The HCL Group Personal Pension Plan (SMART Section)

Transcription

1 The HCL Group Personal Pension Plan (SMART Section) 6 April 2016

2 Dear Colleague It is important to plan ahead if you want to make sure you have an income when you stop working. The more you plan for your retirement now, the less you will have to worry about it later. Pension planning is important for all of us - even if you are just starting your career with us and retirement seems a long way off. We run the HCL Group Personal Pension Plan (the Plan) to provide our employees with a tax-efficient and cost-effective way to save and invest money for their retirement. Membership of the Plan is one of the most valuable benefits we provide for our employees. The Plan is provided by Scottish Widows and is a Defined Contribution pension scheme, which means that you know in advance how much will be paid into it. As a member of the Plan you benefit from an employer contribution on top of the contribution you make. Scottish Widows offers a wide range of investment options. The choices you make about investing are important as they will affect the value of your pension fund when you retire. Once you are a member of the Plan you will be issued with a personal pension policy and receive a yearly benefit statement from Scottish Widows. You will also be able to track the progress of your own policy within the Plan online. This booklet, which must be read alongside the Scottish Widows pension plan information, tells you about how the Plan works and the benefits available to you. We know pensions can seem complex so we have included further information in the section What else do I need to know? towards the end of this booklet, as well as details of useful contacts and a Jargon Buster. You can find information and tools to help you in your pension planning at: If you do not have access to a computer to obtain further details and need printed copies of the materials or more information, please contact Scottish Widows on Please note that the Scottish Widows information and policy documents will always over-rule this booklet if any differences between them come to light. If you are unsure whether any of the benefits in this booklet are suitable for you please consider seeing a financial adviser. The Financial Conduct Authority website has information about finding a financial adviser at: Please note that we have appointed Aon Consulting Limited (Aon) to advise us about arranging the Plan. As we pay Aon a fee for their advice to us, you will not pay any extra charges if you join the Plan other than those in this booklet and the Scottish Widows Investment literature. If you have any questions or need further information, please do not hesitate to contact Human Resources in the first instance. Page 2

3 Contents Joining Start making plans... 4 Contributing What it costs to join... 6 Investing Helping your savings grow... 9 Taking your benefits What happens if? What else do I need to know? About Aon About Scottish Widows Problems and complaints Useful contacts Jargon Buster This guide, which is valid until 5 April 2017 or until further changes are made by HCL, Scottish Widows or legislation, has been approved by Aon Consulting Limited whose registered office is Briarcliff House, Kingsmead, Farnborough GU14 7TE. Aon Consulting Limited is authorised and regulated by the Financial Conduct Authority and its registered number, as detailed on the Financial Services Register, is You can check this by visiting: or by contacting the Financial Conduct Authority on Page 3

4 Joining Start making plans Automatic Enrolment By law, employers must place most of their employees into a qualifying workplace pension scheme and make a minimum level of contribution. This is known as Automatic Enrolment. HCL (the Company) will enrol you into the Plan automatically, if you meet certain conditions. The Government sets the criteria for eligible employees and the Company will provide written confirmation of your eligible status once your personal situation has been assessed. You have the option to opt in to the Plan if you are not automatically enrolled (see Opting in below). When you are automatically enrolled into the Plan, or if you opt in to the Plan, you will receive policy documentation as evidence of your membership. At outset your policy will be set up with a selected retirement age (SRA) of age 65. If you already have a personal pension you can still be a member of the Plan; you are allowed to contribute to more than one pension at the same time. Opting out If the Company enrols you in to the Plan automatically but you do not want to be a member of the Plan, you can opt out of the Plan through the flexible benefits portal. You will have 30 days from the date in the instructions to opt out. If you opt out you will be treated as if you had never joined the Plan. You and the Company stop contributing to the Plan and you will receive a refund of any contributions you paid from your salary to the Plan in the next available payroll run (and if made through Pension Salary Sacrifice, you will pay Income Tax and National Insurance on it in the normal way). If you opt out you will lose the Company s contributions and will not be building up a retirement fund in the Plan. If you opt out you can re-join at a later date by requesting to do so through the flexible benefits portal. If you opt out or stop contributions to the Plan and do not re-join the Plan while in this employment, the Company must automatically enrol you again every three years if you are an eligible employee. The Company will tell you if this happens. If you are automatically enrolled again you can opt out if you still do not want to be a member of the Plan. If you decide that you want to leave the Plan any time after the opt out period has ended, please advise HR. Your benefits will be treated as if you had left employment please see the section What happens if? later in this booklet. Opting in If you are not auto enrolled into the Plan but wish to opt in, you need to do so by requesting membership through the flexible benefits portal. If you opt in to the Plan, you can change your mind after joining. Scottish Widows will include details of your right to change your mind and a cancellation form with your membership confirmation letter. You then have 30 days from the date you receive the letter to cancel. You should only return the cancellation form if you want to cancel your membership of the Plan. Please note that if you do cancel during the 30-day period, the amount returned may be less than what has been paid in. You will then receive this amount as salary (and if made through Pension Salary Sacrifice, you will pay Income Tax and National Insurance on it in the normal way). Page 4

5 If you decide that you want to leave the Plan at any time after the cancellation period has ended, please advise HR. Your benefits will be treated as if you had left employment please see the section What happens if? later in this booklet. Pension protection If you have Primary, Enhanced, Fixed Protection, Fixed Protection 2014 or have applied for/are going to apply for Individual Protection 2014, Individual Protection 2016, or Fixed Protection 2016, please read the important information contained in the What else do I need to know? section before making any decisions about whether to join your employer s pension and/or life assurance arrangements. Other pension benefits Once you are a member of the Plan you may be able to transfer in benefits from past pension arrangements. However, this is a complex area and you should seek financial advice beforehand. If you are thinking of reviewing your previous pension arrangement(s), please contact Scottish Widows in the first instance on Page 5

6 Contributing What it costs to join Contributions As a member of the Plan you benefit from Company contributions in addition to the contributions you make. The level of Company contribution is dependent upon the amount you elect to contribute as shown in the table below: Employee contribution Company contribution Total contribution 1% 2% 3% 2% 2% 4% 3% 3% 6% 4% 4% 8% 5% 5% 10% 6%+ 5% 11%+ Salary Sacrifice As a member of the SMART section of the Plan, your contributions are made through a Salary Sacrifice arrangement called Pension Salary Sacrifice (PSS). This means that you select the level of salary you wish to exchange for a pension contribution and your salary reduces by this amount. The Company then pays this amount into the Plan on your behalf, in addition to their contribution. As a result, the amount you have given up never becomes part of your salary. The total amount paid into your pension policy is the same as it would be if you did not participate in PSS, but as you do not pay National Insurance on the salary you have given up, your take-home pay will increase slightly. Reference salary Your higher salary, before the reduction in "exchange" for a pension contribution, is called your reference salary. This is kept on record and is used for pay reviews, calculating pension contributions, mortgage references and benefits such as life assurance. Changing how much you sacrifice You can change the level of salary you exchange at any time through the flexible benefits portal. You need to bear in mind some tax rules and limits which are confirmed in the What else do I need to know? section of this booklet. Important note Salary Sacrifice reduces your earnings which will, in turn, reduce the maximum level of contributions you can make to any other pension arrangements. It may also affect your entitlement to some State benefits, which are based on your income or the National Insurance you pay. These include Employment and Support Allowance. If you are unsure how Salary Sacrifice might affect your State benefits, you should contact Her Majesty s Revenue & Customs (HMRC). You can find out more about Salary Sacrifice at: Page 6

7 Please contact Human Resources for information on how maternity or paternity leave, or sickness absence may affect your Plan contributions. Is there a limit on how much I can sacrifice each year? You will have to pay a tax charge if the total contributions go over the Annual Allowance (see the 'What if I pay too much in?' section later in this booklet for details). Please remember that tax treatment depends on your personal circumstances. Your circumstances and the tax rules may change in the future. Opting out of PSS At outset, or a later date, you can choose to opt out of the PSS arrangement and make contributions on a contributory basis from your monthly salary. You should contact Human Resources to change the method of your contribution. The contributory method This is the alternative way of making personal pension contributions. You receive your salary each month in full and then pay your contribution from it. Your contributions are deducted from your net pay and paid into the Plan each month, along with the Company s contributions. Tax relief if you do not contribute via PSS To encourage savings the Government allows tax relief on pension contributions. Under current tax rules if you pay basic rate Income Tax every 1 you contribute costs you 80p. Contributions are taken from your take-home (net) pay but increased (grossed up) by the basic rate Income Tax relief before they go into your policy in the Plan, as shown in the example below. Monthly contribution Breakdown to show benefit of tax relief Your contribution 100 Income Tax relief at 20%* 20 Cost to you deducted from take-home pay 80 Employer contribution** 100 Total amount paid into your policy 200 *Based on tax rates for the year starting 6 April **Assuming you and the Company contribute the same percentage of your salary. What tax relief do I receive on my contributions? If you don t pay Income Tax: You will automatically get tax relief of 20% on contributions up to 2,880 of take-home (net) pay (or 3,600 gross earnings) or 100% of your relevant UK earnings, if greater. Page 7

8 If you pay Income Tax at 20%: You will automatically receive tax relief on your personal pension contributions up to 100% of your relevant UK earnings, because your pension provider claims tax relief for you at your basic rate of 20% and adds this to your policy. If you pay Income Tax at 40%: You will receive basic rate tax relief automatically. You can claim an extra 20% tax relief on contributions up to 100% of your relevant UK earnings in your Self- Assessment tax return. If you don t fill in a tax return, call or write to Her Majesty s Revenue & Customs (HMRC). If you pay Income Tax at 45%: You will receive basic rate tax relief automatically. You can claim an extra 25% tax relief on contributions up to 100% of your relevant UK earnings in your Self- Assessment tax return. If you don t fill in a tax return, call or write to HMRC. Please remember that tax treatment depends on your personal circumstances. Your circumstances and the tax rules may change in the future. Changing how much you contribute You can change your level of contribution at any time through the flexible benefits portal. You need to bear in mind some tax rules and limits which are confirmed in the What else do I need to know? section of this booklet. Is there a limit on how much I can pay in each year? No, but you will only receive tax relief on contributions up to 100% of your relevant UK earnings. You will also be subject to a tax charge if contributions (including your employer s contributions and any tax relief) exceed the Annual Allowance (see the 'What if I pay too much in?' section later in this booklet for details). General points regarding contributions If you want to pay a single contribution, please contact Human Resources for assistance. Please also refer to Human Resources for information on how maternity or paternity leave, or sickness absence may affect your contributions to the Plan. Please be aware that the Company has the right to make changes to your benefits package, including reducing employer contributions (where applicable), within current law. If this were to happen, you would receive full details of the changes. Page 8

9 Investing Helping your savings grow There is a range of funds available for you to invest your contributions. The Scottish Widows Investment literature, available via gives you full details of all the funds available and the charges they carry. You must think carefully about how your fund will be invested and whether it is appropriate for your personal circumstances and attitude towards investment risk. If you are unsure you should seek financial advice. The default option Contributions will automatically be invested in the default option, which is the Scottish Widows Balanced Pension Investment Approach (Targeting Annuity). You should note that the default investment option (DIO) may not be suitable for everyone. You must read the Scottish Widows Investment literature for further details about the DIO / fund choices. This approach automatically moves your investments (and on-going contributions if still being paid) gradually from the higher risk and predominantly equity based growth phase into lower risks funds over the 15 years before the selected retirement age (SRA) on your policy, as follows: Source: Scottish Widows Full details of each fund making up the lifestyle approach can be found in the Scottish Widows investment literature, along with details on choosing your own funds and / or removal from the lifestyle approach. Please note that a lifestyle approach, where the investment automatically moves to lower risk funds as you approach retirement, may not be suitable if you do not intend to fully draw benefits at your SRA perhaps because you wish to utilise Flexi Access Drawdown or Uncrystallised Fund Pension Lump Sums (see the section Taking your benefits for more information on these options). Page 9

10 It is important that you review your SRA from time to time and advise Scottish Widows as soon as possible if you want to change it. Otherwise, the fund switching may start at the wrong time - too late, and you could end up being exposed to unnecessary risk or too early, and your investments may miss out on potential higher returns. Please note that investment decisions you make at the outset are not final at any time, you can switch existing funds, redirect future contributions to other funds, or both. You should contact Scottish Widows if you wish to make any such fund switches. Types of funds Unit-linked funds These funds are divided into units of equal value. The contributions from your account buy a number of these units, depending on how much the units are worth at the time. These units will go up and down in value, which in turn will make the value of your plan rise and fall accordingly. If unit prices fall, your plan may be worth less than you have invested. With Profits Fund With Profits Funds work differently to unit-linked funds, so it is important that you thoroughly read the investment literature and details of the fund charges from Scottish Widows. If you decide to invest in with-profits and then withdraw your money before the Plan matures, the provider may reserve the right to: reduce the selling price of your units; or withdraw part of the bonus (if the provider adds returns to the fund in this way). This is often called a market value reduction (MVR). The provider can decide how much to take away from the unit price or bonus, but it will normally reflect market conditions at the time. Important information Some funds invest in a particular market, with the investment manager for that fund choosing the assets. You may only want to choose specialist funds like this if you are familiar with investing (and the risks it involves), or if you are familiar with that market or how the funds might behave. If you invest in overseas funds, changes in currency exchange rates may affect the value of your investments. Some funds in regions where markets are still developing (often called emerging markets ) may be especially volatile, with dramatic falls and rises in value. Property funds can carry extra risk because of the time it takes to buy and sell property this may make the funds more volatile and you may find that there are delays with moving money you have 'tied up' in property to another type of investment. Some cash or deposit funds are actually money market funds that invest in different types of assets. As a result, these funds can be more volatile than ordinary cash investments and may rise and fall in value. This means the value of your capital the original amount you invested is not guaranteed. Page 10

11 Charges Aon Consulting Limited has negotiated the charges with Scottish Widows on the Company s behalf. The single Annual Management Charge (AMC) that is made for the funds making up the default option and a core range of other funds will be 0.50% of your fund value, which equates to 50 pence for each 100 of your fund value. The unit prices for the funds you invest in will automatically take this AMC into account. Some funds you can access may have a higher AMC; please refer to the Scottish Widows investment literature for more information, which you can access via Page 11

12 Taking your benefits When you choose to take your pension benefits you can use the value of your fund to provide an income and/or cash sums. Under current law you can take your benefits anytime from age 55 and you do not need to stop working to draw your benefits. The minimum age you can start taking your benefits will increase to age 57 in Having spent years building up your pension fund, you must make sure you understand the options available when starting to take your benefits. From April 2015 new rules came in, allowing you to take full responsibility for the money you have saved and use your pension fund however you like. Your options are: You can take up to 25% of your pension pot as a tax free cash sum and with the remaining 75% of the fund: Take a further lump sum (which will be taxed at your marginal Income Tax rate) Leave it invested and take regular and/or occasional amounts that will be taxed as income (this is known as Flexi Access Drawdown ) or; Buy an annuity which pays you a guaranteed taxable income either for life or a fixed term (you have lots of options for how the annuity works and you can shop around to get the best deal for your circumstances). You can draw money from your fund when you need it, taking 25% of each payment as a tax free cash sum. The rest of the payment will be taxed as income (known as Uncrystallised Fund Pension Lump Sum ). You can use some or all of your fund for one or more of the above options. Although it is great to have these choices, you must make sure you understand all your options and, in particular, the tax you might have to pay. It is important you think about taking financial advice at the right time. Please note that you can take some or all of your benefits and stay in the Plan. However, in certain circumstances this will trigger the Money Purchase Annual Allowance (see the section headed What else do I need to know? What if I pay too much in? ). Please note that there is a Lifetime Allowance which applies to the value of all the pension benefits you build up from all sources (apart from the State) over your working life. For the 2016/17 tax year the allowance is 1 million. For further details on the Lifetime Allowance please see the 'What else do I need to know?' section. Page 12

13 Scottish Widows will contact you as you approach your SRA with details of your fund value and more information on the above options. The Aon Retirement Service can also support you through deciding how to take your pension benefits. Five years before your SRA, you will receive log on details for the online portal, which contains lots of useful information on your options and tools to help you start thinking about what you might want to do. At 12 months before your SRA, the Aon Retirement Service team will contact you to offer further guidance and support. Or, you can call the team directly on (available 8am to 6pm Monday to Friday). Pension Wise The Government introduced Pension Wise from April Pension Wise is a free and impartial service to help people with defined contribution funds understand what their choices are and how they work. This guidance is available online at over the phone or face to face and covers: what you can do with your pension pot the different pension types and how they work what s tax-free and what s not Pension Wise will not, however, give you personal advice about which option is the most suitable for you. Please note that you have to be age 50 and have a defined contribution pension to use Pension Wise. You should seek financial advice before you make decisions on how you will take your benefits. Page 13

14 What happens if? What happens when I leave this employment? If you leave employment you keep the fund you have built up under your policy within the Plan. You may: Leave your benefits in your policy, where they will stay invested Pay contributions directly to Scottish Widows (although the Company s contributions will stop) Transfer your fund to another pension arrangement Start taking benefits from your fund if you are over age 55. The most suitable option for you will depend on your situation at the time you leave. You may want to seek financial advice before deciding what route you will take. What happens if I die? If you die before taking your benefits the fund you have built up to the date of your death would be payable to your beneficiaries as a cash lump sum and is usually free of any tax liability. Your wishes You must fill in a nomination form outlining who you would like to receive any benefits following your death. Equally, if your personal situation changes, for example, you marry, divorce or become a parent, you may need to fill in another nomination form. These forms are available from Scottish Widows and should be returned to them directly after you have filled them in. If you die after taking benefits from the Plan, the amounts payable to your beneficiaries will depend on how you choose to receive your benefits. This is an important situation to plan for and should be part of the financial advice you seek when you start to draw your benefits. Page 14

15 What else do I need to know? Changing your details Once you have been enrolled / opted in to the Plan, if you wish to change your investment choice or SRA, contact the Scottish Widows Member Helpdesk on Lines are open weekdays from 8am to 6pm, Bank Holidays excluded. When you are automatically enrolled into the Plan, or if you opt in to the Plan, your SRA is set at age 65. However, it can be any age from 55 onwards and you can change it at a later date to the age you plan to draw benefits. The SRA is important because it can affect how your pension contributions are invested please see the sections Investing Helping your savings grow and Taking your benefits at retirement for more details. Other pension arrangements If you already have a personal pension, you can still be a member of the Plan. You are allowed to contribute to more than one pension at the same time. See What if I pay too much in? later in this section for further details. Please note that your employer will not contribute to any other pension arrangement. Consolidating pensions Once you are a member of the Plan you may be able to transfer in benefits from past pension arrangements. However, this is a complex area and you should seek financial advice beforehand. If you are thinking of reviewing your previous pension arrangement(s), please contact Scottish Widows in the first instance on State benefits If you reach State Pension Age after 6 April 2016 you will be entitled to the new single-tier State Pension. The full new State Pension will be per week (for 2016/2017), but the exact amount you receive will depend on the National Insurance you have paid over your working life, which is used to work out your new State Pension. If you reached State Pension age before 6 April 2016, you may have received the old two-part State Pension: The Basic State Pension a flat rate amount payable to everyone who had paid enough National Insurance. The State Second Pension (S2P formerly SERPS) which provided mostly earnings-related benefits. State Pension Ages have been under ongoing review by the Government, and your own State Pension Age depends on both your sex and date of birth. You can use the State Pension Age calculator on the Government s website: to find your State Pension Age, based on the rules currently in force. To find out more about State pensions in general, you can visit the Government s website: or call: or Page 15

16 Please note that joining the Plan may not be appropriate for everyone as contributing to it may affect entitlement to State benefits which may change themselves in future. If you are unsure you should seek financial advice. Death benefits The type and level of benefits payable in the event of your death after taking some or all of your retirement benefits is dependent upon how you have taken benefits and how old you are. Drawdown (Flexi Access Drawdown or Uncrystallised Fund Pension Lump Sums) Date of death Format of benefits Tax position Can be paid to Before age 75 All benefits Tax-free From age 75 onwards Lump sum (paid out of the Plan) Income (continuation of Drawdown) Taxable at marginal Income Tax rate Taxable at marginal Income Tax rate Any beneficiary Annuity Death before age 75 Death from age 75 Joint-life annuity Guaranteed term annuity (The income is guaranteed at a certain level for a period) Value protected annuity (If someone receiving this type of annuity dies before all of the original amount used to buy it has been paid out, the balance is payable to their beneficiaries.) Any beneficiary can receive payments tax-free Any beneficiary can receive payments at marginal Income Tax rate Taxable at marginal Income Tax rate What if I pay too much in? The Annual Allowance The Annual Allowance applies to all contributions, from you or any employer, paid into all of your pension arrangements over a 12-month pension input period ( PIP ). From 6 April 2016 onwards, PIPs will run in line with the tax year (before this date, PIPs could be different). If the contributions going into your policy during the PIP go over 40,000 (the Annual Allowance for tax year 2016/17) then the amount you have contributed above the Annual Allowance may be added to your taxable income. You will pay tax on it at your highest rate, unless you have any unused Annual Allowance from the previous three tax years. Page 16

17 From April 2016 the Annual Allowance of 40,000 will reduce for anyone with 'adjusted income' above 150,000 a year. This is called the tapered Annual Allowance. Adjusted income is taxable earnings from all sources plus the value of any pension contributions during the tax year. The Annual Allowance will reduce by 1 for every 2 of 'adjusted income' over 150,000 with a maximum reduction to the Annual Allowance of 30,000. This means those with adjusted income of 210,000 a year or more will have an Annual Allowance of 10,000. Please note that if your net income not including pension contributions (known as 'threshold income') is less than 110,000 a year, your Annual Allowance will not reduce, regardless of the level of adjusted income. If the total payments into the Plan made by you and your employer, plus contributions made to any other pension arrangements, are likely to be close to 40,000 in any PIP please seek financial advice before making any decisions. If you draw your benefits due to ill health then as long as you satisfy HMRC s requirements, or if you die while still building up your fund, the Annual Allowance will not apply to your benefits in that year. Money Purchase Annual Allowance (MPAA) Since April 2015, tax relievable contributions to defined contribution arrangements have been limited to a Money Purchase Annual Allowance of 10,000 per annum - if certain trigger events occur. Trigger events include income paid from a Flexi Access Drawdown fund, payment of an Uncrystallised Fund Pension Lump Sum, income of more than the permitted maximum income under a Capped Drawdown or Flexible Drawdown taken prior to April Please seek financial advice before you proceed with a trigger event if your total pension contributions are close to the 10,000 MPAA. Lifetime Allowance The Lifetime Allowance applies to the value of all the pension benefits you build up from almost all sources (apart from the State) over your working life. For the 2016/17 tax year the allowance is 1 million. It has been announced that it will increase with the Consumer Prices Index (CPI) from April Please note that widows pensions and other pensions paid following the death of someone else may not count towards the Lifetime Allowance. Overseas pensions may or may not be included, depending on the circumstances. You can build up benefits over the Lifetime Allowance, but you would have to pay a tax charge on the excess. This charge is 25% if you take these excess benefits as a pension or annuity, which would then also be subject to Income Tax. The charge goes up to 55% if you take the excess as cash. Please note that death benefits paid as lump sums also count towards the Lifetime Allowance. If these benefits, along with any other pensions or cash sums being paid, go over the allowance, a charge of 55% will apply to the excess, unless it is used to pay for dependants pensions. Page 17

18 If you think your contributions or benefits may be close to any of the allowances, please consider taking financial advice. Important note do you have Primary, Enhanced, Fixed Protection, Fixed Protection 2014 or have applied for / are going to apply for Individual Protection 2014, Individual Protection 2016, or Fixed Protection 2016? If you join an employer s pension plan and/or life assurance scheme, either by completing an application form or as a result of automatic enrolment, you will lose your Enhanced or Fixed Protection. If you join an employer s pension plan through automatic enrolment but opt out within the one-month period, you will be treated as if you have never been a member and you will not lose your protection. If you have Primary Protection or if you have applied for / are going to apply for Individual Protection 2014/2016, pension contributions can still be paid into your pension policy. Please note that you will have to pay a tax charge on any pension savings above your protected Lifetime Allowance. More information on protection and automatic enrolment is available on the HMRC website at: Neither your employer nor the Plan provider are responsible for any tax charge or loss of tax relief you incur through joining or being automatically enrolled into any pension or life assurance arrangements. Page 18

19 About Aon Aon Consulting Limited s advice is to the Company, so unless you request Aon Consulting Limited to provide you with advice with regard to the Plan, you will not receive any advice or a recommendation from Aon Consulting Limited. If you want to receive advice from Aon Consulting Limited on products other than the Plan, you would need to agree payment with Aon Consulting Limited. Aon Consulting Limited will tell you their charge, and how to pay them, before carrying out any business for you. Please note that where this booklet includes a link to a third party website, Aon has no control over and is not responsible for the third party website content. Including these links does not imply endorsement in any way of the site it links to. About Scottish Widows Scottish Widows is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register number ). You can contact Scottish Widows on (weekdays from 8am to 6pm) or you can access the Plan's website at: Problems and complaints If you have a complaint please write to: Aon Consulting Limited The Compliance Department 3 The Embankment Sovereign Street Leeds West Yorkshire LS1 4BJ Tel: complaints@aon.co.uk If you cannot settle your complaint with Aon Consulting Limited you may be entitled to refer it to the Financial Ombudsman Service (FOS) depending on who you are, what capacity you are acting in and the circumstances of your complaint. The FOS website is available at or call for further information. Page 19

20 Useful contacts The Financial Services Compensation Scheme (FSCS) The FSCS is the compensation scheme for customers of UK authorised financial services firms and can compensate customers if a firm has stopped trading or does not have enough assets to pay claims made against it. Aon Consulting Limited and Scottish Widows are covered by the FSCS. You may be entitled to compensation from the FSCS if Aon Consulting Limited or Scottish Widows cannot meet their obligations. This depends on the type of business and the circumstances of the claim. Most types of investment business are covered in full up to 50,000. Insurance advising and arranging is protected for 100% of the claim with no upper limit. Your personal policy within the Plan falls into the insurance advising and arranging category for compensation entitlement purposes. For further information about compensation scheme arrangements please contact: Financial Services Compensation Scheme 10th Floor Beaufort House 15 St Botolph Street London EC3A 7QU Tel: or The Pensions Advisory Service (TPAS) TPAS is an independent non-profit organisation that provides free information, advice and guidance on all pensions, including State, company, personal and stakeholder schemes. TPAS is available to help at any time if you have questions about your own pension arrangements. TPAS 11 Belgrave Road London SW1V 1RB Tel: You can also find more information about the Automatic Enrolment rules on the TPAS website at: Page 20

21 The Pensions Regulator (TPR) TPR oversees the running of workplace pension schemes in the UK. It has wide-ranging legal powers and can step in if employers are failing in their duties towards pension schemes. Their website contains a useful section for people who want to know more about automatic enrolment or have concerns about their workplace pension arrangements. Tel: GOV.UK The Government website contains a State Pensions Guide, details about the Pension Tracking Service (if you have lost track of a pension) and a Pension Scheme Administration Guide. Page 21

22 Jargon Buster Annual Allowance The maximum amount of pension contributions you can invest in any tax year while still receiving tax relief. Annual Management Charge (AMC) The charge to cover set up and management costs, administration and day-to-day fund management. Annuity An annuity is what most people call their pension. It s a financial product that will provide you with an income for the rest of your life. You can use all or part of your pension fund to buy an annuity from an insurance company. Automatic Enrolment Automatic Enrolment was introduced by the Government to encourage people to save more for their retirement. Employers will automatically enrol their eligible employees into their pension scheme. Employees then have the option to opt out. Benefits What you can take when you choose to take your retirement options. Contributions A payment into your pension plan made by you, your employer or any other person. Default Investment Option Where your contributions will be invested at outset or if you do not make a choice yourself. GPP (Group Personal Pension)/GSHP (Group Stakeholder Pension) An arrangement made by an employer for employees of that company to participate in a personal pension scheme on a group basis. Her Majesty s Revenue and Customs (HMRC) A department of the UK Government responsible for the collection of taxes. Income Tax The amount of tax you pay from your earnings. Inflation This is the increase in the cost of living over time. Inflation means that the value of money reduces over the years. So, if you choose a level annuity that is, one that does not increase year by year over time it will gradually buy you less and less, as the price of everything else increases. Page 22

23 Lifestyling An investment strategy used in Defined Contribution (DC) schemes. Under lifestyling, your investments move automatically based on your age and the length of time until you are due to retire. As you approach retirement, your savings are moved into funds with less risk, that are less likely to change dramatically in value. Lifetime Allowance The Lifetime Allowance is a limit on the total value of pension benefits that you can build up, without facing a tax charge on the value of the benefits. Pension fund A pot of money you have built up to provide your benefits. Pooled Investment Fund A collection of assets that you can invest in. Money is pooled together from various sources and managed by a professional investment fund manager. This means that you can invest a fairly small amount while still enjoying the benefits of a larger investment fund. Salary Sacrifice The amount of your salary that you sacrifice in return for a pension contribution from your employer. Selected Retirement Age (SRA) The age you choose to take your benefits. This is normally any age from age 55. State Pension The State Pension is a regular payment from the Government that you can get when you reach State Pension Age. To get it you must have paid or been credited with a certain level of National Insurance contributions. Tax-free cash A lump sum available to members when they take their pension benefits, normally up to 25% of the value of their pension pot. Taking a lump sum means that the amount left to buy an annuity or use for drawdown will reduce. The lump sum is paid free of tax. Tax relief An amount that can be deducted from your annual income to reduce the amount on which you pay tax. Transfer You can transfer the value of some pensions between providers. Unit A unit is a share of an investment fund. Each investment fund is split into units. The number of units you hold is your share of the investment fund. Page 23

24 Volatility The level of unpredictable change over a period of time, normally short term, in the investment market. Page 24

25 Aon Consulting Limited The Aon Centre The Leadenhall Building 122 Leadenhall Street London EC3V 4AN Tel: +44 (0) Published by Aon Consulting Limited Registered office Briarcliff House, Kingsmead, Farnborough, Hampshire, GU14 7TE Copyright Aon Consulting Limited All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any way or by any means, including photocopying or recording, without the written permission of the copyright holder, application for which should be addressed to the copyright holder. Aon Consulting Limited is authorised and regulated by the Financial Conduct Authority. Page 25