Important document please read. Stakeholder Pension

Transcription

1 Important document please read Stakeholder Pension

2 Key Features of the Stakeholder Pension The Financial Services Authority is the independent financial services regulator. It requires us, Wesleyan Assurance Society, to give you this important information to help you decide whether our Stakeholder Pension is right for you. You should read this document carefully so that you understand what you are buying and keep it safe for future reference. Wesleyan Assurance Society, founded in 1841, is a mutual organisation. It provides a range of financial products for a number of specialist professional markets. These Key Features give a summary of the Stakeholder Pension product. They do not include all the definitions, exclusions or terms and conditions. These are set out in the policy document. If you would like a copy of the policy document, please contact our Head Office direct. The Wesleyan Stakeholder Pension is designed to help you to save for your retirement in a tax-efficient way. Your Financial Consultant will provide you with an illustration showing the pension you may receive in the future. Please read it carefully and keep with this document. Aims To build up a sum of money in a tax-efficient way, which will give you a pension when you retire. Your commitment Risks What you get back at your chosen retirement date isn t guaranteed. It will depend on: how much is paid into your plan our investment performance interest rates at the time you start taking your pension. When you re ready to retire, your pension may be lower than illustrated. This could happen for a number of reasons, for example if: you stop paying into your plan or take a payment break our investment performance is lower than illustrated interest rates when you retire are lower than illustrated you start taking your pension earlier than your chosen retirement date tax rules change charges increase above those illustrated. Your plan may invest in a range of investment types, including stocks and shares, which carry different levels of risk. The value of your plan can go down as well as up. If you start the plan with a single payment and invest in the Pensions Managed Fund, then cancel your plan within 30 days, you may get back less than you ve paid in. Tax law and practice may change in the future. To make monthly or yearly payments into your plan until your chosen retirement date. Or to make at least one single payment. To let the plan build up until you choose to start taking your pension and then to use it to provide your pension. To tell us within 30 days if you cease to have Relevant UK Earnings (income that is chargeable to UK tax). When we ask, to inform us if any of your other pensions have been used to take benefits (known as crystallisation ) and the percentage of the Lifetime Allowance these benefits represent. This information will be provided to you by your other registered pension scheme providers 2

3 Questions and answers What is the Wesleyan Stakeholder Pension Plan? It s a plan designed to help you to save for your retirement in a tax-efficient way. You can pay into the plan or someone else can do it for you. You must be under 75, but there is no minimum age. How flexible is it? You can choose an expected retirement age between 55 and 75. You can make one-off payments at any time to top-up your plan. You can change your monthly or yearly payment amount at any time. You can stop paying or take a payment break and start again later if your circumstances change. This will, however, reduce your future pension. What might I get back at retirement? The final plan value will depend on a number of things. For example, how much is paid in, how long the payments are invested for, how well our investments perform over the term of the plan and charges. Your pension (also known as an annuity) will depend on interest rates at the time you convert the plan into your pension. To do this, you ll need to buy an annuity. Your plan will be divided into 100 separate parts. You can start taking a pension from some of them while leaving the others fully invested. You can then start drawing a pension from these later on, either all at once or in a series of stages. How much can be paid into my plan? If you re employed, both you and your employer can pay into your plan. The minimum payment is 20. Payments can be increased later and additional one-off payments can be made. Monthly and yearly payments can increase each year, automatically, in line with the National Average Earnings Index (the minimum increase in any year is 5%, and the maximum 15%). Monthly and yearly payments are payable by Direct Debit and one-off payments by cheque. HMRC sets a maximum amount that you can pay into your plan in any tax year and receive tax relief. You can generally pay up to a total of 100% of your earnings into all of your pension plans combined. Where you make contributions to your Personal Pension, your plan will receive 20% tax relief at source; this means that for every 1,000 you wish to contribute to your pension, you only need to pay 800 and we will reclaim 200 from HM Revenue & Customs ( HMRC ) on your behalf and invest it in your plan. If you are a higher-rate taxpayer, you may be entitled to claim up to a further 20% from HMRC through your annual self-assessment tax return. Nearly everyone can contribute up to 3,600 into a pension, whether they have earnings or not. Where you contribute this to your Stakeholder Pension, we will still be able to reclaim tax relief at 20% for you, meaning that you only need pay 2,880 even where you don t actually pay tax. What choices will I have at retirement? You can convert all of your plan value into a pension, which will be taxable. Or you can take up to 25% of the plan as a tax-free cash sum, in return for a smaller taxable pension. You can start taking a pension at any time between ages 55 and 75, even if you re still working. Benefits must commence no later than the day before your 75th birthday. You may only take a pension before age 55 if you re forced to retire from your occupation through injury or ill health, or if HM Revenue & Customs (HMRC) has approved this for your particular job. The Open Market Option (OMO) is your right to compare what we can offer you at retirement with other authorised pension providers. You can buy your taxable pension from any authorised pension provider. You could transfer your fund to allow you to draw an income without buying an annuity. There are various pension options available at retirement and we recommend you seek financial advice. 3

4 How much can be saved in total in my pension plan(s)? A Lifetime Allowance will apply to your pension savings when you take your benefits. The Lifetime Allowance is 1,800,000 for the tax years 2010/11 to 2015/16 but it is unknown how this limit may change in future. Any amounts over the Lifetime Allowance will normally be subject to a tax charge. The total value of your pension fund(s) may vary depending on the method of valuation and your type of pension scheme. What happens if the value of my pension fund(s) exceed the Lifetime Allowance? Any contributions over your earnings (or 3,600 if higher) will not be accepted by Wesleyan. The limit on contributions which attract tax relief is known as the Annual Allowance and, currently, is 255,000 for the tax years 2010/11 to 2015/16. It is unknown how this limit may change in future. If your income exceeds 130,000 in a tax year, or has done so in the previous two tax years, your entitlement to higher-rate tax relief on your contributions may be restricted, and you may also incur a tax charge on the value of any contributions paid by your employer. The Annual Allowance includes any contributions you, your employer or anyone else makes to money purchase pensions (e.g. Personal Pension Plans, Stakeholder Plans) and the increase in the value of benefits under Defined Benefit (Final Salary) pension schemes, such as the NHS Pension Scheme or the Teachers Pension Scheme. Collectively, these increases in pension benefits are known as your pension input. For the purposes of the Annual Allowance, the Pension Input Period for the Wesleyan Stakeholder Pension is 6 April to 5 April. This means that your pension input for the year ending 5 April will be the contributions you made to your scheme in the preceding 12 months. Any contributions made above the Annual Allowance will not be accepted by Wesleyan as they would be taxed at 40%. Any money in excess of the Lifetime Allowance will be subject to a Lifetime Allowance Charge of 55% if the excess is taken as a Pension Commencement Lump Sum. If the fund is used to provide pension benefits, you will pay a Lifetime Allowance Charge of 25% and the pension will be taxed in the usual way as income. What happens if I stop my plan? If you stop your plan, it will be made paid-up and the payments already made will continue to be fully invested for you until: you decide to take your benefits, or you transfer them to another pension plan or pension, or you die. Payments can be started again at any time. Benefits will be payable as described in the relevant section of this key features (see What might I get back? ). 4

5 What about tax? You ll get Income Tax relief on your payments. We claim Income Tax relief at the basic rate from HMRC and invest it in your plan. If you re a higher-rate taxpayer, you may claim any extra tax relief to which you may be entitled through your self-assessment tax return. At current tax rates, the value of the tax advantage means that every 100 invested in your plan will cost you only 80 or, if you re a higher-rate taxpayer, as little as 60 assuming you are entitled to maximum tax relief. If your employer pays into your plan, your employer may get tax relief on the payments made as a business expense. The fund or funds in which your money is invested build up free of Income Tax and Capital Gains Tax, although we can no longer reclaim tax credits on dividend income on UK company shares. If you take a cash lump sum when you retire known as a Pension Commencement Lump Sum this will be paid to you tax free. Your pension will be treated as earned income and will be taxable. If you die before you retire, there is normally no Inheritance Tax payable on the value of your plan. If you make payments for someone who is a basic-rate taxpayer or a non-taxpayer, they will be eligible for basic-rate income tax relief. This is how we understand tax rules now. They may change in the future. Where are my payments invested? The whole of your payments (including basic-rate tax relief) are invested in your plan. We currently offer two funds for you to choose from: The Wesleyan Pensions Deposit Fund aims to provide a short-term home for your investment when you consider some or all of your money should be held in non-equity linked investments. The Fund aims to achieve a high level of security by investing in Bank Deposits and other money market instruments. The Wesleyan Pensions Managed Fund aims to provide capital growth over a medium to long-term period by investing in UK and International shares, fixed-interest stocks, property, cash and other related investments. Under normal circumstances it is recommended that investments in the Wesleyan Pensions Managed Fund are for a minimum of five years. It is divided into units which are like shares in the Fund. Your payments buy units in the Fund. The value of your payments at any time depends on the total number of units you have in the Fund and their current price. If the unit prices rise or fall, so does the value of your payments. If you do not choose a fund, your payments will automatically be invested in the Wesleyan Pensions Managed Fund. Five years before your retirement date we will automatically apply a lifestyle investment fund mix to your pension. This is designed to move your money to less risky investments as you get closer to retirement. It is therefore important to let us know if you decide to retire earlier or later than you originally planned. Switching your pension into less risky investments may mean that your fund will not grow as much as it would have done but it is also less likely to fall in value. Applying the lifestyle investment mix is free of charge, and the split of investment will be: Years to retirement Wesleyan Pensions Managed Fund % of investment You can opt out of lifestyling at any time in the five years preceding your retirement. However, you must instruct us to do this in writing. You can direct payments you make into a different fund at any time, or switch the value of existing payments out of one fund and into another. What are the charges? 0 Wesleyan Pensions Deposit Fund % of investment We charge an Annual Management Charge (AMC) for managing your plan and investments. The AMC is a percentage of the fund value and is normally deducted daily from the investment funds. We currently take a 1.5% AMC for the first ten years of your plan, and then a 1.0% AMC after that period. If the charge that applies to your plan is different from the charge taken into account in determining the price of the units then units will be added to or deducted from your plan on a monthly basis to make up the difference. Your illustration shows our charges and the effect they have on your investment over the term of your plan. The figures assume that your contributions will qualify for tax relief, and that benefits, when paid, will be within the Lifetime Allowance

6 What other benefits can I choose? If you can t work because of illness or injury, a separate Waiver of Contribution contract may be able to provide the money you need to continue making payments (within certain limits) until you are well enough to start working and earning again. For further details, please refer to the Waiver of Contributions Benefits Policy Conditions document, which is available on request. Please ask for an illustration including this benefit. When will I be able to take my pension benefits? You will be able to take your benefits from age 55 even where you have used your Personal Pension to contract-out of the State pension scheme. You may have chosen a selected retirement age at the time you bought your pension. If you want to, you could lower your retirement age to take benefits sooner or you can delay taking benefits up to a maximum of age 75. Four to six months before your selected retirement date we will contact you detailing the retirement choices we can offer on your pension plan. For further information on your retirement options please speak to your Financial Consultant. What happens to the plan if I die before taking my pension? We ll pay the plan value as a lump sum, taking into account your circumstances when you died and anyone you ve previously stated you want the money to go. If you have some Protected Rights benefits within your Wesleyan pension, for example, from a previous transfer, then this will be used to secure a pension for your surviving spouse or civil partner. Can I change my mind? You can change your mind within 30 days from when you get your plan documents (this is the statutory time limit). If you decide, for any reason, that you don t want the plan, we ll give you your money back. However, if you have started your plan with a single payment invested in the Pensions Managed Fund then you may get back less than you invested. How will I know how my plan is doing? We ll send you a yearly statement to show how your plan is doing. You can check the financial pages of the Financial Times to see how your fund or funds are performing. Unit prices are also listed on our website You can also get an up-to-date valuation by calling our helpline on How to contact us If you have any questions at any time, please call us on , or visit our website or write to us at our Head Office address below, or fax us on We will try to answer your questions immediately. Our telephone lines are open 8.30am to 5.30pm Monday to Friday and 9am to 2pm on Saturdays. We may monitor calls to improve our service. Our Head Office address is: Wesleyan Assurance Society Colmore Circus Birmingham B4 6AR Can I transfer my plan? You can transfer your pension plan to another pension plan or scheme at any time before you start taking a pension. Your illustration gives examples of how much you could transfer to another plan or scheme depending on when you transfer. 6

7 Other information How to complain If you ever need to complain, first write to the Compliance Department, Complaints Team at our Head Office address. If you re not satisfied with our response, you can complain to: Financial Ombudsman Service Investment Division South Quay Plaza 183 Marsh Wall London E14 9SR Complaining to the Ombudsman won t affect your legal rights. Law The law and courts of England and Wales will decide any dispute. Compensation If we cannot meet our financial obligations to you, you may be entitled to compensation under the Financial Services and Markets Act 2000 from the Financial Services Investors Compensation Scheme. Details of the scheme can be obtained from: Customer Services Team Financial Services Compensation Scheme 7th Floor Lloyd Chambers 1 Portsoken Street London E1 8BN. 7

8 For all your financial needs: Savings and Investments Retirement Planning Life and Income Protection Mortgages and Insurance Please call: Or visit: If you would like this document in Braille, large print or audio tape, please contact Head Office Wesleyan Assurance Society Colmore Circus Birmingham B4 6AR Advice is provided by Wesleyan Financial Services Ltd through its brand names including Wesleyan Medical Sickness, Wesleyan for Teachers and Wesleyan for Lawyers. Wesleyan Financial Services Ltd is wholly owned by Wesleyan Assurance Society. Wesleyan Assurance Society is authorised and regulated by the Financial Services Authority. Incorporated by Private Act of Parliament (No. ZC145). Fax: Telephone calls may be recorded for monitoring and training purposes. WR-KFD-1-04/10