Key Features of the Executive Pension Plan (Series A)

Transcription

1 Key Features of the Executive Pension Plan (Series A) Please read this document along with your personal illustration (if you have one) before you decide to buy this plan. It's important you understand how the Executive Pension Plan (Series A) works, the benefits and associated risks.

2 Welcome Contents About the Executive Pension Plan (Series A) 3 Its aims 3 Your commitment 3 Risks 3 Other documents you should consider reading 4 Questions & Answers 5 Is the Executive Pension Plan (Series A) right for me? 5 Is this a stakeholder pension? 5 How flexible is it? 5 Can I transfer money in? 5 How much can I pay into my plan? 5 Where are my payments invested? 5 Can I transfer money out? 6 What are the charges? 6 Additional deductions 6 Loyalty bonus 6 What is a Market Value Reduction? 6 What might I get back? 7 When can I take my benefits? 7 What choices will I have when I take my benefits? 7 Where can I get guidance about what to do with my pension? 7 What about tax? 7 What other benefits can I choose? 8 How will I know how my plan is doing? 8 What happens to the Executive Pension Plan (Series A) if I die? 8 What if the plan is not right for me? 8 Other information 9 How to contact us 11 We would like everyone to find it easy to deal with us. Please let us know if you need information about our plans and services in a different format. All our literature is available in audio, large print or braille versions. If you would like one of these please contact us using the details on the last page. The Financial Conduct Authority is a financial services regulator. It requires us, Prudential, to give you this important information to help you decide whether our Executive Pension Plan (Series A) is right for you. You should read this document carefully so that you understand what you are buying, then keep it safe for future reference. 2 Key Features of the Executive Pension Plan (Series A)

3 About the Executive Pension Plan (Series A) The Executive Pension plan(series A) is a pension arrangement which allows you to save for retirement tax efficiently. Its aims What this plan is designed to do To build up a fund, in a tax-efficient way, to provide for your retirement. To enable your employer to provide extra life cover should you die before you take your benefits. Your commitment What we ask you to do To make a regular monthly or yearly payment or to make at least one single payment at the start of the plan. To allow your pension fund to potentially grow until you take your benefits. If your employer is providing life cover, you must tell us of any change in your health from the time you sign the application form through to the start of your plan, as this could affect your cover. To allow your pension fund to potentially grow until you take your benefits. You cannot normally access your benefits until age 55. Risks What you need to be aware of Investing money can be rewarding but it s not without risk. We ve highlighted the key risks you should consider before investing in this product. The value of your plan can go down as well as up and may even fall below the amount you invested- what you get back is not guaranteed. Inflation will reduce what you can buy in the future. Levels of risk and potential investment performance differ depending on the funds you choose. Please read your Fund Guide for more information. If you withdraw money from your With-Profits Fund we may reduce the value by applying a Market Value Reduction. We explain this in the section Market Value Reduction. Key Features of the Executive Pension Plan (Series A) 3

4 Other documents you should consider reading This document gives you key information about the Executive Pension Plan (Series A). If you want more detail on specific points, please read the following documents. We have highlighted when they are relevant throughout this document. They are all available from your adviser or direct from us. Our contact details are on the last page. Members Booklet Gives you detail on the terms and conditions of the contract. Fund Guide This explains your investment options. Your With-Profits Plan a guide to how we manage the Fund This provides information on how our With-Profits Fund works, and our current approach to managing it. 4 Key Features of the Executive Pension Plan (Series A)

5 Questions & Answers Is the Executive Pension Plan (Series A) right for me? The Executive Pension Plan (Series A) might be right for you if you are looking to save tax-efficiently for your retirement. Is this a stakeholder pension? No, stakeholder pensions are generally available and could meet your needs as well as this plan. How flexible is it? You can change your regular payments at any time, subject to minimum amounts we may set from time to time and subject to your employer s agreement. Your employer would then confirm the details of any new payments to us. You and your employer can make regular payments or one-off lump sum payments into the plan. You can stop paying or take a payment break and restart later if your circumstances change. Please note that this may have an impact on your future benefits. Your employer can arrange for regular payments to your plan to increase automatically each year until your normal retirement date. Can I transfer money in? You are able to transfer money into your plan from other registered pensions schemes you may have. Transfer values are invested in the same was as single payments, but there is no new income tax relief for a transfer value. How much can I pay into my plan? There is no limit on the amount you can pay in annually to your pension plan. However, there will be a tax charge on payments made by you or on your behalf that exceed an annual allowance set by the Government. For more information on this, see the section What about tax for more information on the annual allowance. Where are my payments invested? We will invest all the payments to the plan in up to six funds from a wide range of investment options available to the trustees. Options include the With-Profits and Unit-Linked Prudential Funds, and funds from managers outside the Prudential group. The trustees have control over the choice of investment funds, although they can allow you to choose. If the trustees allow you to choose your investments, you can alter the investment strategy by switching your existing investment into different funds. The first two switches in any 12 month period are free of charge. Subsequent switches are subject to a charge which is currently 25. If this changes in the future we will let you know. Switches out of the With- Profits Fund may be subject to a Market Value Reduction. You can also change the funds in which future payments are invested without incurring a charge. The trustees must confirm any change to the funds (to us in writing) before any changes to the investment strategy are applied and there may be some restrictions on changes that can be made, but we would confirm these at the time. Different fund management charges may apply to new choices of investment fund in some instances. Payments into Unit-Linked Funds will buy units in the chosen funds. The price of each unit depends on the value of the investments in the fund. We work out the value of your plan based on the total number of units you have in each fund. If the unit prices rise or fall, so will your plan value. Money in the various funds may be invested in a wide range of shares and other investments in the UK and abroad. A With-Profits investment is one that aims to smooth the return on your money over the time you have the plan. So you should see a steadier performance year on year, rather than watching the value of your plan fully reflect the rise and fall in stockmarkets. Your payments invested in the With-Profits Fund are pooled with those of other Prudential With-Profits investors to form a fund. We invest this fund in a wide range of investments including company shares, property, Government bonds and deposits. You can get further information from our Your With-Profits Plan a guide to how we manage the Fund. We allocate your share of the profits of the fund by adding bonuses. There are currently two types of bonus: Regular, which we add throughout each year. We can change the rate of Regular Bonus at any time without telling you beforehand. It is not guaranteed that a regular bonus will be added each year, although once added these bonuses are guaranteed on death and at normal retirement date. Final, which we may pay when you take money out of the with-profits fund, although this may vary and is not guaranteed. Key Features of the Executive Pension Plan (Series A) 5

6 Can I transfer money out? You can transfer your fund to another registered pension scheme at any time. We do not charge you for transferring to a new arrangement. However, a Market Value Reduction may apply if you transfer money out of our With-Profits fund. Please see the section 'Market Value Reduction' for more information. What are the charges? For Unit-Linked Funds we deduct an annual management charge that covers the costs of setting up your plan, and managing the investments. This charge is taken as a percentage of the fund value and this varies according to the funds chosen. For With-Profits funds, there are various costs involved with setting up and managing the policy. A charge is deducted from the With-Profits Fund each year to cover these costs. The charge is not explicit you will not see it being taken from your policy. It is deducted from the underlying With-Profits Fund and is already taken into account when we calculate bonus rates for our With-Profits Fund. The charge is currently 1.14% a year. Further information on the operation of the With-Profits Funds is contained in Your With-Profits Plan a guide to how we manage the Fund. There is a charge to pay for all the guarantees the With-Profits Fund supports. We guarantee to not take away bonuses already added when a payment is made because of death and at your normal retirement date and to only apply a Market Value Reduction in certain circumstances. This charge will be taken by making a small deduction each year when deciding Regular and Final Bonuses, so you will not see it on any yearly statement. The total deduction over the lifetime of the plan is currently not more than 2% of any payment made from the fund. Charges may vary if, for example, the long term mix or type of assets held within the With-Profits Fund is changed. If you or your employer stop making payments to your plan before your normal retirement date, we continue to deduct charges from the plan. Our charges may vary in the future and may be higher than they are now. Some of the externally managed funds may also apply a dilution levy. This is a type of charge, which may be applied to a Unit- Linked Fund, to cover the cost of either buying assets (where more people are investing than disinvesting) or selling assets (where more people are disinvesting). If such a charge applies, it will normally be collected via the unit pricing process. A dilution levy is not designed to make a profit, but to cover expenses. We do not currently apply this charge directly to your plan, however, we reserve the right to explicitly charge for any dilution levy that applies. There may be some additional costs which may impact the overall performance of the fund. These costs include trading, dealing costs and property expenses. More information about these may be found in the Fund Guide. Additional deductions Unit Allocation: The percentage of the payment which is used to buy units is shown on the enclosed illustration. Initial Charge: Units are bought at the offer price and sold at the bid price. The bid price is approximately 95% of the offer price. Loyalty bonus The Annual Management Charge is reduced by 0.5% in the loyalty bonus period. A loyalty bonus may apply, dependent on the initial term to the normal retirement date of the plan and whether payments are regular or single premiums. The loyalty bonus period for regular payments applies where the term of the plan to normal retirement date is greater than 10 years. For single payment plans the loyalty bonus applies normally in the 15 years prior to normal retirement date (or after 3 years for terms of less than 18 years). For five year terms, the loyalty period for regular payments applies from expiry. What is a Market Value Reduction? If you take money out of the With-Profits Fund, we may reduce the value of your fund if the value of the underlying assets is less than the value of your plan including all bonuses. This would also apply if the trustees of the plan transferred part, or all, of the scheme. This reduction is known as a Market Value Reduction (MVR). It s designed to protect investors who are not taking their money out and its application means that you get a return based on the earnings of the With-Profits Fund over the period the payments have been invested. 6 Key Features of the Executive Pension Plan (Series A)

7 We apply the MVR to your plan s value including regular and final bonuses. Please read Your With-Profits Plan a guide to how we manage the Fund for more information on bonuses. An MVR will reduce the value of your plan and you may even get back less than has been invested in the plan. We guarantee not to apply an MVR at your normal retirement date or on any claims due to death. For more information on MVR please see "Market Value Reduction a clear explanation" which can be found at What might I get back? The size of your fund when you take your benefits will depend on how much you have paid in, for how long, in which funds and how those funds have performed. When can I take my benefits? The Government currently allows people to start taking their benefits from the age of 55, even if you are still working. You may be able to start taking your benefits earlier if you are in ill health. If benefits are taken any time other than your Normal Retirement date (this is the date you tell us you want to retire when you take the plan out) or on your death, a Market Value Reduction may apply to money out of our With-Profits fund. What choices will I have when I take my benefits? There are four main options which may be used in combination: Uncrystallised Funds Pension Lump Sum take a single or series of lump sums from your pension savings. Flexi-access drawdown a new form of drawdown which will allow you to take an unlimited amount of income or lump sums from a pension fund. This will replace flexible and capped drawdown, although existing capped drawdown plans will continue. A pension annuity an investment that guarantees to pay a secure income for the rest of your life, regardless of how long you live. Pension directly from a pension scheme occupational pensions schemes are not changing. You will still be able to draw a pension from any occupational pension scheme you are a member of. Please contact us as you approach retirement and we will let you know which of these options we may be able to offer you. You may have to transfer to another pension arrangement to take advantage of them all. Under the terms of the current contract you will need to do this by your 75th birthday. There is no minimum guaranteed amount for the pension. Pension income is taxed as earned income. Whatever you decide to do with your pension savings you don t have to stay with us. You should shop around and depending on the choices you make, you may find something more appropriate elsewhere, with alternative features, investment options or charges. Where can I get guidance about what to do with my pension? In addition to the support from your adviser, two free and impartial services, set up by the Government, are available to give you more information about pensions. General guidance on all aspects of pensions is available from The Money Advice Service Telephone For people over 50, Pension Wise is also available. This government service offers guidance to people with personal pensions on all the options available for their pension savings. You can have a free consultation online, over the phone and face to face. Find out more at Telephone What about tax? Tax Relief The employer will deduct member payments from the member s earnings before calculating Income Tax. Employer payments qualify as a business expense for tax purposes and do not result in an additional tax expense for the member. Annual Allowance The Annual Allowance is a limit to the total amount of payments that can be paid to defined contribution pension schemes and the total amount of benefits that you can build up in defined benefit pension schemes each year, for tax relief purposes. Key Features of the Executive Pension Plan (Series A) 7

8 Tax is a complicated subject and you may wish to seek advice if you feel this will affect you. For more information please visit or visit the HMRC website at Money Purchase Annual Allowance The Money Purchase Annual Allowance (MPAA) will apply to you if you have flexibly accessed pension benefits on, or after, 6 April Your pension scheme administrator or provider paying these benefits will have informed you if you are subject to the MPAA at the time they paid the flexible benefits. In any year where you exceed the MPAA you may incur a tax charge and you should seek financial advice if you feel this may affect you. Examples of drawing benefits flexibly include taking income from flexi-access drawdown or taking a cash lump sum direct from your pension plan as an Uncrystallised Funds Pension Lump Sum. For more information visit or the HMRC website at Lifetime Allowance The Lifetime Allowance is a limit on the amount of pension benefit that can be drawn from pension schemes, whether lump sums or retirement income, and can be paid without triggering an extra tax charge. If you think you would like to know more about this, you can find more information by visiting or the HMRC website at Tax rules require careful consideration and you should speak to a financial adviser if you feel this may affect you. Capital Gains Tax Capital gains tax is not paid on the member s pension funds. Income Tax Any pension income will be taxed as earned income. The fund will grow largely tax free. What other benefits can I choose? If your employer is making regular payments, you can have life cover as part of your plan. The extra cover would be paid on top of the value of your pension plan if you die before your normal retirement date. The extra cover can be paid as a lump sum and used to buy dependants benefits. The cost of any life cover will be paid by your employer and depend on factors such as, level of cover, your age, hobbies and health. The extra cover will stop if you stop making payments into the plan. How will I know how my plan is doing? We ll send a yearly statement to show how your plan is doing. You can also ask for an up-to-date valuation from our Customer Services Department, by phoning or writing to us. What happens to the Executive Pension Plan (Series A) if I die? We will pay the value of your fund, plus any additional life cover added to your plan. The trustees will decide who should get the benefits. They will take into account your circumstances when you die and anyone you ve previously nominated to receive any benefits. Benefits payable on death are not subject to income tax and are not normally subject to Inheritance Tax. If the value of all death benefits paid as a lump sum from this and any other scheme is more than the Lifetime Allowance, there will normally be a tax charge. For further details please see What if the plan is not right for me? You can change your mind within 30 days from when you get your plan documents. If you decide, for any reason, within this period, that you don t want the plan, we ll give you your money back. If you do not exercise your right to cancel within the 30 day statutory cancellation period, the contract will become binding. We will not return any money to you except in the form of a benefit payable in accordance with the rules. If you wish to exercise your right to cancel, you should complete and return the Cancellation Notice you will receive or write to us at: Customer Services Department, Prudential Lancing BN15 8GB 8 Key Features of the Executive Pension Plan (Series A)

9 Other information Client category We classify you as a 'retail client' under Financial Conduct Authority (FCA) rules. This means you'll receive the highest level of protection for complaints and compensation and receive information in a straightforward way. Financial Strength Prudential meets EU standards for meeting its financial obligations. You can read our solvency and financial conditions reports at or if you contact us we can post some information to you. Compensation If we get into financial difficulties which may affect our ability to pay your claim, you may be eligible to receive compensation under the Financial Services Compensation Scheme (FSCS). The FSCS is an independent body set up by Government to provide compensation for people where their authorised financial services provider gets into financial difficulties and becomes unable, or unlikely to be able, to pay claims against it. This circumstance is widely referred to as being in default. It is important for you to be aware that you may not always be able to make a claim under the FSCS, and there are also limitations in the amount of compensation you may receive. Any compensation available will depend on your eligibility, the type of financial product or service involved, the investment funds selected (if applicable) and the circumstances of the claim. You can find out more information on the FSCS and examples of limits in the scope of FSCS cover for your plan at or you can call us. Information is also available from the Financial Services Compensation Scheme. Visit their website: Or write to: The Financial Services Compensation Scheme PO Box 300 Mitcheldean GL17 1DY Or call the FSCS: Telephone: Terms and conditions This Key Features Document gives a summary of your plan. Full details are set out in our Members booklet which is available on request using our contact information on the last page, and will also be sent to you when your plan starts. Conflict of Interest We want to make sure that we uphold our reputation for conducting business with integrity. If we become aware that our interests may conflict with yours we will take all reasonable steps to manage it in an appropriate manner. We have drawn up a policy to deal with any conflicts of interest. If you would like to know the full details of our Conflict of Interest Policy, please contact our Customer Service Team on the contact details on the back page. Law In legal disputes the Law of Scotland will apply. Key Features of the Executive Pension Plan (Series A) 9

10 Our regulators We are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Prudential Assurance Company Limited is entered on the Financial Conduct Authority (FCA) Register, FCA Reference Number The FCA Register is a public record of all the organisations that the FCA regulates. You can contact the FCA at: The Financial Conduct Authority 25 The North Colonnade London E14 5HS Telephone: or consumer.queries@fca.org.uk Prudential Regulation Authority details: The Prudential Regulation Authority Bank of England Threadneedle St London EC2R 8AH Telephone: enquiries@bankofengland.co.uk Communicating with you Our plan documents and members booklet are in English and all our other communications with you will be in English. How to make a complaint If you have a complaint, please get in touch with us and we will do everything we can to resolve it. You can also ask us for details of our complaints handling process. Our contact details are in the How to contact us section at the back of this document. If you re not satisfied with our response, you can take your complaint to the Financial Ombudsman Service who help settle individual disputes between consumers and businesses providing financial services: Financial Ombudsman Service Exchange Tower London E14 9SR Telephone: or Or visit the website: Help is also available from the following bodies: The Pensions Ombudsman 11 Belgrave Road London SW1V 1RB Telephone: The Pensions Ombudsman is an independent organisation, set up to investigate complaints about pension administration. The Pensions Advisory Service (TPAS) 11 Belgrave Road London SW1V 1RB Telephone: The Pensions Advisory Service is an independent, government funded body that gives free advice to members of the public about pensions. These services are free and using them won t affect your legal rights. 10 Key Features of the Executive Pension Plan (Series A)

11 How to contact us If you want to contact us before you buy this plan, you can write or phone: Write to: Prudential Lancing BN15 8GB UK Phone: Monday to Friday 8am to 6pm. We may record or monitor calls to improve our service. If you are a deaf customer, who is also a British Sign Language (BSL) user, you can contact us using a Video Relay service. The service, provided by SignVideo, connects customers to fully qualified, registered NRCPD interpreters who will relay your conversation with a member of our customer service team. There is no cost for using this service to call Prudential and we re available to help you Monday to Friday, 8am to 6pm. Keep in touch It s important that we keep in touch so, if you change your address or any of your contact details, please let us know. Key Features of the Executive Pension Plan (Series A) 11

12 Prudential is a trading name of The Prudential Assurance Company Limited, which is registered in England and Wales. This name is also used by other companies within the Prudential Group. Registered office at Laurence Pountney Hill, London EC4R 0HH. Registered number Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. P745A 03/2018