ADVISER AND FINANCIAL INTERMEDIARY GUIDE

Transcription

1 ADVISER AND FINANCIAL INTERMEDIARY GUIDE This is intended for Advisers and Financial Intermediaries only and has not been approved for customer use 1

2 About Primetime Retirement An introduction by our CEO and Founder Primetime Retirement is a specialist company totally focused on the retirement income market. We provide alternative income solutions to people who prefer to keep control of their pension fund, rather than locking it away in a lifetime annuity. We recognise that many of your clients are uncomfortable taking investment risk with their pension funds so all our products have guaranteed income and / or maturity lump sums. We also recognise your clients want to keep their options open for the future. I was delighted that the Chancellor introduced sweeping changes in April 2015 that now offer new pension freedoms and this guide explains how our plans take advantage of these freedoms in more detail. My Company will continue to offer innovative solutions that keep pace with legislative changes and to provide a personal service solely focused on the retirement income market. Kim Lerche-Thomsen CEO and Founder 2

3 The Primetime Retirement Fixed Term Drawdown Plan Primetime Retirement focus on offering clients more options, and our Fixed Term Drawdown Plan uses the new pension freedoms to give your clients flexibility in terms of how and when they take their cash from their pension fund. Our plan uses a Self Invested Personal Pension (SIPP) wrapper, administered by Astute Trustee Services Limited, to hold their investment and help them control any income they decide to draw during the term, giving our plan an added element of flexibility compared to other fixed-term income products. The plan runs for a fixed term, with plan terms starting at 3 years and going up to a maximum of 6 years. When your clients invest their pension fund into our plan, they have three fixed-term options to choose from a maximum income option, a maximum maturity option or a mixture of income and maturity 1. Maximum Income In return for investing their pension fund with us, we will pay them a regular income over a term of between 3-6 years so that, by the end of the plan term, their entire pension fund is depleted. 2. Maximum Maturity Alternatively, if your clients do not want or need to take any income, they can simply leave their plan to accumulate until the end of their chosen term and receive a Maturity Lump Sum instead. This maturity value is known from outset and is not affected by changes in market conditions. 3. Income + Maturity By choosing this option, your client can elect to take a regular income during the plan term plus a known maturity lump sum at the end of the term. The more income they take, the lower their maturity lump sum will be. Or, they could choose to receive a higher maturity lump sum by taking a lower level of regular income. We offer a default Income + Maturity option that pays a fixed level of income designed to provide a balance between a high income and a high maturity option. Through a carefully selected panel of financial services firms, we can offer your clients a choice of Deposit Funds and/or Investment Fund returns which deliver differing levels of income and/or maturity lump sum to match their requirements. 3

4 The new pension freedoms and the Primetime Retirement Fixed Term Drawdown Plan Introduction the new pension freedoms In the 2014 budget, the Chancellor announced sweeping changes to pension regulations with the freedom for your clients to choose how and when to receive income from their pension funds. Important changes have been made to the amount that can be taken from pension funds, the tax treatment of any payments taken and the tax treatment of any benefits payable on death. In addition, there are now two forms of lump sum that can be taken free of tax. Three ways in which the Primetime Retirement Fixed Term Drawdown Plan helps your clients benefit from the new freedoms (1) Income withdrawals from their plan One of the main changes introduced by the new pension regulations is that your clients are no longer restricted by previous Government income limits and are now free to choose any income they want each year from nil to the maximum level that would exhaust their pension plan at the end of the chosen term. An example of this is given on the next page. They can also choose between two types of cash payment which are free of income tax. These are:- Either a tax-free Pension Commencement Lump Sum (PCLS), normally 25% of their pensions fund at the point of first drawing income, with any excess amount being subject to income tax under the Pay As You Earn (PAYE) system Or if they don t take PCLS, any payment to them includes a 25% tax-free element with the balance taxable as income under the PAYE system. These tax free payments are Uncrystallised Funds Pension Lump Sums (UFPLS). (2) Death benefits Primetime Retirement Plans offer a return of the fund less any income paid to the date of death. However, the rules relating to tax rates applicable on death have also changed: If they were to die prior to age 75, any beneficiary can take the entire pension fund as a lump sum or as a tax free income (through the purchase of an annuity or income drawdown) If they were to die after age 75, any beneficiary has 3 options: take a lump sum, purchase an annuity or purchase income drawdown. Under all options, the beneficiary would pay income tax at their marginal rate. (3) Maturity Amounts Our Fixed Term Drawdown Plan offers a known return at the end of the plan term, but your clients can also choose to exhaust their pension fund with no maturity lump sum amount at the end of the term, if they prefer. 4

5 The Primetime Retirement Fixed Term Drawdown Plan Financial Services Compensation Scheme (FSCS) is protected by the Financial Services Compensation Scheme (FSCS). The FSCS is the body that can pay your client compensation in the event of the failure of any of the associated financial services firms. Pension funds transferred into our Deposit Funds are protected through the FSCS up to 85,000 per deposit taker*. Additionally, we have an Investment Fund option that could provide an additional 50,000 of FSCS protection*. Although the maximum investment allowed in our Investment Fund is normally 50,000, we will allow larger investments subject to receiving written confirmation that your client is happy to invest beyond this protection limit.* It is important to note that any money the client already holds with any of our Deposit Fund and Investment Fund partners will affect the level of FSCS protection they may be entitled to. While the protection limits quoted represent our understanding of the current compensation scheme rules and limits, as at January 2017, you should check the FSCS website ( org.uk) as scheme rules may change from time to time. SIPP wrapper gives them added flexibility over how and when they do this. Any income they receive is then paid to them, net of tax. They can choose to receive this income from the SIPP either monthly, quarterly, half-yearly or annually. They could even choose to turn the income stream off and on, depending on their changing needs in retirement so unlike a traditional annuity that pays out a regular income regardless of requirements, with our plan your client is in control. However, once they have chosen an income level at the start of the plan, they cannot subsequently change this amount. Income Maturity Maximum income 0 more less Income + maturity less more 0 Maximum maturity Income options If your client chooses to take an income from their plan, our 5

6 The Primetime Retirement Fixed Term Drawdown Plan Suitability A Primetime Retirement Fixed Term Drawdown Plan may be suitable for your clients if they can answer yes to any of the following questions:- Do they want a guaranteed income and a known maturity lump sum in the future? Are they worried about exposing their pension fund to fluctuating investment performance? Do they want to keep their options open for the future rather than locking in to a lifetime annuity now? Do they worry that their health may deteriorate in the future which could result in them receiving a higher income later on in retirement? The risks explained Future Income - Annuity rates can go up and down depending on market conditions, although we guarantee the amount payable at maturity, we cannot guarantee what income this will provide in the future. Inflation - Inflation will reduce what they can buy in the future. Taxation - Tax treatment depends on individual circumstances and could change in the future. Annual allowance - Your client s plan will be set up as Flexi-access Drawdown unless we have been advised otherwise. Where your client has chosen to take an income from their plan, the amount they can contribute to other money purchase pension schemes without incurring a tax charge is reduced from 40,000 to 4,000 in a Pension Input Period. Your client will have 91 days from starting drawing income to inform the trustees of any schemes they are contributing to, that they have commenced Flexi-access Drawdown. Capital security In the event of a deposit taker or investment taker failure or insolvency, their investment will not be guaranteed and they must rely on their right of recourse to the Financial Services Compensation Scheme (FSCS). Deposit taking business is currently protected under the FSCS up to a maximum of 85,000 per authorised institution. The equivalent figure for an investment taker is 50,000. These levels are subject to review with the next review due in January Quotation validity For Deposit Funds, the plan benefits shown in your client s Personal Quotation are guaranteed for 14 days. However, if the rate decreases before this date then the quotation will be held at the original higher rate for a further 14 days from the date of the rate decrease. For these quoted benefits to apply, we must receive all funds from your client s pension scheme(s) before the end of the validity period. If funds are received after the validity period, the benefits and deposit takers may change. Your client will receive a final quote for their acceptance prior to investment of funds. For the Investment Fund these guarantees do not apply. Important Information Your client s investment is held in a SIPP and the assets of the SIPP are owned by Primetime Trustees Limited, a non-trading Trustee company which acts purely as a Trustee of The Primetime SIPP. This ensures that their assets are protected by being held separately from the business activities of either Primetime Retirement Limited or Astute Trustee Services Limited who administer The Primetime SIPP. Further information on FSCS (including the amounts covered and eligibility to claim) can be found on the FSCS website, Your client must remain in the plan for the full term and your client cannot change the benefits during that time. 6

7 Next steps Getting started Personal quotations We can provide you with personal quotations for your clients. This can be done in three ways:- Through our customer service centre whose contact details are given below Through our portal on for registered advisers who have signed our terms of business Through the industry portal iress on Other information A range of additional information is available that explains all of the features, benefits and risks of the different plan options available, including:- Key Features Document A summary of the protection by the Financial Services Compensation Scheme Policy conditions Partner Guides Client Guide Processing applications Transfers can be made from UK registered pension schemes and our team will be pleased to help you through the process. Wherever possible we transfer funds through ORIGO to speed up the process. Ongoing support We provide annual valuations for your clients and will assist you in requests for income changes where these are possible. Adviser charging An initial adviser charge can be facilitated through the product either as a percentage of the investment (after any deduction of PCLS) or as a fixed amount. Financial Intermediary Charging An initial commission can be paid through the product. Contact us You can contact our Customer Services Team in the following ways:- Call us on us on info@primetimeretirement.co.uk Access our website on 7

8 The Primetime SIPP ( The Plan ) is a registered pension scheme, administered by Astute Trustee Services Limited. Registered in England No Astute Trustee Services Limited is authorised and regulated by the Financial Conduct Authority. FCA Number Astute Trustee Services have delegated the day to day running of the scheme to Primetime Retirement Limited (Registered in England No ) and Primetime Trustees Limited is the Scheme Trustee. (Registered in England No ). Primetime Retirement Limited is authorised and regulated by the Financial Conduct Authority. FCA Number Registered address: Primetime Retirement Limited, Baines House, 4 Midgery Court, Fulwood, Preston PR2 9ZH. Telephone: info@primetimeretirement.co.uk CPT03.5 (04/17)