Policy Conditions of the Group Stakeholder

Transcription

1 Policy Conditions of the Group Stakeholder Reference MPEN30/N2-T 10/2017 These are our standard terms and conditions on which we intend to rely. You should read these terms carefully. If you do not understand anything please ask for further information.

2 Your policy booklet This booklet is divided into 7 sections 1 General information and glossary of terms 1.1 General information 1.2 General policy provisions 1.3 Glossary of terms 2 Contributions 2.1 Paying contributions 2.2 Option to automatically increase regular contributions 2.3 Option to reduce regular contributions 2.4 Stopping regular contributions 2.5 Starting regular contributions again 2.6 Single contributions 2.7 Making transfer payments to the policy 3 Benefits 3.1 General information 3.2 Taking benefits at the chosen retirement age 3.3 The option to choose an early retirement age 3.4 The option to choose a late retirement age 3.5 Payment of benefits at retirement 3.6 Proving your age and that you are entitled to receive a pension 3.7 Benefits on death 3.8 Transfer payments 4 How we work out the amount of your fund 4.1 General information 4.2 If you die before taking retirement benefits 4.3 If you take retirement benefits at the chosen retirement age 4.4 If you take retirement benefits at the late retirement age 4.5 If you take retirement benefits at an early retirement age 4.6 If the value of the member s fund is transferred to another scheme or policy 4.7 Delaying the working out of the member s fund 5 Investment funds 5.1 General information 5.2 Units 5.3 Unit-linked investment funds 5.4 Adding units to a policy 5.5 Working out the number of units to add 5.6 Closure or withdrawal of a fund or a significant change to a fund 5.7 Option to switch between investment funds 5.8 Lifetime investment programme option 5.9 Redirecting contributions to different investment funds 5.10 The right to delay a transaction 5.11 External funds 5.12 Reassurance funds 5.13 Change of investments 6 Charges 6.1 General information 6.2 Annual management charge 6.3 Fund expenses 6.4 Changes to annual management charge 6.5 Changes to charges 7 Further information 2

3 Policy Conditions of the Group Stakeholder Your policy booklet This policy booklet is about your pension policy. Introduction This policy booklet contains the main terms and conditions of the Group Stakeholder Scheme. These terms and conditions are also governed by the rules of the Aviva (No.5) Stakeholder Personal Pension Scheme EP. If there is any inconsistency between the scheme rules and this policy booklet, the scheme rules prevail. Please ask us if you would like a copy of the scheme rules. HMRC or the Department for Work and Pensions (DWP) may require us to change the rules or the policy to meet with any changes to law or regulation. We will tell you of any changes which are needed to meet such requirements. This policy is designed to meet the minimum requirements needed for Stakeholder Pension status. If the minimum standards for Stakeholder Pension status are changed, we may amend the terms of the policy. We will tell you of any changes which are needed to meet such requirements. Until we have received satisfactory proof you are entitled to any benefits under the policy, we reserve the right to: delay calculation of any amount due under the policy; and/or delay payment of any benefit due under the policy. Only those options described in this policy booklet will be made available under this policy unless you are notified in writing to the contrary by us. You will need to tell us as soon as you move to another address. If there is any inconsistency between the law, HMRC and/or DWP requirements relating to Stakeholder Pensions, and this booklet or the scheme rules, the law, HMRC and/or DWP requirements will apply. Your policy document A policy document is the evidence of the legal contract between us as the pension provider and you as the member. Your Group Personal Pension policy document is in two parts. This policy booklet which gives the general terms and conditions which apply to the policy, including a glossary of the terms that we use. Your policy booklet may also be referred to as terms and conditions, and vice versa. The policy schedule which gives more details which are specific to your own policy. Your policy schedule may also be referred to as your membership certificate, and vice versa. We may issue more schedules in the future if some details change. We may also issue endorsements setting out any changes we make to this policy booklet. You should keep these documents in a safe place as you may need to produce them when benefits become payable. In this booklet, references to writing or written include any other means of communication agreed between us and you. The Aviva (No.5) Stakeholder Personal Pension Scheme EP Your Group Stakeholder Pension is part of the Aviva (No.5) Stakeholder Personal Pension Scheme EP. The Aviva (No.5) Stakeholder Personal Pension Scheme EP is operated under the terms of a Deed Poll and general rules. You can ask us for a copy of the Deed Poll and the rules. The Aviva (No.5) Stakeholder Personal Pension Scheme EP is a registered pension scheme. This means that your policy has the tax advantages enjoyed by registered pension schemes. The Scheme Administrator is Aviva Life & Pensions UK Limited whose administration headquarters address is: Aviva PO Box 1550 Salisbury SP1 2TW United Kingdom 3

4 Policy Conditions of the Group Stakeholder Independent Help The Pensions Advisory Service (TPAS) is available to assist members and beneficiaries of the scheme in connection with any difficulties which they may have failed to resolve with the administrators of the scheme, including the provision of further information to members, or to provide assistance in obtaining the correct legal entitlement for a pension scheme. If TPAS is unable to resolve the problem but believe a member s complaint is valid, it will assist a member in making a formal complaint to the appropriate Ombudsman (the Pensions Ombudsman or the Financial Ombudsman Service). The Pensions Ombudsman investigates complaints of injustice in consequence of maladministration of the scheme. The address of the Pensions Ombudsman is the same as for TPAS. The address of TPAS is: 11 Belgrave Road London SW1V 1RB United Kingdom Phone: Fax: enquiries@pensionsadvisoryservice.org.uk Website: The Financial Ombudsman Service is available to investigate and determine complaints or disputes of fact or law in relation to the Scheme. The address of the Financial Ombudsman Service is: The Financial Ombudsman Service Exchange Tower London E14 9SR Phone: or complaint.info@financial-ombudsman.org.uk Website: Making a complaint won t affect your legal rights. 1 General information and glossary of terms 1.1 General information Throughout this policy, words in the singular will include the plural and vice versa, unless we say otherwise. Also, words that are in the masculine gender will include the feminine and vice versa. When we refer to any law or regulation in this policy, this will include any later change made to that law or regulation, or any change that is connected with it. Definitions of some of the terms used in this policy are shown in the glossary on page 5. Some of the words are also defined in the rules of the scheme. 1.2 General policy provisions In making decisions and exercising discretions given to us under these policy terms, we will act reasonably and with proper regard to the need to treat you and our other customers fairly We reserve the right from time to time by giving you 30 days written notice, so far as it is practicable to do so, to make such changes or additions to these terms and conditions as are reasonably required to reflect: changes in applicable pensions, tax or other law, legislation, regulation or industry codes of practice which affect your policy; changes in how the London Stock Exchange or other relevant investment or regulated markets may work which may impact on the operation of your policy; changes in investment/share dealing administration or other infrastructure facilities, systems or means of communication which impact on the provision and operation of your policy and which are outside of our control; changes to services relating to your policy supplied to us by third parties; changes in circumstances or the happening of any event which is outside of our control which means that the policy s terms and conditions operate in a way which is unfair to you or our other policyholders; 4

5 changes resulting from the introduction of new systems, services, and changes in technology outside of our control; changes in circumstances or the happening of any event which is outside of our control and which makes it impossible, impracticable or economically unviable for us not to make a change to the terms and conditions, provided that any such change is not unfair to you or our other policyholders; changes required to remedy obvious errors We reserve the right from time to time to make changes or additions to these terms for any administrative or other reason, which may or may not have a detrimental effect on you, and which is not set out in If you have suffered a material detriment as a result of those changes or additions you may notify us and you will be free to transfer your policy to another registered pension scheme. We will waive any transfer out charge and any new or increased charges provided that the transfer is made within three months from the date on which we gave you written notice of the change or addition We will send any notice to your last known address on our records. We will assume that any notice sent by post will be received by you within three working days There is a free choice about the law that can apply to a contract. We propose to choose the law of England and Wales, and, by entering into this contract, you agree that the law of England and Wales applies to this policy These policy terms will only apply to your policy provided they are not held by a relevant court or viewed by the Financial Conduct Authority (FCA) to be unfair contract terms or reasonably considered by us to be unfair contract terms. If a term is held, viewed or considered to be unfair it will, as far as possible, still apply but without any part of it which would cause it to be held, viewed or considered unfair No person shall have a right under this policy to any payment of benefits to or in respect of him or her which, if paid, would be an Unauthorised Member Payment as defined in the act. In particular, no person shall have the right to assign or surrender or agree to assign or surrender any benefit except as permitted by the act The Scheme Administrator will never knowingly make an Unauthorised Member Payment. However, if the Scheme Administrator inadvertently makes an Unauthorised Member Payment the Scheme Administrator shall be entitled to recover such payment from the member s fund or, where this is insufficient, you will be personally responsible for repaying such payment. 1.3 Glossary of terms We use certain technical words and phrases in this policy booklet. To help you, this section explains what they mean. Act means the Finance Act 2004 (as amended from time to time). Administration headquarters means Aviva, PO Box 1550, Salisbury, SP1 2TW, United Kingdom, or such other address as we may advise from time to time. Annual management charge means the annual management charge for each investment fund, as described in section 6.2. Automatic enrolment means the process by which an employer enrols jobholders and entitled workers into the scheme, as required under automatic enrolment regulations. Automatic enrolment regulations means the provisions relating to pension scheme membership for jobholders set out in Part 1 of the Pensions Act 2008, as amended, and supporting secondary legislation (including but not limited to The Occupational and Personal Pension Scheme (Automatic Enrolment) Regulations 2010, all as amended from time to time. Available investment fund means one of the range of unit-linked pension investment funds set out in the investment literature made available for the Scheme that you can invest in as described in section 5.3. Business day means a day when the London Stock Exchange is open for transacting business.. Chosen retirement age is the age at which you expect to retire. It is chosen when your policy is set up and is shown on the policy schedule. Civil partner means a registered civil partner as set out in section 1(1) of the Civil Partnership Act

6 Policy Conditions of the Group Stakeholder Date of receipt means: (a) in the case of a letter, the business day on which a letter is received by us at our administration headquarters from you, with the exception that if a letter is received by us after 5.00pm on a business day or is received on a day which is not a business day it will be treated as having been received on the following business day; (b) in the case of a fax or electronic communication, the next business day unless it is received after 5.00pm in which case it will be two business days after receipt by us; and (c) in the case of contributions, the date of receipt by us, or, if that is not a business day, the next business day. Default investment fund means the default investment fund specified in the membership pack or such other replacement default investment fund as is from time to time notified to you in accordance with the terms of this policy. DWP means the Department for Work and Pensions. Eligible jobholder means a person who meets the requirements of sections 1(1) and 3(1) of the Pensions Act 2008 in relation to the employer. Entitled worker means a person who meets the requirements of section 9(1) of the Pensions Act 2008 in relation to the employer and who has opted into membership of the Scheme in accordance with section 9(2) of the Pensions Act External fund means a fund managed by an external fund manager into which our investment funds may invest. External fund manager means a company other than us that manages an external fund. HMRC means HM Revenue & Customs. Investment company means a company which operates or manages an investment fund. You can find more details in section 5.1. Investment fund means one of the range of funds you can invest in under your policy (including a reassurance fund). Jobholder means an eligible jobholder or a person who meets the requirements of Section 1 (1) of the Pensions Act 2008 in relation to the employer and who has opted into membership of the employer s pension scheme in accordance with section 7 of the Pensions Act Lifetime investment programme means any investment option made available under the scheme under which funds are automatically switched between available investment funds depending on your age or the number of years to a selected date for the commencement of your benefits. This option will be fully described in the information made available to you. Member s fund means the value of the policy at the time we work it out. It is worked out in line with section 4. Money market funds means funds that invest primarily in cash/money markets. For more information on these funds and the risks specific to these funds, please refer to the Risks specific to money market funds statement in the Choosing your investment funds guide. Protected pension age is as set out and defined in paragraphs of Schedule 36 of the act. Reassurance fund means a specific type of external fund operated or managed by another life insurance company. Registered pension scheme means a pension scheme which is registered by HMRC pursuant to Chapter 2, Part 4 of the act. Save More Tomorrow option is the option for an employer to offer you the facility to increase your contributions each year, at a fixed rate, for a fixed term or until a predetermined level of contribution is reached. Scheme means the Aviva (No.5) Stakeholder Personal Pension Scheme EP or any other scheme which replaces it. Stakeholder pension is a type of pension which must meet the standards set by the DWP and the HMRC. These are mainly to do with payment levels, cost and terms and conditions. When the standards have been met, the scheme can be registered with the Pensions Regulator. A pension scheme can only be a Stakeholder Pension if it is registered with the Pensions Regulator Tiered contributions option means the option for an employer to set employer and/or your contributions based upon age, length of employment or length of membership in the scheme. The employer will change contributions automatically over time as the policyholder satisfies the scheme criteria for the next contribution level. 6

7 Unit each investment fund is divided into one or more series of notional units. We allocate units to a policy so that the value of that policy may be worked out from time to time. As the holding of units is notional it does not create any interest in the assets we treat as part of an investment fund. Unit price means the notional value of each unit in an investment fund as worked out in section The unit price is used to work out the value of policies from time to time. Valuation means working out the value of an investment fund usually so that the unit price of the units in that investment Fund can be determined. This is described in section 5. You/Your normally means the member specified in the policy schedule. However, it can mean the spouse, civil partner or dependants of the member if they are receiving a pension payable after the death of the member. We/Us/Our means Aviva Life & Pensions UK Limited or its successors in title. It can also mean a subsidiary or associated company which is responsible for the operation of the policy, or part of it. It may, for example, include a company which operates or administers an investment fund. 2 Contributions 2.1 Paying contributions You and your employer, if applicable, can make contributions to the policy within the contribution limits set out in the scheme rules. We may set a minimum level of contribution and we reserve the right to change this from time to time in accordance with the terms of this policy. You can get details of the current minimum level of contribution from us. Contributions which are paid on a regular weekly, monthly, four-weekly or annual basis will be referred to as regular contributions. The policy schedule will show: the amount of the contributions that are being paid to the policy; how often the contributions need to be paid. All other contributions will be referred to as single contributions and may be paid at any time by cheque or any other way that we may agree to. Contributions cannot be paid after retirement benefits are taken. If this policy forms part of an employer s pension scheme which has been arranged to comply with automatic enrolment regulations, the following requirements must be met whilst you remain a jobholder for whom your employer is required to provide active membership: total contributions must be at least the minimum level required under the automatic enrolment regulations; the level of contributions paid by your employer must be at least the minimum level required under the automatic enrolment regulations; and where a shortfall occurs between these amounts whilst you remain an active member of this scheme you must pay contributions which, however calculated, are equal to or more than the shortfall. We don t take extra charges if contributions stop or restart, unless we have sent you an endorsement to your policy showing that we do or your illustration shows that we do. If you and your employer are making regular contributions, you or your employer must pay them by Direct Debit unless we have agreed another method of payment. If you and your employer want to make single contributions, you must pay them by cheque unless we have agreed another method of payment. 2.2 Option to automatically increase regular contributions In addition to the rights under section 2.2 the amount of any regular contribution may be increased automatically with effect from any contribution due date. If the level of regular contributions is determined by reference to your age, length of employment or length of scheme membership under the Tiered Contributions Option then details of the level of contribution payable now and in the future will be shown on your Key Features illustration. The terms which apply to all automatic increases will be those that are current at the time of each increase. If the level of regular contributions is determined by reference to your length of scheme membership under the Save More Tomorrow option, then details of the level of contribution payable now and in the future will be shown on your Key Features illustration. 7

8 Policy Conditions of the Group Stakeholder Once you have elected to join your employer s scheme on a Save More Tomorrow basis, you may cancel future Save More Tomorrow increases by contacting your employer at least 30 days before the next increase is due to take place. The terms which apply to all automatic increases will be those that are current at the time of each increase. If automatic increases are available under your scheme, details of any tiered contribution or Save More Tomorrow options available to you will be shown in your membership pack or can be obtained from your professional financial adviser. 2.3 Option to reduce regular contributions You or your employer, if applicable, may want to reduce the regular contributions. This can be done from any date when regular contributions are due as long as we are told. The reduced contribution must be the same or more than our minimum at that time. The terms which apply to the reduced regular contributions will be those that are current at the time the reduction is made. 2.4 Stopping regular contributions You and your employer, if applicable, may want to stop paying regular contributions. This can be done from any date when regular contributions are due as long as we are told at least 30 days in advance. If regular contributions to the policy stop, the policy is made paid-up. Regular contributions must be paid in the way described in: section 2.1 Paying contributions ; and the policy schedule. If they are not, the policy will be made paid-up either on notification from you, or on the day before the anniversary date after the date when the first unpaid regular contribution should have been paid. You may become ineligible for contributions to be paid into the policy. If so, the policy will be made paid-up from the date that you become ineligible. We will deal with contributions received after that date in line with the scheme rules. 2.5 Starting regular contributions again Your policy may have been made paid-up as described in section 2.4. If we agree, you or your employer, if applicable, can restart paying regular contributions so long as you are still eligible to contribute to a pension. From the date your contributions begin, the terms and conditions which apply to this type of reinstatement will either: (a) allow regular contributions to be re-started and paid to your existing policy; or (b) start a new policy and allow regular contributions to be paid to the new policy. You can get details of the method that would apply to you from us. 2.6 Single contributions You or your employer, if applicable, may make a single contribution at any time before the date that retirement benefits are taken. The amount of the single contribution must not be less than the minimum that we will accept. The terms which apply to a single contribution will be our current terms at the time the payment is made. 2.7 Making transfer payments to the policy You may ask us to accept a transfer payment into the policy from other registered pension schemes or qualifying recognised overseas pension schemes. The conditions for accepting transfer payments are in the scheme rules. On receipt of any such request we will advise you of the terms which will apply to the investment of the transfer payment into the policy which will be our current terms at the time that we receive the transfer payment. 3 Benefits 3.1 General information The policy gives benefits when you retire or if you die before retirement benefits are taken. You must tell us when you want to take benefits by writing to us (or any other way that we may agree to) at our administration headquarters so that we can prove that the person making this request is allowed to do this. You can take retirement benefits under this policy at any of the following times: Between your 55th and 75th birthdays. Before your 55th birthday but only if HMRC has agreed to this, where you have been notified that you have a protected pension age. 8

9 Before your 55th birthday if retirement is due to ill health which stops you from continuing to work. You do not need to cease employment before you take your benefits. If you take your benefits anytime before your 75th birthday and remain in employment and your employer is required to pay contributions to comply with automatic enrolment regulations we may set up a new policy within your employer s pension scheme. 3.2 Taking benefits at the chosen retirement age The policy will be set up with a chosen retirement age. This is the age at which you expect to retire. This may be changed in line with sections 3.3 and 3.4. We will write to you at least four months prior to your chosen retirement age to explain the options available to you. In addition at least six weeks prior to your chosen retirement age we will provide a statement of benefits showing what sum of money may be available to purchase a lifetime annuity at your chosen retirement age. To take benefits at the chosen retirement age you must tell us in writing (or by any other means that we may agree to) and provide us with all the information we require at least 14 days before the chosen retirement age. The member s fund available to secure benefits at the chosen retirement age will be worked out in line with section 4.3. If you do not tell us that benefits are to be taken at the chosen retirement age we will leave the policy unchanged. 3.3 The option to choose an early retirement age You can choose to take retirement benefits before the chosen retirement age (or the late retirement age, if applicable). This depends on the dates described in section 3.1. The chosen date is known as the early retirement age. To choose this option, you must tell us in writing (or by any other means that we may agree to). The early retirement age will be either: the date we receive all of the information required to enable us to complete your request; or The member s fund available to secure benefits at the early retirement age will be worked out in line with section The option to choose a late retirement age You can choose to delay taking retirement benefits until a particular date after your chosen retirement age. This date is known as the late retirement age. It must be within the dates set out in section 3.1. To choose this option you must tell us in writing (or by any other means that we may agree to) before the chosen retirement age. If you or your employer, if applicable, are paying regular contributions you may continue to pay them. To take benefits at the late retirement age you must tell us in writing (or by any other means that we may agree to) and provide us with all the information before the late retirement age. The member s fund available to secure benefits at the late retirement age will be worked out in line with section Payment of benefits at retirement When you retire the member s fund will be used to buy a pension for: You, or You, plus a pension for your spouse, civil partner and/or dependants which will be paid after you die. When you retire, you can choose to take part of the retirement benefits as a tax free lump sum if the scheme rules allow this. Any pension must be set up and paid in line with the scheme rules. Pensions cannot be assigned or cashed in unless the scheme rules allow it. The scheme rules allow the member to choose which insurance company provides the pension. If we are chosen, the amount of pension the member s fund buys will depend on our annuity rates when the pension is bought. If another insurance company is chosen to provide the pension, the amount that is transferred to that insurance company will be the value of the member s fund worked out in line with the relevant section of section 4, less any tax free lump sum paid by us. any other date allowed and that we agree with you. 9

10 Policy Conditions of the Group Stakeholder 3.6 Proving your age and that you are entitled to receive a pension Before any pension is bought, you must prove your age and identity to our reasonable satisfaction. If a pension is being bought for a spouse, civil partner and/or dependant, their age and identity must also be proved. We can ask for evidence that pensioners are still alive before continuing to pay their pension. 3.7 Benefits on death If you die before taking retirement benefits, the member s fund will be available to provide benefits in line with the scheme rules. The value of the member s fund will be worked out in line with section Transfer payments If you want to, the value of all or part of the policy can be transferred to another scheme or policy which is a registered pension scheme or qualifying recognised overseas pension scheme. You can find full details on this in the scheme rules. The transfer must be made before retirement benefits are taken. The transfer date will be either: the date that we receive all of our requirements to enable us to complete your transfer request; or any other date that we allow that you agree with us. You should ask us for a transfer payment in writing (or by any other means that we may agree to). The amount of the transfer payment will be worked out in line with section How we work out the amount of your fund 4.1 General information The policy can only be cashed in to provide benefits which are allowed by the scheme rules. When we work out the value of the member s fund, we may make what we believe to be, a reasonable allowance: for any levy imposed by law; for any current or potential liability; or an adjustment arising from: changes to the terms of the policy as described in section 1.2.2; compliance with a court order; the correction of an error that would otherwise affect the value of the member s fund; the deduction of any tax charge in connection with an unauthorised member payment as defined in the scheme rules. 4.2 If you die before taking retirement benefits On the date we receive written notification of your death, units will be cancelled, realising your policy value, and the proceeds held until we are required to make payment. We may pay interest from the date we realise your policy value until the date we receive our last requirement to make payment. The amount of interest will depend on the interest rates we are using at the time. We will deduct income tax from the interest before it is paid, in accordance with tax law applicable at the time. We will not pay interest if it is below our minimum level. 4.3 If you take retirement benefits at the chosen retirement age If you take retirement benefits at the chosen retirement age the value of the member s fund will be equal to: the number of units in each investment fund attaching to the policy when we receive all the information required to make the payment; multiplied by their unit price at the date we receive all the information required to make the payment. 4.4 If you take retirement benefits at the late retirement age If you take retirement benefits at the late retirement age the value of the member s fund will be equal to: the number of units in each investment fund attaching to the policy when we receive all the information required to make the payment; multiplied by their unit price at the date we receive all the information required to make the payment. 10

11 4.5 If you take retirement benefits at an early retirement age If you take retirement benefits at an early retirement age the value of the member s fund will be equal to: the number of units in each investment fund attaching to the policy when we receive all the information required to make the payment; multiplied by their unit price at the date we receive all the information required to make the payment. 4.6 If the member s fund is transferred to another scheme or policy If the value of the member s fund is transferred to another scheme or policy the value of the member s fund will be equal to: the number of units in each investment fund attaching to the policy on the transfer date (in line with section 3.9); multiplied by their unit price at the date we receive all the information required to make the payment. 4.7 Delaying the working out of the member s fund We may delay working out the value of the member s fund if the policy is affected by any of the situations described in section Investment funds 5.1 General information We will make a range of investment funds available. You can find out more about how these work in section 5.3 Unit-linked Investment funds. We may change the number of funds from time to time. We may also close funds in line with section 5.6 What happens if an investment fund is closed and may make new funds available. We may operate these funds ourselves or we may appoint external fund managers to do this. (In this policy booklet, the company operating or managing an available investment fund is known as the investment company ). We may change or end an arrangement we have with another company at any time, as long as: the member s rights to benefits are not reduced at the time the arrangements are changed or ended; and we make other arrangements for the policy. We, the investment company or its investment manager will take into account the general aims or objectives of the investment fund but, apart from this, will have full discretion in relation to the fund s investment policy. We will endeavour to give you prior written notice of any material change in the risk profile or investment strategy of an investment fund where it is possible to do so. We may make available investment funds which mainly invest in funds managed by other investment companies or are managed specifically by other life insurance companies. In this policy booklet these funds are known as external funds. You can find more information about these in sections 5.11 and We may change the range and number of External Funds available at any time. We may limit the range and number of investment funds available for particular policies. A policy cannot invest in more than ten funds at any one time. You can ask us for details of the investment funds available. If you do not choose an investment fund into which contributions to your policy will be invested, then all contributions will be applied to the default investment fund. 11

12 Policy Conditions of the Group Stakeholder We reserve the right from time to time by giving you 30 days written notice, so far as it is practicable to do so, and provided it shall not have a detrimental effect upon your policy, to make changes or additions to the investment funds as are reasonably required: to continue to manage any investment fund in line with any aims that we have already set out; or to continue to value any investment fund in line with the terms set out in this policy. We may also stop all dealings in units for a temporary period for any of the above reasons or for any of the reasons set out in section If an event described in section 1.2.2, above, or 5.6 means that we decide to make changes to or to close an investment fund but it does not affect all of the investment funds then we will endeavour to tell all those policyholders with units in the affected funds at least 30 days before the date the funds will be withdrawn, converted, merged, closed to new payments or unit exchange or will be subdivided. Where we are unable to give 30 days notice we will give as much notice as is reasonably practicable. These policyholders will then have 30 days to transfer units into any other available investment fund. The policyholders wanting to do this must ask us in writing (or in any other way that we may agree to). We will deal with the transfer in the way we describe in section 5.7. If no response is received confirming an alternative investment fund to be used, within the notice period, we will surrender all units that you hold in that fund and use the proceeds to purchase units in the default investment fund, or in the event there is no default investment fund, a fund of our choice, at all times acting reasonably. We will deal with the transfer in the way we describe in section 5.7. We reserve the right to withdraw the default investment fund in respect of past and/or future contributions and to nominate a new default investment fund at all times acting reasonably and subject to section We will endeavour to give you at least 30 days written notice of any change in the default investment fund applicable to you where it is possible to do so. 5.2 Units Each investment fund is divided into shares of equal value. These are known as units. We or the investment company can join these units together or divide them. There may be more than one series of units within any investment fund. If so, each set will be treated as a separate fund in its own right for the purposes of valuing funds and working out unit prices. Each investment fund is divided into units so that individual policies can be valued when working out the benefits that can be paid. Units are notional and the assets treated as part of an investment fund belong to the investment company or us. 5.3 Unit-linked investment funds How an investment fund is valued The value of a unit-linked investment fund is the total value of the assets, plus income less any fees, held by that investment fund as at a particular point in time. However, the total value can be changed in line with the paragraph below. The value is worked out by using either: prices which are publicly available; or the opinion of independent valuers; or recognised market quotations; or the opinion of a stockbroker or market valuer. For freehold and leasehold property the value will be based on the most recent valuation of the property made by an independent valuer. This will then be amended to take account of changes in property prices since the last valuation. Each investment fund will bear all the costs and expenses which are associated with it. These include: the costs of buying and selling the assets of the fund; all expenses connected with the assets of the fund (including the costs of management, maintenance and valuation of properties, loan interest and any other borrowing costs); any charge made by a body which regulates pensions or insurance companies; any current or potential liability of the fund; the gross tax notionally incurred (either directly or indirectly) by the fund; and 12

13 any loss which has happened because of exceptional circumstances and which is relevant to the fund. The costs and expenses which apply to your policy will take account of the restrictions which apply to stakeholder pensions. If there are any costs or expenses which cannot be associated with a particular investment fund, we or the investment company at all times acting reasonably can decide which investment funds the amount will be taken from and the amount to be taken from each of those investment funds. In effect, two valuations of each fund are made, one having regard to the prices at which the assets might be purchased ( Purchase Valuation ) and the other having regard to the prices at which assets might then be sold ( Sale Valuation ) How often a unit-linked investment fund is valued The Investment company or we will arrange for each unit-linked investment fund to be valued at least once a week. In practice, the investment funds will be valued more often; normally each working day How unit prices are worked out In order to protect the interests of all policyholders in an investment fund, we will calculate the investment fund s unit price based on the value of the investment fund on either a purchase valuation or sale valuation basis. If the investment fund is increasing, the unit price will generally be based on a purchase valuation basis. If the investment fund is contracting, or if we believe the investment fund needs to sell assets to satisfy cash-ins of units, then a sale valuation basis may be applied. 5.4 Adding units to a policy Units are added to your policy on the later of the following dates: for contributions paid by cheque, direct credit transfer or individual direct debit, on the date of receipt of the contribution at our administrative headquarters. for contributions paid, other than by cheque, direct credit transfer or individual direct debit, on the date of receipt of the instruction. the date we receive our last administrative requirement. For example, if we receive a single contribution cheque but also require a completed application form, we will not invest the contribution received until the date we receive the application form. 5.5 Working out the number of units to add When a contribution is paid into a policy, we work out the number of units to add to the policy by dividing the amount of the contribution by the unit price on the date that we add the units. We will allocate units to the investment funds in line with the written instructions that you have given us. Units in the policy may only be held in a maximum of ten investment funds at any one time. 5.6 What happens if an investment fund is closed We reserve the right at any time to close any investment fund(s) provided we believe it is reasonable to do so and it is for one of the following reasons: The fund becomes too small or too large to be managed effectively; Assets to match the fund s aims or strategy are not available (including but not limited to where the fund is linked to an external fund the closure of that external fund); The costs of managing the fund become prohibitively expensive (including but not limited to the charges imposed by an external fund manager); There are significant changes outside of our control (for example in financial markets or the economy) or there are legislative or regulatory changes which mean that the fund is no longer able to operate in accordance with its stated aims; The fund has underperformed over a significant time period; Where the fund is linked to an external fund we have reasonable doubts as to the governance of that external fund (including Treating Customers Fairly considerations). If a fund is closed, we would cease to accept future contributions (including those resulting from exercise of the switching option or redirection option) into the 13

14 Policy Conditions of the Group Stakeholder closing fund(s) and would have the right to replace units in that fund (the closing fund ) already allocated to the policy with units of another fund(s). We will where practicable give you not less than 30 days previous written notice of our intention to make such replacement(s). You may notify us before the expiry date of such notice period, of the units of which fund(s) you wish to replace for the units of the closing fund(s), but we reserve the right not to replace the units with units of the With-Profits Sub-Fund. If you do not give such notification, we will replace the units of the closing fund(s) with units of the default investment fund or if there is no such default fund then of such fund(s) as we reasonably consider to have investment objectives and risk most nearly matching those of the closing fund. If we receive notice that an external fund is closing to new investment only and we have decided to close the investment fund that invests in the external fund, we will give you as much notice as possible of such closure. You will then be able to switch your units in that investment fund into any other investment fund available to the policy at that time. 5.7 Option to switch between investment funds Depending on the rest of this section, you can tell us to replace some or all of the units in a particular investment fund with units in any other investment fund or funds which are available to the policy. If you are automatically enrolled into, or join an employer s pension scheme which has been arranged to comply with automatic enrolment regulations, you can instruct us to switch regular contributions into a different available fund once the first contribution has been invested. Units under the policy can be allocated to a maximum of ten investment funds at any one time. Your request to switch units between investment funds must be made in writing (or in any other way that we may agree to). The value of the units to be allocated to the new investment fund will be the same value as the units being replaced after we have taken off any administration charge. The value of the units will be worked out using unit prices on the date of receipt of the request. The value of the units being replaced must be the same or more than the minimum value which we specify from time to time. You can normally switch your investment between the available funds at any time. We reserve the right to delay the switching of funds for up to one month, and six months for funds that invest in property. In addition to this we also reserve the right to: refuse the switch request; or delay the request indefinitely; or limit the number of switches of units; and/or, impose charges for switching of units, where we have reasonable grounds to suspect that such switching arises from policyholders engaging in: activities aiming to take advantage of market timing opportunities; or a pattern of short-term or excessive switching; or switching patterns likely, in our reasonable opinion, to be disruptive to unit pricing of the affected investment funds. In exercising our discretion, we will take into account a policyholder s trading history in a particular investment fund or across all investment funds, total value of holdings of units in investment funds and/or whether the policyholder is also a trustee of the policy acting for one or more policyholders. 5.8 Lifetime investment programme option Investment programmes may be available to your policy. They manage some or all of your investments in funds. They may apply throughout your policy or only during a certain number of years prior to your retirement. When an investment programme applies to your policy we will switch your investments in funds and apply any ongoing contributions in accordance with that investment programme. We do not make a charge for carrying out these switches. Usual policy and fund charges apply to funds within investment programmes. Please refer to your scheme documentation and investment guides to find out what, if any, investment programmes apply to your policy. The investment programme end date will match your chosen retirement age. If you change your chosen retirement age this may result in your existing fund holdings being switched and change where any future contributions are invested. 14

15 If you are automatically enrolled into, or join an employer s pension scheme which has been arranged to comply with automatic enrolment regulations, you can select, change, or remove any investment programme once the first contribution has been invested. Otherwise you can choose an investment programme when you start the policy. After that, you can choose or de-select an investment programme at any time. If you de-select an investment programme you may need to give us alternative investment instructions. Where an investment programme does not apply throughout the term of your policy, but starts a number of years before your retirement, rather than applying throughout the policy: the investment programme will overlay your own choice of investment funds where your own choice of funds is the same as one of the funds within the investment programme, your total holding in that fund will be used to calculate the movements of money into and within the investment programme. We may change or remove any investment programme for any of the reasons set out below. This may mean a change to: funds within the investment programme; mix of funds within the investment programme; length of the investment programme; name of the investment programme; risk profile of the investment programme; charges that apply in the investment programme. As set out above, some of these changes may mean that the charges and/or risk ratings change, and either go up or down to reflect the charges and/or risk ratings of the new funds and their relative proportions. If any or all of the above changes happen, we will make information available about the change; however, we will not write to you before any or all of the changes or ask your permission to make any or all of the changes. After we make any or all of the above changes to the investment programme, we will notify you of the change as soon as practically possible, but this may be after the change has taken place. This could be up to a year after we make the change. We reserve the right to make such changes to investment programmes as are reasonably required, in order to reflect: changes in applicable pensions law, tax law or other law, legislation, regulation or industry codes of practice which affect your investment programme. changes in how the London Stock Exchange or other relevant investment or regulated markets may work which may impact on the operation of your investment programme. changes in investment/share dealing administration or other infrastructure facilities, systems or means of communication which impact on the provision and operation of your investment programme. changes to services relating to your policy supplied to us by third parties which are outside of our control or which require additional expenditure by us. changes in circumstances or the happening of any event which means that the investment programme operates in a way which is unfair to you or our other policyholders. changes resulting from the introduction of new systems, services, and changes in technology. changes in circumstances or the happening of any event which makes it impossible, impracticable or economically unviable for us not to make a change to the investment programme, provided that any such change is not unfair to you or our other policyholders. changes required to remedy obvious errors. changes required for appropriate governance reasons to implement legislation or regulatory changes or best practice. In exceptional circumstances we may have to make an alteration to your policy to remedy errors. If we do, we may use the current version of the investment programme. When you leave your employer s scheme, we may change your investments to match those of the relevant default fund which we provide at the time. If this happens we will let you know when you leave the scheme. This may mean a change in charges, up or down. When you leave your employer s scheme, your policy may remain invested in an investment programme designed specifically for that scheme. If this is the case, no future amendments your employer and their investment adviser might make to that investment programme would be applied to your policy after you have left employment. You can change your investment instructions at any time. 15