Lifetime Annuity Plan

Transcription

1 INVESTMENTS PENSIONS INTERNATIONAL ESTATE PLANNING Lifetime Annuity Plan Prepare for retirement, with a guaranteed income for life Client Guide Straightforward Retirement Solutions

2 Why Canada Life? Canada Life has been providing retirement solutions for our customers for a long time. We ve actually been in the UK since 1903, looking after the retirement, investment and protection needs of customers. We re here to help you get ready for your retirement with confidence, by making things clear and straightforward. Visit to find out more. What you can expect from Canada Life Great service, support and financial strength At Canada Life we believe in being here to support you through retirement, so we make it our mission to make the process of dealing with us as easy and as smooth as possible. We re also proud of our heritage and our financial strength. We ve been around for a long time. In fact, we were founded in 1847 in Canada, making us the oldest Canadian life assurance company. Canada Life is part of Great-West Lifeco Inc., one of the largest Canadian life and health insurance companies. We have 769bn of assets under management as at 30 June Great-West Lifeco serves several million people worldwide, providing a wide range of retirement savings and income plans, as well as comprehensive protection contracts for individuals and families. CANADA LIFE HAS BEEN OPERATING IN THE UK SINCE 1903 FINANCIAL STRENGTH 5-STAR AKG RATING 769bn** GREAT-WEST LIFECO ASSETS UNDER ADMINISTRATION 30 MILLION+ 240, ,300 CUSTOMER RELATIONSHIPS* ADVISER RELATIONSHIPS* EMPLOYEES WORLDWIDE* * 1 January ** 30 June Lifetime Annuity Plan Client Guide

3 Your options in retirement With the Lifetime Annuity Plan (LTA) you can provide the financial certainty of a guaranteed, regular income for life. The Lifetime Annuity Plan uses the money you have saved in your pension plan to provide you with a guaranteed, regular income for your lifetime and, if you so choose at the start, your chosen beneficiary s lifetime, for example, your partner. A professional adviser can help you choose the most suitable option for your circumstance. So, how does it work? When setting up your annuity, you have a number of options. You can: Access all your tax-free cash at the start Choose either a single or joint income plan where up to 100% of your income will be paid to your spouse after you die Choose a level, escalating or Retail Price Index (RPI) linked income Choose to have your income in advance (paid as soon as possible after the policy is set up) or in arrears (for example, if paid monthly it would start at the end of the first month) Choose the frequency of any income payments (monthly, quarterly, half yearly or yearly) Choose a guarantee period (from one month to 30 years) this guarantees how long we will pay your income, even if you die during the term Choose to provide an income for your chosen beneficiary on your death (this can be any person aged 35 or over, or 50 and over for enhanced annuities) Choose annuity protection that pays a lump sum to your chosen beneficiary(ies) on your death You may qualify for an enhanced annuity (with a higher income than the standard annuity) Enhanced annuity An enhanced lifetime annuity will pay an income higher than that from a standard annuity. The additional income you receive will depend on your health and lifestyle and is based on the fact that your life expectancy is potentially shorter than someone in a better state of health. I want to receive a regular guaranteed income, payable for life Lifetime annuities Lifetime Annuity Plan Take up to 25% as a tax-free lump sum. All income payments thereafter will be taxed as income Your Annual allowance is unaffected meaning it will not be reduced by the Money Purchase Annual Allowance (MPAA) See Glossary of Terms on Page 7. Lifetime Annuity Plan Client Guide 3

4 Your options in retirement How is the LTA taxed? The annuity income is taxed at your marginal rate once we receive a tax code from HM Revenue and Customs or you provide a valid P45 certificate. Otherwise, you will have a temporary, emergency tax code, which is applied. So any annuity income paid to you from your annuity will be added to any other income you receive (for example, salary/state pension) and even if you currently pay no income tax this could push you into paying basic rate (20%), higher rate (40%) or even top rate (45%) income tax bracket. Death benefits and guarantee period Annuity Protection is available as an option, which means you could have some of your money returned as a death benefit. Should you die before age 75, the capital amount less any income already paid to you would be returned free of tax to your nominated beneficiary or to be paid to your spouse. Once your policy is set up, you cannot change it or cash it in, even if your circumstances change. Your income will stop when you die, unless you have chosen for it to continue under the guarantee period or have taken out annuity protection to provide a lump sum. Inflation will reduce the spending power of your income, especially if you have chosen an income that does not increase each year. You can choose to buy your annuity policy from any annuity provider this is called the Open Market Option. 4 Lifetime Annuity Plan Client Guide

5 Case Study Meet Nigel He is 65 years old, married and looking to fully retire. He is risk averse and does not want to take any risks that could affect the level of income he requires. He is married but his wife Jeanette still works and has her own pension provision when she retires in five years time. Nigel s objectives He has a pension pot of 200,000 and is looking to take all his tax-free cash to pay off his outstanding mortgage and wants the certainty of a guaranteed income for life. He would like to know that Jeanette would receive income from his annuity should he die before that time. His professional adviser explains that a lifetime annuity would be the most suitable product as it is the only retirement pension option which will provide him with a guaranteed income for the rest of his life. Nigel elects to purchase a lifetime annuity with some inflation proofing, which will increase in line with the retail price index and pays him a yearly income of 4,000 (this figure is for illustrative purposes only and actual annuity rates and subsequent income could be higher or lower). When combined with his state pension he feels that he has enough income to cover his essential outgoings as well as provide him with some discretionary spending. He also chooses a five year guarantee period, so that should he die within the first five years, his wife Jeanette will continue to receive the income payments for the remainder of that period. For example, if Nigel died within two years of receiving his annuity, his wife would receive the annuity income payments for the rest of the guarantee, in this case three more years. This gives Nigel: the certainty of a guaranteed, regular income for the rest of his life. the option to have that income paid on a monthly, quarterly, half-yearly or yearly basis. the option for an income that increases each year. the choice of providing an income after his death, for example a spouse, if he were to die before them. the option to protect his savings capital, so that on his death the capital amount (less the income which has already been paid to him) can be passed on to his chosen beneficiaries. Lifetime Annuity Plan Client Guide 5

6 Discover our full range of retirement solutions You can find out more about Canada Life and your retirement options at You can also talk to your professional adviser or contact Canada Life directly to request a personalised illustration. Your professional adviser can give you help and guidance. Retirement Income Planning maximise your pension and invest for your future Lifetime Annuities & Scheme Pensions guaranteed annuities for personal pension and occupational pension scheme members. We also provide enhanced rates based on some medical conditions. Trustee Investment Plan a single and/or regular premium trustee investment for either small self-administered schemes, self-invested personal pensions (SIPP) or final salary occupational pension schemes. Pension Investment Plan a plan that allows you to save for retirement, consolidate existing pension plans and from age 55 take lump sums direct from the plan (known as UFPLS). Flexible Drawdown Plan a plan which gives flexibility to keep your income options open, while allowing you to access all tax-free cash at the start of the plan. Fixed Term Income Plan - provides any combination of a guaranteed income payable for a fixed term and a guaranteed lump sum payable at the end of the fixed term. Pension Wise Before you make any decisions, why not take advantage of the government s Free Guidance Guarantee. You can access free guidance face-to-face from the Citizens Advice Bureau and online or over the phone from the Pension Advisory Service. Find out more from 6 Lifetime Annuity Plan Client Guide

7 Glossary of Terms Annual allowance The maximum amount of tax relievable pension savings you can make, including any third party on your behalf, such as your employer, within a tax year. Beneficiary An individual chosen by you to receive a benefit on your death. Expression of wish form (also known as a nomination of beneficiary form) An indication by you to let us know how and to whom you would like any death benefit to be paid. Lifetime allowance This is the overall limit on how much tax-privileged pension savings a member can draw without facing a lifetime allowance charge. Lifetime annuity These products provide an income for your lifetime. They can also be set up to provide an income for a chosen beneficiary for a guaranteed period, for their lifetime or a combination of the two. Pension Commencement Lump Sum (PCLS) The official term used to describe tax-free lump sum (see tax-free cash). Tax-free cash A sum of money, normally 25% of your pension fund, that is available completely free of tax. Uncrystallised Fund Funds that have not yet been drawn upon to provide pension benefits. Lifetime Annuity Plan Client Guide 7

8 Getting in Touch Your professional adviser will be able to answer any questions you may have about saving for your retirement, and your retirement options with Canada Life. You can also contact us in the following ways: Customer Services Team Canada Life Limited, Canada Life Place, Potters Bar, Herts EN6 5BA Canada Life Limited, registered in England no Registered office: Canada Life Place, Potters Bar, Hertfordshire EN6 5BA. Member of the Association of British Insurers. Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. MAR R