A GUIDE TO YOUR LEGAL & GENERAL PENSION AND LIFE ASSURANCE SCHEME. EMPLOYEE BENEFIT: PENSION AND LIFE ASSURANCE

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1 A GUIDE TO YOUR LEGAL & GENERAL PENSION AND LIFE ASSURANCE SCHEME. EMPLOYEE BENEFIT: PENSION AND LIFE ASSURANCE

2 2 INTRODUCTION. As an employee of Legal & General you are able to become a member of our employee pension plan. The pension terms which apply to you are set out in your contract of employment and this remains a valuable part of your benefits with Legal & General. This booklet outlines the main features of the employee pension plan and Life Assurance cover. A pension is the money you invest during your working life to provide you with an income when you retire. You may think it s a long way off, but paying into a pension now will provide you an income when you retire. The sooner you start preparing for your retirement, the more likely it is that you will be better off when you stop working.

3 3 PENSIONS AND LIFE ASSURANCE THE BASICS. WHAT TYPE OF PENSION SCHEME DO LEGAL & GENERAL OFFER? You may already know that there are different types of pension scheme. The scheme Legal & General offer is an employee pension plan which is a type of Personal Pension. Contributions you and Legal & General pay are allocated to a policy in your name. So even if you leave Legal & General at some point in the future you can still make contributions to it. You can also choose what funds (within the range available) you want your contributions to be paid into and switch these around from time to time. WHEN DO I JOIN THE PENSION SCHEME? You will be enrolled from the first day of employment (membership of the scheme being part of the contract of employment you sign).

4 4 WHAT CONTRIBUTIONS DO I PAY? The default employee contribution rate (for new employees) depends on your grade. For grades 1 to 4 (LGIM 1L to 3L) the default rate is 2% of basic pay. For grades 5 (LGIM 4L) and beyond, it s. These are the default rates for new employees; however, you can choose to pay more or less than this. If you wish to amend the level of your pension contributions you can find the form on Landscape at pension-and-life-assurance/index.html WHAT CONTRIBUTIONS WILL LEGAL & GENERAL PAY? Legal & General s contributions consist of both a basic amount (which is paid regardless) and a matching amount which is linked to how much you pay and the table below is set up for a new employee at the default position, as set out previously on this page. The basic amount for grades 1 to 5 (LGIM grades 1L to 4L) is of basic pay. The basic amount for grades 6 to 8 (LGIM grades 5L to 8L) is 10%. The matching amount is linked to your own contribution with a limit of of basic pay, so if you were to pay, Legal & General would match your contribution, enhancing your overall pension contribution. Legal & General Basic Contribution Employee Contribution Legal & General Matching Contribution Total Contribution (based on the default pension rates) Grade 1 4 (1L 3L) 2% 2% 9% Grade 5 (4L) 1 Grade 6 8 (5L 8L) 10% 20% Any contributions you elect to pay are made via our salary sacrifice arrangement (known as SMART). This means that instead of paying for your contributions from your salary, you agree to reduce your salary by the amount of your pension contribution, and as a result you and Legal & General pay less National Insurance (NI). The NI that you and Legal & General save is also paid into your pension as an employer contribution. Legal & General currently add 90% of their NI saving to your pension. The total amount contributed to your pension will increase by the amount of NI you and Legal & General have saved.

5 EMPLOYEE BENEFIT: PENSION AND LIFE ASSURANCE CAN I OPT OUT? There are very limited circumstances under which you can opt out completely. If you have recently joined Legal & General you will be sent an enrolment pack which will provide you with a unique code to allow you to do this (Legal & General, as your employer, have no access to this code). If you have been in the pension scheme some time, it is possible to cease all future contributions. This is not an opt-out as you will not be able to receive a refund of any contributions you have made. Remember that by opting out you forfeit both Legal & General s basic and any matching contributions. 5

6 6 WHERE WILL MY CONTRIBUTIONS BE INVESTED? Your enrolment letter (if you are a new starter) will confirm which fund your contributions are invested in as a default. It will provide details of how to switch to alternative funds. If you are an existing member of the scheme, details of the available funds can be found at our dedicated website WHAT CHARGES DO I PAY? The charges depend on the size of your pension pot and are set out below: Annual Management Charge (AMC) 0.17% of the value of insured funds a year + Fund Management Charge (FMC) Currently* 0.08% to 1.86% of the value of insured funds a year *as at March 2015 The Annual Management Charge (AMC) is determined by scheme underwriting. It will be expressed as a percentage of the value of insured funds. The AMC is independent of your choice of investment funds. We work out the charge daily and take it monthly for the past month by cashing in units. Fund Management Charge (FMC) currently 0.08% to 1.86% of the value of insured funds a year. The FMC varies from investment fund to investment fund and covers the cost of managing your chosen investment fund(s). This charge is reflected in the price of units. For details of the FMCs applying to all the funds available under the insured arrangement please visit Charges are deducted monthly. Each year you will receive a statement setting out the charges deducted over the last 12 months. To find out whether you would pay any additional fund charges, please see the relevant fund factsheet. For more information about the charges, please refer to the Key Features document which can be found at

7 7 CAN I TRANSFER IN PENSIONS HELD ELSEWHERE? Yes, in certain circumstances although Legal & General cannot provide you with advice as to whether transferring funds is the right thing to do. If you are unsure you may wish to consult an independent financial adviser. If you d like to consider transferring then please view the transfer process documents which can be found here WHEN CAN I TAKE/DRAW ON MY PENSION? The earliest age at which you can withdraw lump sums or buy an annuity or similar product is currently age 55. You can withdraw funds from your pension scheme regardless of whether you are working for Legal & General at the time or not. WHERE CAN I GET FURTHER INFORMATION? The dedicated website (which you can access from any computer or similar device) is Here you can access: Fund factsheets/information/key Features, Nomination of beneficiary form (in the case you die before your pension fund has been paid to you), Retirement planning and other useful tools, Details of how to apply for Manage Your Account which is an online tool which allows you to: * Flexibility. You can monitor your pension plan and follow investment performance. * Opportunities. To view and change where your money is invested so you can make sure it s working hard for you. * Convenience. You can keep an eye on your transaction history and view scheme charges and contributions. * Choices. You can request benefit and unit statements and explore your investment options. * Education. You can look at fact sheets about current and potential funds so you can keep informed. * Efficiency. You can update your personal details without contacting us directly.

8 8 PENSION ALLOWANCES. WHAT IS THE LIFETIME ALLOWANCE? This is a limit set by the Government on the total amount of pension savings that you can build up in all your pension arrangements before you have to pay a tax charge. This is called the Lifetime Allowance. For most people their Lifetime Allowance will be the Standard Lifetime Allowance. Certain circumstances may mean you have a different personal Lifetime Allowance these are known as fixed 2012, fixed 2014, primary, enhanced or individual protection and you will have completed an HM Revenue & Customs (HMRC) election form if they apply to you. If you go over the Lifetime Allowance, anything over this amount will be taxed and the rate of tax is different depending on whether you choose to take it as cash or provide yourself with an extra pension income. If you choose to use it to provide yourself with an extra pension income, the income will also be taxed at your marginal rate of income tax. It is important to be aware that the Lifetime Allowance may reduce in the future, and you may be entitled to a higher Lifetime Allowance if you have received a certificate confirming this from HMRC. WHAT IS THE ANNUAL ALLOWANCE? The Annual Allowance is set by the Government and is the amount of tax-efficient pension savings you can make in the course of a pension input period which in the case of the Legal & General schemes is also the tax year 6 April to 5 April. It is possible to have pension savings (contributions) in excess of the Annual Allowance and please see below about carry forward which can be used to increase your Annual Allowance although any contributions in excess of this limit will attract a tax charge. If that applies, you will need to declare the tax due (it isn t deducted at source) in a self-assessment tax return. WHAT IS CARRY FORWARD? Carry Forward is a way of topping up your Annual Allowance by using unused Annual Allowance from previous year. You can Carry Forward unused allowances from the previous three tax years. More information on the Annual Allowance, Carry Forward, and calculating tools can be found on HMRC s website

9 9 LIFE ASSURANCE. WHO IS ELIGIBLE FOR LIFE ASSURANCE? All employees are eligible for life assurance benefits. This benefit becomes payable on death whilst working for Legal & General. WHAT ARE THE LIFE ASSURANCE BENEFITS? The life assurance benefits consist of two elements a lump sum and a pension payable. WHAT IS THE LUMP SUM AND TO WHOM IS IT PAYABLE? In the event of your death, a lump sum of 4 x your annual basic salary is payable at the discretion of the life assurance scheme trustees. This means that it does not form part of your estate and so would not be liable to tax. You can nominate anyone you wish to receive the lump sum (or you can nominate more than one person if you wish). The trustees are not legally required to follow your nomination but they will try to take account of your wishes where it is possible to do so. It s therefore very important that you complete a Death in Service Nomination form which can be found on Landscape or click the link below. There is a separate form to complete in respect of the pension fund you have built up which would be paid to your beneficiaries in the event of death (and whether or not you are still working for Legal & General at the time), which can be found on Landscape or click the link below.

10 10 DEPENDANTS PENSION. WHAT IS THE DEPENDANTS PENSION PROVISION? If you die whilst employed by Legal & General and are survived by a spouse or civil partner, a pension of 4/9ths of your annual basic salary is payable to them for the rest of their life. If you do not have a spouse or civil partner but have a child or children under the age of 23, then the pension will be paid to them until their 23rd birthday. If there is more than one child then the pension will be shared equally between them. If you don t have a spouse, civil partner or child/children then a pension may be payable to a dependant. A dependant is broadly categorised as someone who relies on you (in whole or in part) to maintain your standard of living. The most common example of a dependant would be a non-married partner with whom you live and share the various household bills and rent/mortgage etc. Payment to such a dependant (unlike the other pensions) is at the discretion of the trustees. If this applies to you then the Nomination of Beneficiary form referred to on page 9, will allow you to nominate them. WILL THE DEPENDANTS PENSION INCREASE IN PAYMENT? The pension will increase each year in line with that year s increase in the Retail Price Index, subject to a minimum of 3% and a maximum of. CONTACT US. MBX Employee Benefits employee.benefits@landg.com

11 Legal & General Assurance Society Limited Registered in England and Wales No Registered office: One Coleman Street, London EC2R 5AA We are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. 10/15