Pensions Express JUNE 2016

Transcription

1 6 The pensions freedoms Pensions Express JUNE 2016 Special Edition for Post 96 Deferred and Active Deferred Members American Express UK Pension Plan Welcome to Pensions Express, a publication from the Trustees of the American Express UK Pension Plan, for Members who started working for American Express in the UK on or after 1 January As communicated last year, significant changes were introduced by the Government in April 2015 to give individuals greater flexibility as to how they can use flexible pension savings when they retire. The new flexibility is sometimes referred to as the new pensions freedoms. This edition of the newsletter reminds you how these changes affect the Plan and confirms the main retirement options that are available to you. It also highlights some changes announced in the 2015 Government Budgets and includes much of the usual information about the current Trustees and how to get information or take action in relation to your Plan benefits. The pensions freedoms apply to flexible pension savings. Both your retirement lump sum (your RLS ) and any AVCs you have paid into the Plan together with any Company matched contributions (your AVCs ) are flexible benefits. This means that your retirement options changed as of April The key change to the options available within the Plan is that you can now choose to take all of your benefits as a one-off cash sum from the Plan when you retire. You can also choose to transfer your benefits to another provider to access a much wider range of retirement options than previously available. The chart on page 2 explains the range of retirement options which are now available to you. Note: This publication reflects the current retirement options available. However, the retirement options offered by the Plan or by other providers could change in the future. The tax treatment of pension benefits could also change. Plan Administrator s contact details: Trustees of the American Express UK Pension Plan, c/o Xerox Benefit Administration Services, Building 12, Unit D, Vantage Point Business Village, Mitcheldean, Gloucestershire GL17 0DD. amexadmin@xerox.com UK Benefits contact details: ukbenefits@aexp.com

2 What are my retirement options? Other pensions The options described in this chart do not cover any benefits you may have in the American Express Stakeholder Plan, or any other pension plans outside of American Express. Options from the Plan Transferring to a different provider Use all your benefits to buy an annuity from an insurer Take up to 25% of your benefits as a tax free cash lump sum and use the remainder to buy an annuity from an insurer TAKE all your benefits as a one-off lump sum from age 55 onwards 25% would be tax free and rest taxed at your marginal rate. Transfer all of your Plan benefits to another provider You can do this at any time before your benefits come into payment at the Trustees discretion Transfer your RLS or your AVCs to another provider You could do this at any time before your benefits come into payment and use the Plan options for the benefits remaining in the Plan Think tax! If you access your benefits flexibly using certain options you may trigger a different annual allowance that would apply to any future pension savings see pages 3 and 4 for more details We strongly recommend you take financial advice before selecting your options. Another provider may offer different options for using your benefits from age 55, such as: Z draw down Z Z a series of lump sums Z Z a combination of options Z Small benefits If your benefits are below certain limits, other options may apply see page 4 for more information 2

3 taking your benefits from the Plan Considering your options You will need to decide which of the retirement options offered by the Plan or outside of the Plan are right for you. You may request information about flexible benefits that may be provided to you, how you can transfer your benefits, and your options under the Plan rules. This information may help you decide what to do with your flexible benefits. The Trustees and administrators of the Plan cannot provide you with advice, but there is lots of other help out there. Pensions guidance is available from Pension Wise to help you to understand your options in relation to your flexible benefits. Pension Wise is the government s free and impartial guidance service. You can contact Pension Wise: online at by phone on face-to-face at your local Citizens Advice Bureau. We strongly recommend you access Pension Wise, read the leaflet Your pension it s time to choose available from the Money Advice Service ( and speak to an independent financial adviser regulated by the Financial Conduct Authority, to help you decide which option is the most suitable for you. If you need help finding a financial adviser go to Retirement age Plan benefits are normally payable from age 65, but you can choose to take them from age 55, even if you are still working for American Express. In some circumstances, provided that you no longer work for American Express, you may be able to take your Plan benefits from age 50. Remember, if benefits are paid before age 65 they may be reduced to reflect that they will be paid for a longer period - see the table on the right. Note: You will only be permitted to take your retirement benefits from the Plan before age 55 if you: cease to be employed by American Express on or before taking your benefits AND are not re-employed by American Express for at least 6 months after taking your benefits (or for at least one month after taking your benefits if the employment is substantially different to your previous role). If you fail to meet these conditions, your benefit may become an unauthorised payment, which means you will be liable for significant tax penalties on all benefits received up to age 55 and you will lose your protected pension age. Before taking payment of any benefit from the Plan, if you are in any doubt about whether this applies to you, please contact Xerox for further information. Retirement at age Reduction Factor

4 taking your benefits from the Plan (cont.) Tax issues Different retirement options will have different tax implications. In particular, if you access benefits flexibly (e.g. by using drawdown or by taking them all as a one off lump sum or a series of lump sums) then: you would pay a tax charge on any future money purchase pension savings above 10,000 in any tax year; and your annual allowance for other future pension savings would be 10,000 lower than it would otherwise have been. Money purchase pension savings are savings which provide a certain amount of money to purchase pension benefits (under the Plan this includes your AVCs). If you are unsure whether your future pension savings are money purchase or not you should contact your independent financial adviser. If you made AVCs - check your AVC investment choices When you want to retire, and how you want to use your AVCs, may affect your investment choices. You should take this opportunity to check your AVC investment choices and ensure they remain appropriate for your retirement plans. You can use Prudential s on-line tool Hartlink to review and change your investment choices. If you haven t already registered for this service, go to or via their Retirement Zone amexavc. Please note that there is generally no fee for switching investment funds at present. However, you may be impacted by the movements in underlying prices of funds between buying and selling and if you have any With Profits funds, you should check if the Prudential will charge you to make changes. Small benefits If all your Plan benefits (RLS and AVCs) are valued at 10,000 or less you may be able to take them from age 55 as a one off cash sum called a small pots lump sum provided certain conditions are met. Previously, if your benefits in all registered schemes were valued at 30,000 or less, you might have been able to take your Plan benefits as a trivial commutation lump sum. It is no longer possible to receive your Plan benefits in this way but you can now take all of your benefits as a one-off lump sum see the chart on page 2. AVC Annual Management Charges (AMC) In the last 12 months the Trustees have secured a reduction in the AMC on seven of the Prudential funds as well as four of the Threadneedle funds. Full details were included in the annual AVC statement, issued by Prudential in March. 4

5 Transferring your benefits out of the Plan As shown in the flow chart on page 2, you can choose to transfer your benefits to a different provider if you wish to do so. More flexibility about when you can transfer You can transfer all of your benefits in the Plan (both RLS and AVCs) at any time before they are put into payment at the Trustees discretion. The Trustees current policy is to permit such transfers. This may be subject to future change. You can also now transfer your AVCs whilst leaving your RLS behind or transfer your RLS whilst leaving your AVCs behind. Some things to consider before transferring There are a number of factors you should consider and the Trustees strongly recommend that you consult a financial adviser before making a decision to transfer any benefits out of the Plan. Please note that the Plan has a number of features which may be different to those offered by other pension providers. For example: Your RLS from the Plan is calculated using a specific formula and is not dependent on investment returns. In other pension plans the amount made available to you on retirement may be dependent on investment returns (as is the case for your AVCs). Under the Plan you can take your benefits from age 55 (or, in some circumstances, age 50 if you no longer work for American Express) although they will be reduced for early payment. This may not be possible from another pension plan. The Plan does not currently charge you for transferring out or accessing your benefits. A different pension provider may charge you for transferring or accessing your benefits. Their investment options and charges may also be different to those under your AVCs within the Plan.! Remember - If you transfer out of the Plan, you cannot transfer back in again. 5

6 How do I know if I am an Active Deferred Member or a Deferred Member? If you were paying mandatory contributions to the Plan until the Plan closed to future accrual on 31 July 2013 and are still working for American Express in the UK, you are an Active Deferred Member. If you have stopped working for American Express in the UK or opted out of the Plan, you are a Deferred Member. Pension scams Pension scam activity is on the increase. Many scams begin with members being encouraged to transfer to a scheme that promises faster access, access under age 55 or better investments returns. Pension scams could affect your benefits in different ways (e.g. by triggering tax or other charges or using risky investments). You can get more information about how to spot pension scams at dangers-of-pension-scams.aspx. Keep us informed If we cannot find you, we cannot pay you! We also cannot send you information about the Plan and your benefits. It is therefore important that you keep your address details up to date. When members leave American Express and move away, it becomes increasingly difficult to find them when their benefits are due for payment. However, as addresses often remain unchanged, Xerox, the Plan administrators, may ask you to provide your address in future correspondence. Data protection The Trustees, American Express and their respective advisers have a legitimate interest to process data relating to you for the purposes of the Plan. Any processing will be undertaken in accordance with the Data Protection Act

7 The Trustees Ian Pittaway (the Chairman of the Trustees) is an independent trustee. John White, Andrew Simpson and Julian Kearney are Trustees nominated by American Express. Alan Coles, Keith Cornelius and Mariette Hardman are Member-Nominated Trustees, which means they were nominated as Trustees by Plan members. Margaret Ellis is Secretary to the Trustees. The Trustees main job is making sure the Plan is run in accordance with its Trust Deed and Rules. This includes ensuring that the Plan s assets are invested appropriately, that benefits are paid on time and that the interests of all members are taken into account. To ensure the Trustees perform all tasks in line with requirements, they are legally required to appoint advisers with expertise in actuarial, investment, legal and administrative matters. From left to right: John White, Keith Cornelius, Margaret Ellis, Ian Pittaway, Alan Coles Not in photo: Mariette Hardman, Julian Kearney, Andrew Simpson Looking after the Plan The American Express UK Pension Plan is set up as a trust and looks after all benefits that were built up prior to closure on 31 July 2013, including AVCs. As a Deferred Member or an Active Deferred Member, your benefits will remain in the Plan until you retire (or transfer out). Regardless of the closure to future accrual in 2013, the Plan will continue to be managed by the Trustees and their role will remain the same. In particular, American Express and the Trustees will continue to work together to ensure that sufficient funds are available in the Plan to pay all benefits when they fall due. The Trustees will also continue to communicate with Plan members including issuing an annual funding statement to all members. This provides more detailed information regarding the Plan s funding and investments. It also tells you what other Plan documents members can ask to see to get further information about the Plan. Disclaimer The Plan is governed by its Trust Deed and Rules (as amended from time to time). In the event of any conflict between the Trust Deed and Rules and any other information provided to you in relation to the Plan, the Trust Deed and Rules will override. This publication reflects the current retirement options available. However, the retirement options offered by the Plan or by other providers could change in the future. The tax treatment of pension benefits could also change. 7

8 DEFERRED MEMBERS GETTING MORE INFORMATION AND TAKING ACTION I want to: Update my address Get a retirement quote (if I am aged 50 or over) Transfer my benefits out Get a transfer value for divorce purposes Update my AVC Beneficiary Form (or provide one if I haven t already) Manage my AVC investment choices, keep up to date on AVC investment fund returns and risk ratings Obtain Independent Financial Advice Be reminded of how my Plan benefits will work Obtain a State Pension forecast Locate my other pension savings from my other employers Please contact Xerox (contact details on page 1), quoting your Name and NI number as reference. We have enclosed a blank Beneficiary Form with this edition of Pensions Express. If you have Additional Voluntary Contributions, please complete and return this form. Log onto your personal account via the Retirement Zone or go to Prudential s site If you have not done so already, you will need to register on Prudential s site (you will be sent a PIN via on registration). Go to to locate an Independent Financial Adviser using your postcode. Unfortunately, neither the Trustees nor American Express can give you financial advice. You should have received this information when you left the Company. To request a duplicate copy please contact Xerox (contact details on page 1). Go to The Government made changes to the State Pension as of 6 April 2016 you can get further information from the same website. Go to ACTIVE DEFERRED MEMBERS GETTING MORE INFORMATION AND TAKING ACTION I want to: Update my address Update my Beneficiary Form (or provide one if I haven t already) Manage my AVC investment choices, keep up to date on AVC investment fund returns and risk ratings Get a retirement quote Transfer my Plan benefits out Get a transfer value for divorce purposes Obtain Independent Financial Advice Be reminded of how my Plan benefits will work Obtain a State Pension forecast Locate my other pension savings from my other employers Please use myhr, accessed through the Square. Go to FYB Flex via the Square and input your beneficiaries. Log onto your personal account via the Retirement Zone or go to Prudential s site If you have not done so already, you will need to register on Prudential s site (you will be sent a PIN via on registration). Please contact Xerox (contact details on page 1), quoting your Name and NI number as reference. Alternatively contact UKBenefits@aexp.com quoting your People Track number. Go to to locate an Independent Financial Adviser using your postcode. Unfortunately, neither the Trustees nor American Express can give you financial advice. You received a statement from Xerox, in Q4 2013, detailing your accrued benefit to 31 July 2013 and an estimate in November If you need a duplicate copy please UKBenefits@aexp.com quoting your People Track number. Go to The Government made changes to the State Pension as of 6 April 2016 you can get further information from the same website. Go to 8