstances, we may delay encashments. This may be because there are a large number of customers wishing to encash their fund or part of their fund at the same time, or if there are practical problems selling the assets within the fund. Due to the high cost and time involved in selling properties, a delay of this sort is most likely to happen if you are invested in a property fund (or a fund with a high proportion of property or property related assets). The length of any 18

21 delay will depend on how long it takes us to sell the assets in the fund. A minimum delay of six months would be likely to apply in this situation. Delayed transactions will be based on the value of units at the end of the delay period when the transaction actually takes place. When there are more customers moving out of a fund than making new investments in it, we may reduce the value of the units in the fund to reflect the percentage of the costs associated with buying and selling the assets of the fund. The reduction in the value of the affected assets will be different for each fund and is likely to be most significant for the proportion of any fund invested in property. Core Fund 50% Global Consensus Fund 50% The choice of fund will determine what level of charges will apply. See Table A overleaf. The reduction for any part of the fund invested with external fund managers may happen at a different time to the reduction for the rest of the fund. Therefore, the cash-in value of your plan, before/at/after your target maturity date, may be less than the payments you have made. Warning: The value of your plan may go down as well as up. Warning: If you invest in this product you may lose some or all of the money you invest. 3. WHAT ARE THE PROJECTED BENEFITS UNDER THE POLICY? The following tables set out the costs and benefits for a typical Long Term Savings Plan. The figures will vary based on each individual s personal details. The figures overleaf are based on the following details: Payment: 500 per month. The premium is assumed to increase by at 3% each year in line with assumed increases in salary. Funds: Your payment will be invested in the following way: 19

22 Table (A): Illustrative table of Projected Benefits and Charges at 5.13% Growth per annum A B C D E = A + B C D Year Total amount of premiums paid into the policy to date Projected investment growth to date Projected expenses and charges to date Taxation to date Projected policy value after payment of taxation 1 6, , , , ,545 1, , ,102 2, , ,855 4, ,519 34, ,783 18,637 3,166 6,343 77, ,593 46,565 8,514 15, ,043 Expected Maturity (20) 161,222 90,426 17,089 30, ,491 Warning: These figures are estimates only. They are not a reliable guide to the future performance of your investment. IMPORTANT: THIS ILLUSTRATION ASSUMES A RETURN OF 5.13% PER ANNUM. THIS RATE IS FOR ILLUSTRATION PURPOSES ONLY AND IS NOT GUARANTEED. ACTUAL INVESTMENT GROWTH WILL DEPEND ON THE PERFORMANCE OF THE UNDERLYING INVESTMENTS AND MAY BE MORE OR LESS THAN ILLUSTRATED. The effect of the deductions in respect of the expenses and charges shown is to reduce the assumed growth rate on your fund by 1.00 % per annum. Exit tax of 41% is assumed in Tables (A) The charges shown in column C of the tables include the cost of any intermediary/sales remuneration incurred by Irish Life, as described in Section 4. The premiums shown in column A do not include the government levy of 1%. The payments shown include the cost of all charges, expenses, intermediary remuneration and sales remuneration associated with your plan. It does not include any government levies that may be payable. 20

23 Funds with external managers Some funds are wholly or partly managed by external managers. If you invest in one of these funds, the illustration above assumes an estimated level of external manager charges on the fund. However, the level of these charges can vary. Section 8 below gives detail of the reasons for this. Incentive Fees An incentive fee may be paid to the external managers if they achieve positive investment returns on the funds they manage. Depending on the particular fund, circumstances in which an incentive fee may be paid to an external manager include the following; If the investment return is positive in any calendar quarter If the investment returns exceed a certain level each year If the investment returns achieved in a particular year are greater than the previous highest investment returns If the returns achieved by these funds exceed the performance of a benchmark fund. If an incentive fee would be payable under the assumptions used to produce the illustration in the table of benefits and charges in Section 3 an estimate of this incentive has been included in the figures. However, generally the figures in the table of benefits and charges in Section 3 do not included incentive fees that might arise as they would not be payable under the assumptions used to produce this illustration. If during the term of your plan an incentive fee is paid, this will be reflected in the unit price. Counter Party Risk It is important to note that the value of investments with any fund manager may be affected if any of the institutions with whom money is placed suffers insolvency or any other financial difficulties. Where a fund is managed by an external fund manager, the value of your units will reflect the value of the assets recovered from that manager. Irish Life will not use any of its assets to make up any shortfall. 21

24 4. WHAT INTERMEDIARY/SALES REMUNERATION IS PAYABLE? The level of intermediary/sales remuneration shown is based on the typical plan outlined in Section 3 above. The figures for your specific investment will be shown in your welcome pack. TABLE B: Illustrative table of Intermediaries/Sales And Remuneration Year Premium payable in that year Projected total intermediary/sales remuneration payable in that year at 5.13% investment growth 1 6, , , , , , , ,521 0 The projected intermediary/sales remuneration shown above includes the costs incurred by Irish Life in relation to the provision of sales advice, service and support for the plan. These costs are included in the plan charges set out in column C of both the illustrative table (A) of projected benefits and charges in Section ARE RETURNS GUARANTEED AND CAN THE PREMIUM BE REVIEWED? The benefits illustrated are not guaranteed. What you get back depends on how your investments grow. If the investment returns achieved are less than assumed in the illustration, then the benefits illustrated may not be achieved or in order to achieve the benefits that are illustrated the premium may need to be increased. 6. CAN THE POLICY BE CANCELLED OR AMENDED BY THE INSURER? If the cost of administering your Long Term Savings Plan increases unexpectedly we may need to increase the charges on your plan. Also we can alter your Long Term Savings Plan (or issue another plan in its place) if at any time it becomes impossible or impracticable to carry out any of the plan provisions because of a change in the law or other circumstances beyond our control. If we alter your Long Term Savings Plan (or issue another in its place), we will send a notice to your last known address explaining the change and your options. If you do not tell us everything relevant when answering all of the questions on the application form, then failure to disclose any material fact, this being a fact that would influence the assessment and acceptance by Irish Life of your proposal to effect a life insurance policy, could render your policy null and void. You should therefore ensure that the information contained in the proposal form that you will sign for this policy is true and accurate. 7. INFORMATION ON TAXATION ISSUES Any taxes or levies imposed by the government will be collected by Irish Life and passed directly to the Revenue Commissioners. Under current Irish tax law, tax is payable on returns made on this plan. The exit tax rate is 41% from January We will deduct any exit tax that is due from your plan before we make any payments to you. Tax is payable on your investment returns when You make any withdrawal (full or partial) from your investment You reach the 8th anniversary of your investment, and each subsequent 8th anniversary You die 22

25 The tax payable on each 8th anniversary will reduce the amount invested in the fund from that date onwards. Where tax is deducted from your fund on each 8th anniversary, this tax can be offset against any tax that is payable on a subsequent encashment. Any tax due will be deducted from the fund and thus reflected in the fund performance. If tax legislation and practice changes during the term, this will be reflected in the fund value. Tax legislation means Irish Life must deduct the correct amount of tax payable. Irish Life retains absolute discretion to determine, in accordance with all relevant legislation and guidelines, its application and interpretation, the tax treatment of this investment. In some circumstances, additional tax may be due after death. For example, if the death benefit is paid to your estate, your beneficiaries may have to pay inheritance tax. There is no inheritance tax due on an inheritance between a married couple or registered civil partners. In certain circumstances inheritance tax due may be reduced by any tax paid on a death under this investment. If payments are made by anyone other than the legal owner of the investment, for example from a company or business plan, there may be other tax implications. Any levies imposed on the plan by the government will be collected by Irish Life. Please contact your Financial Adviser or Irish Life if you do not fully understand the likely tax treatment of any benefits payable in connection with your Long Term Savings Plan. We recommend that you seek independent advice in respect of your own specific circumstances. Funds investing in overseas property or other overseas assets Some funds invest wholly or partly in property or other assets outside of Ireland. Any United Kingdom (UK) rental profit from property is subject to the basic UK rate of tax according to current United Kingdom tax law. UK tax incurred by Irish Life in respect of UK property will be deducted from the fund. For any investments in European or Asian property, tax will be deducted on rental profits if this is required by the domestic tax rules of the relevant country. In some instances, depending on the domestic tax rules of the country, capital gains tax may also be payable on capital gains made within the fund. For any investments in overseas assets, tax will be deducted on rental profit if this is required by the domestic tax rules of the relevant country. In some instances, withholding or other underlying taxes may apply, depending on the domestic tax rules of the country. Any tax due will be deducted from the fund and thus reflected in the fund performance. If tax legislation and practice changes during the term, this will be reflected in the fund value. We recommend that you seek independent tax advice in respect of your own personal circumstances. 8. Additional information in relation to your policy What are the benefits and options provided under this plan? Long Term Savings Plan is an open ended regular payment savings plan that enables you to provide for your financial needs. It is anticipated that the monies remain invested until you reach retirement age. You may at any stage increase or reduce your regular payment each month, provided you do not reduce your payment to less than the minimum payment of 300 per month. 23

26 The maximum payment we will accept is 10,000 per month. While the plan does have a target maturity date, you do not have to absolutely determine in advance the period for which you wish to save, and you may stop investing at any stage, either temporarily or completely. You may not cash in any of your investment in the first 12 months. You may cash in your investment in full at any time after this. However, in certain circumstances we may delay part or total withdrawals (please see Section 2). Death Benefits If you die while the plan is in force, the benefit payable will be 100.1% of the value of your fund, less any tax payable. What is the term of the contract? There is no specified term to your Long Term Savings Plan. It is an open-ended savings plan and will remain in force while you are alive until you decide to terminate it. What is the target date then? The plan is intended for those wishing to save to supplement retirement benefits. For this reason it has a target maturity date that you choose which would typically be your intended retirement date. Are there any circumstances under which the plan may be ended? Your Long Term Savings Plan may be ended if you cash in the full value of your plan. Your Long Term Savings Plan will end if you die. How may I pay my premiums? Your regular contributions must be paid through your employer s payroll and you can stop or start without any penalty. You may pay single contributions to us at any time (as long you are still employed by your Employer). Single contributions can be made through your employer s payroll or they can be paid directly to us. How are the payments invested? Your Long Term Savings Plan is a unit-linked savings plan. In return for your money we allocate units to your plan from each of your chosen funds as will be listed on your plan schedule. The value of your investment is linked to the value of these units. The value of a unit will go down as well as up over time, depending on how the underlying assets perform. The underlying assets in the fund may be used for the purpose of securities lending in order to earn additional return for the fund. While securities lending increases the level of risk within a fund, it also provides an opportunity to increase the investment return. Where an external manager engages in securities lending, they may keep some or all of the revenue from this activity for themselves. You do not own the units. Unit-linking is simply a method of working out the value of your investment at any date. The value of your investment at any date will be equal to the total of the number of units allocated to your investment from each fund multiplied by the unit price for units of that fund on that date. The value of your investment will therefore go down as well as up over time as the unit prices change to reflect the value of the underlying assets. You may, at any time, switch some or all of your money from one fund to another by writing to us to request a switch. We do not make a charge for this service. Therefore, the value of your investment will be the same immediately before and immediately after the switch. The number of switches permitted in any 12 month period is 6. However it is important to note, before you switch from your original fund choice(s), that the funds in your Long Term Savings Plan may 24

27 have different levels of risk and potential return and they may also have different yearly fund charges. In certain circumstances, we may delay switches. This may be because there are a large number of customers wishing to switch fund at the same time, or if there are practical problems selling the assets within the fund. Due to the high cost and time involved in selling properties, a delay of this sort is most likely to happen if you are invested in a property fund (or a fund with a high proportion of property or property related assets). The length of any delay will depend on how long it takes us to sell the assets in the fund. A minimum delay of six months would be likely to apply in this situation. Delayed transactions will be based on the value of units at the end of the period when the transaction actually takes place. When there are more customers moving out of a fund than making new investments in it, we may reduce the value of the units in the fund to reflect the percentage of the costs associated with buying and selling the assets of the fund. The reduction in the value of the affected assets will be different for each fund and is likely to be most significant for the proportion of any fund invested in property. The reduction for any part of the fund invested in external fund managers may happen at a different time to the reduction for the rest of the fund. Funds are managed at an overall level by Irish Life. For some funds, a part or all of the fund assets are managed by companies (external managers) other than Irish Life. There are charges taken from these funds by both Irish Life and these external fund managers. The external fund managers deduct costs and charges from the assets they manage. These will be reflected in the performance of the fund. The level of the charges as a percentage of the overall fund can vary for several reasons. The first reason for the variability in the effect of these charges on the overall fund is the fact that the proportion of the fund that is managed by external fund managers can vary over time. The weighting of the individual investment types may also vary over time. Where the fund invests in other funds, the overall fund charge will also vary accordingly. The split can change in the future mainly due to the availability of assets and also inflows and outflows in the fund. The actual level of the external manager charge will therefore vary depending on the weighting of these factors within the fund. The second reason for the variability in the effect of these charges on the overall fund is if the funds managed by external managers borrow to increase the amount of assets that the funds invest in. Borrowing increases the potential for enhanced returns if assets perform well, but also increases the level of risk of the investment. The external manager charges in relation to investments may be based on the total value of the assets held including any borrowings made rather than on the funds they manage. The amount of borrowing relative to the value of the assets held will determine the level of these charges as a percentage of the funds managed. If the level of borrowing increases relative to the value of assets then the level of charges as a percentage of funds managed would increase. For example, a significant fall in asset values could result in a significant increase in the average level of this charge as a percentage of funds managed. This is because a fall in asset values means that the amounts borrowed would represent a higher proportion of the funds value. Equally, if the level of borrowing reduces relative to the value of assets then the level of charges as a percentage of funds managed would also reduce. For example, a significant rise in asset values could result in a significant decrease in the average level of this charge as a percentage of funds managed. This is because a rise in asset values means that the amounts borrowed would represent a lower proportion of the funds value. The charge could also vary if the fund manager received an incentive fee when they achieve positive investment returns on the funds they manage. This is explained in Section 3 and 25

28 in more detail in your Terms and Conditions Booklet. When these factors apply to a fund we have estimated the expected fund charges for the purposes of the table of benefits and charges set out in Section 3. This is for illustration purposes only and is not a contractually fixed charge. The actual level of the external managers charges may be higher or lower than this depending on the factors outlined above. Can the policy be assigned? You may not assign this policy in whole or in part or assign any of the benefits, rights or duties which may arise under the policy. Is there an opportunity to change your mind? When your welcome pack is issued you will have an opportunity to cancel the plan if you are not satisfied that the benefits meet your needs. You may do this by writing to the: Irish Life Corporate Business Group Affinity Service Team, Lower Abbey Street, Dublin 1. you should contact our head office who will deal with your enquiry. Irish Life Corporate Business Group Affinity Service Team, Lower Abbey Street, Dublin 1. Phone: Fax: code@irishlife.ie Website: Our service team also operate an internal complaints procedure and any complaints you may have will, in the first instance, be fully reviewed by them. If you feel we have not dealt fairly with your complaint, you should contact the Financial Services Ombudsman at: The Financial Services Ombudsman 3rd Floor, Lincoln House, Lincoln Place, Dublin 2. Lo-call: Fax: enquiries@financialombuds man.ie Website: within 30 days from the date we send you details of your plan. On cancellation all benefits will cease and Irish Life will refund your regular payment. We will refund any single payment (or payments), less any reduction in investment values over the period of the investment. Law applicable to your plan Irish Law governs the plan and the Irish Courts are the only courts that are entitled to settle disputes. What to do if you are not happy or have any questions? If for any reason you feel that this plan is not right for you, or if you have any questions, 26

29 b. INFORMATION ON SERVICE FEE There are no charges payable to Irish Life other than those set out in your table of benefits and charges and in your Terms and Conditions booklet. c. INFORMATION ABOUT THE INSURER/INSURANCE INTERMEDIARY/SALES EMPLOYEE Insurer The Term Life Insurance plan is provided by Irish Life Assurance plc, a company authorised in Ireland. Irish Life Assurance plc is regulated by the Central Bank of Ireland. You can contact us at: Irish Life Corporate Business Group Affinity Service Team, Lower Abbey Street, Dublin 1. Phone: Fax: code@irishlife.ie Website: d. INFORMATION TO BE SUPPLIED TO THE POLICYHOLDER DURING THE TERM OF THE INSURANCE CONTRACT We at Irish Life are obliged by law to tell you if any of the following events occurs during the term of your contract: we change our name; our legal status changes; our head office address changes; an alteration is made to any term of the contract which results in a change to the information given in paragraph A(8) of this document. In the interest of customer service, we will record and monitor calls. Insurance Intermediary/Sales Employee The sales adviser should insert details of their name, legal status, their address for correspondence and a contact telephone number/fax number or address and if relevant, the companies with whom agencies are held. No delegated or binding authority is granted by Irish Life to your Financial Adviser in relation to underwriting, claims handling or claims settlement. 27