KEY FEATURES OF THE SCOTTISH WIDOWS ENHANCED ANNUITY. Important information you need to read

Transcription

1 KEY FEATURES OF THE SCOTTISH WIDOWS ENHANCED ANNUITY Important information you need to read

2 THE FINANCIAL CONDUCT AUTHORITY (FCA) IS A FINANCIAL SERVICES REGULATOR. IT REQUIRES US, SCOTTISH WIDOWS, TO GIVE YOU THIS IMPORTANT INFORMATION TO HELP YOU DECIDE WHETHER OUR ENHANCED ANNUITY IS RIGHT FOR YOU. YOU SHOULD READ THIS DOCUMENT CAREFULLY SO THAT YOU UNDERSTAND WHAT YOU ARE BUYING, AND KEEP IT SAFE FOR FUTURE REFERENCE. THESE KEY FEATURES SHOULD BE READ WITH THE ENCLOSED ILLUSTRATION. ITS AIMS To provide you with a taxable income on fixed terms for the rest of your life (an annuity), taking into account the personal, medical and lifestyle information supplied. To give you the choice of providing an income for your husband, wife, registered civil partner or other dependant after your death, in exchange for a smaller taxable income for yourself. YOUR COMMITMENT To buy an income with the value of your existing pension plan. To make sure your answers to the personal, medical and lifestyle questions are accurate and complete. RISKS JARGON BUSTER Retail Prices Index The Retail Prices Index is a measure of the level of price inflation in the UK. It measures inflation by calculating the average increase in the prices of a broad basket of goods and services on a month by month basis. If you choose an income that is linked to RPI, it will vary in line with prices and, if RPI is negative, it could go down. If you transfer from another plan any guaranteed benefits associated with this would be lost on transfer. When you die, your income will normally stop. The total amount paid out may be less than the amount that was originally used to purchase the annuity. Once set up, you can t cash in your plan or change the basis of your income, even if your circumstances change. Once you ve bought an annuity, you re locked in for the rest of your life. See Can I change my mind? for more details. If your answers to the personal, medical and lifestyle questions are inaccurate or incomplete we may reduce your income or at worst cancel your policy. If you choose an income that doesn t increase, or increases at a rate lower than future Retail Prices Index (RPI), inflation could reduce what you can buy with it. 1

3 QUESTIONS & ANSWERS WHAT OPTIONS DO I HAVE WHEN MY PLAN IS SET UP? You can choose a type of income that suits you. The income can: be for a fixed amount until you die, or increase at a fixed rate each year, or vary each year in line with RPI so your income could go down as well as up. Normally, you may be able to take a tax-free cash sum of up to 25% of the value of your existing pension fund in exchange for a smaller taxable income. However, if you ve already taken retirement benefits from that fund, such as a tax-free cash sum, you won t be able to take a cash sum from this policy. Please contact your financial adviser or us for more details. You can choose to have monthly, quarterly, half-yearly or yearly income payments which can be made: in advance, where the first payment will be made as soon as possible after your policy has been set up, or in arrears, so, for example, if you choose monthly payments the first payment will be one month after your policy has been set up. There will be no proportionate payment made if you die between payments. This is known as without proportion. You can choose to have your income paid for a minimum period of time (5 or 10 years) also known as a guaranteed period. If you die during that period your income will continue to be paid until the end of the period. You can choose to have a dependant s income paid to your surviving husband, wife, registered civil partner or other dependant after you die. If you ve also chosen a guaranteed period, you will need to choose if their income is with overlap or without overlap : With overlap if you die during the guaranteed period, their income would start at the next date income is due to be paid after your death. During the remaining guaranteed period both your income and the dependant s income would be paid. Without overlap if you die during the guaranteed period, their income would start at the next date income is due to be paid after the end of that period. Only your income would be paid during the remaining guarantee period. If you choose: a guaranteed period or dependant s income, your income will be lower, an increasing income, your starting income will be lower. WHAT WILL MY INCOME BE? The amount of income you get will depend on circumstances when your policy is bought, for example: interest rates; your age; the medical and lifestyle information supplied; charges; how long people are expected to live; the type of income you choose. Your quotation will show you the income you will get from your policy. Remember that the effect of inflation will reduce the future buying power of your income. JARGON BUSTER Inflation The effect of inflation reduces the value of money over time, as the following example illustrates: Today 1,000 After 10 years 781 After 20 years 610 The future value of 1,000, assuming inflation is 2.5% each year 2

4 HOW DO YOU CHECK MY HEALTH AND LIFESTYLE? We may, within six months of your annuity being set up, check the health and lifestyle information you supply in your application. To do this we may ask your doctor to complete a report. Depending on the results we may need to gather further evidence. For example, if you stated you are a smoker, we may ask you to undergo a simple test to confirm your smoker status. WHAT HAPPENS TO MY INCOME WHEN I DIE? Normally, your income will stop when you die. However, if you choose for your income to be paid for a guaranteed period and you die before the guaranteed period has ended, we ll pay the remaining payments to your estate. If you die before age 75, any remaining instalments will be paid free of income tax. If you die after age 75, instalments will be paid net of income tax to your estate. If you ve chosen a dependant s income and the dependant is still alive when you die, we will start to pay their income in line with your annuity conditions. If you die before age 75, any income paid to a dependant will be paid free of income tax. If death occurs after age 75, income will be paid to your dependant net of income tax at their marginal rate. The total amount of income paid to you and any dependant may be less than the amount used to buy the annuity. WHAT ARE THE CHARGES? The following charges can apply to your plan: Any costs for advice and services from a financial adviser can be paid to them from your plan via an adviser charge. If applicable, your quotation will include detail of any such charges. Scottish Widows charges are allowed for in the calculation of your pension. If you have agreed to pay an adviser charge as a percentage of your pension fund, and your pension fund differs from what has been quoted, the adviser charge we pay will differ from the amount shown in your quotation. Your financial adviser should make you aware of any changes to the amount of adviser charge paid and any impact on your income. If you have any questions regarding charges, please speak to your financial adviser. WHAT ABOUT TAX? Income from an annuity will be treated as earned income and will be taxable. If it s possible to take a cash sum from this policy, it would normally be tax free. We ll deduct tax from each income payment before it s paid. HM Revenue and Customs will notify us of the relevant tax allowances and we ll take these into account in working out how much tax to deduct. Tax charges will normally apply if the Government s Lifetime Allowance is exceeded. Please refer to your application for more details or speak to your financial adviser. If you select a joint life annuity, or a guaranteed period, and die before you are 75, any income paid after your death will not normally be subject to income tax, although any income paid to your or your dependant s estate may be subject to Inheritance Tax. The value of the tax benefits of your annuity depend on your individual circumstances. Your circumstances and tax rules may change in the future. For more information on tax, please speak to your financial adviser. 3

5 CAN I CHANGE MY MIND? You can change your mind within 30 days of receiving the policy documents we send to you when your policy is set up. If you do, please tell us of your decision by phone, fax or in writing (see How to contact us for further details), you must return any income payments and, if applicable, any tax-free cash you ve received from us, we ll return the payment used to buy the annuity. We will not return any adviser charge already paid to your adviser. It may not be possible to return the payment to your original pension provider. You may have to buy an annuity with another provider, or if applicable, transfer to another provider. Before committing to buying an annuity you should consider all of the pension options that may be available to you, such as taking a pension encashment or moving to an income drawdown plan. For more details of all your options at retirement, please speak to a financial adviser, or see our Retirement Planning website: retirement If you have received a guaranteed quote from us, then providing you gave us your consent, you will also have received information about whether a higher income is available from other providers on the open market. We recommend you shop around before you make your final decision to help ensure you get the best outcome. 4

6 HOW TO CONTACT US OTHER INFORMATION If you ve any questions please contact us. Call us on during the following times: Monday to Friday 8.00am 6.00pm Saturday 9.00am 12.30pm We may record and monitor calls to help us to improve our service. Fax number Website Office address Scottish Widows, New Business PO BOX 28090, 15 Dalkeith Road Edinburgh EH16 5UG HOW TO COMPLAIN If you ever need to complain, please contact us. If you re not satisfied with our response, you can complain to: The Financial Ombudsman Service Exchange Tower London E14 9SR Tel Website Complaining to the Ombudsman won t affect your legal rights. We ll communicate with you in English. 5

7 TERMS AND CONDITIONS Once your Scottish Widows Enhanced Annuity has been set up, you ll receive a policy document, including policy provisions. We can change some of the terms and conditions at any time. We ll write and explain if this affects your policy. LAW For legal purposes the law of England & Wales, Scotland or Northern Ireland will apply, according to where the benefits are payable under the pension scheme. This information represents Scottish Widows interpretation of the law and HM Revenue and Customs practices as at date of publication. Changes to tax rules and other laws may affect the contract terms. FINANCIAL SERVICES COMPENSATION SCHEME (FSCS) Your plan with Scottish Widows is fully covered by the Financial Services Compensation Scheme. More information about compensation arrangements is available from the Financial Services Compensation Scheme, who can be contacted on or or via their website at SOLVENCY AND FINANCIAL CONDITION REPORT (SFCR) Our SFCR provides information on the performance and management of our business, including its financial strength. It s produced each year and is available on our website at: financial_information/solvency-2-returns.html 6

8 Scottish Widows Limited. Registered in England and Wales No Registered office in the United Kingdom at 25 Gresham Street, London EC2V 7HN. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number /18