GROUP PERSONAL PENSION WITH SALARY SACRIFICE. A guide to help you prepare for the retirement you want

Transcription

1 THE GRANT THORNTON UK LLP GROUP PERSONAL PENSION PLAN GROUP PERSONAL PENSION WITH SALARY SACRIFICE A guide to help you prepare for the retirement you want Your Grant Thornton company pension is provided by Scottish Widows.

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3 PAGE 3 WHAT S IN IT FOR ME? SOME CONSIDERATIONS PAGE 4 WHAT S BEST FOR ME? CONTRIBUTING TO A PENSION PAGE 7 WHAT ABOUT RELYING ON THE STATE OR USING OTHER INVESTMENTS? PAGE 8 WHAT ELSE COULD YOU BE RELYING ON IN YOUR OLD AGE? PAGE 9 WHAT ARE THE CHARGES? HOW WILL MY PENSION FUND BE INVESTED? PAGE 10 GRANT THORNTON RISK GRADED PORTFOLIOS PAGE 18 WHY GRANT THORNTON HAS CHOSEN SCOTTISH WIDOWS A NAME YOU CAN TRUST PAGE 19 HOW TO CONTRIBUTE WHAT NEXT? We hope this guide answers all your questions, but if not, please speak to your financial adviser. 1

4 WHAT WE MEAN WHEN WE SAY: THE GRANT THORNTON UK LLP GROUP PERSONAL PENSION The Group Personal Pension Plan provided by Scottish Widows. PENSION FUND The payments to your Grant Thornton UK LLP Group Personal Pension fund held in your name. When you retire, this fund will be used to pay a taxable income for life together with a tax-free cash sum if chosen. TAX-EFFICIENT INVESTMENT Our pension investment funds are generally free of UK income and capital gains tax. However, we can t reclaim tax deducted at source from the dividends of UK company shares. Tax rules can change. TAXMAN HM Revenue and Customs. SALARY SACRIFICE Salary sacrifice is an agreement between you and Grant Thornton where you sacrifice part of your gross salary (this is your salary before tax) or bonus in return for a non-cash benefit such as a pension contribution. You choose an amount to sacrifice and it is taken from your gross salary so no National Insurance Contributions are paid on it. The sacrificed amount goes into your pension as an employer contribution. TAX RELIEF If you choose to make personal contributions to the plan, outside of the salary sacrifice arrangement, these contributions may be eligible for UK tax relief. We will claim basic rate tax relief on your behalf and invest it in your plan. If you are a higher or additional rate taxpayer you may be able to claim additional tax relief on these contributions via your self-assessment tax return. The value of the tax benefits of a pension plan depend on your personal circumstances. Both your circumstances and tax rules may change in the future. WE/US Scottish Widows. INCOME FOR LIFE The money your pension fund will pay out once you retire which is taxed in payment. You can choose to take part of your pension fund as a lump sum when you retire that is normally tax-free. RETIREMENT DATE Your selected retirement date. TOTAL ANNUAL FUND CHARGE The charge made for managing and investing your plan. 2

5 WHAT S IN IT FOR ME? HERE ARE SOME REASONS WHY AS A SELF-EMPLOYED PARTNER YOU SHOULD CONSIDER STARTING CONTRIBUTING TO THE GRANT THORNTON UK LLP GROUP PERSONAL PENSION. When you are eligible to join, Grant Thornton will pay the amount you ve agreed to sacrifice into your Grant Thornton UK LLP Personal Pension plan. Please see your benefits, your choice available from Grant Thornton for more information on the eligibility rules. If you agree to sacrifice 3% or more of your gross salary, Grant Thornton will pay an additional matching amount to your Grant Thornton UK LLP Group Personal Pension plan subject to a maximum of 8%. Please see table below: Employee Salary Sacrifice Grant Thornton Contributions 1% 0% 1% 2% 0% 2% 3% 3% 6% 4% 4% 8% 5% 5% 10% 6% 6% 12% 7% 7% 14% Total Contributions 8% or more 8%* 16% or more** Using salary sacrifice to pay your pension contributions means you pay reduced National Insurance (NI) contributions The sooner you start paying in, the longer your pension fund has the opportunity to grow If you leave your job, you can take your pension fund with you, including the payments your employer has made When you retire, you can normally take a tax-free cash lump sum, plus a taxable income for life To help make your investment decision easier, we have designed some simple investment tools * For employee contributions above 8% made by salary sacrifice, Grant Thornton will pay some of their own National Insurance savings to your plan. Please see your benefits, your choice available from Grant Thornton for full details. ** Up to a maximum contribution of 50,000 per year. It s easy to join just go into your benefits, your choice which will enable you to join online. 3

6 WHAT S BEST FOR ME? A STEP-BY-STEP LOOK AT MAKING YOUR PENSION DECISIONS CONTRIBUTING TO A PENSION Scottish Widows is working with Grant Thornton to provide the Grant Thornton UK LLP Group Personal Pension. If you choose to become a member of the Grant Thornton UK LLP Group Personal Pension, it could be of life-long benefit to you. If you contribute, it s your decision as to how your funds are invested and neither Grant Thornton or Scottish Widows will give you any advice. The information in this document is given to help you to make your own decisions but, if you need advice, you should contact your own financial adviser. Avoid having to work til you drop Whatever your personal ambitions for retirement, you ll need money to enjoy life to the full. That s where the Grant Thornton UK LLP Group Personal Pension could help. UK state retirement ages are going up. Depending on your age now, you may have to wait until 68 before getting your Basic State Pension. But, by contributing to the Grant Thornton UK LLP Group Personal Pension you may be in a position to retire earlier or have a better lifestyle when you eventually stop work WHY CONTRIBUTE? The Grant Thornton UK LLP Group Personal Pension is a good way to help get the retirement income you need Unless your retirement is already on the horizon, you may struggle to picture exactly what you ll be doing in years time. But, whatever you want your retirement to be, your Grant Thornton UK LLP Group Personal Pension plan should help give you a financial cushion to enjoy it that bit more. When you contribute, there s the feel-good factor of knowing your Grant Thornton UK LLP Group Personal Pension plan is there in the background, quietly doing its job. Because it s earmarked for your retirement, you can t dip into your Grant Thornton UK LLP Group Personal Pension plan or fritter it away. So, although it s tied up until you retire, you should be able to rely on it being there when the time comes. You don t have to retire or stop work before taking benefits from your Grant Thornton UK LLP Group Personal Pension plan. You can normally start taking your pension from 55. But remember, the earlier you take your pension, the less time your pension fund has the opportunity to grow. The sooner contributions start for you, the longer they have the potential to grow Your retirement may seem a long way off, but don t fall into the trap of putting off contributing because you ve got plenty of time. Take it from people retiring today, it will come round much faster than you think. The longer you delay the more you d need to pay in to try and get the same size of pension income. The longer you live, the more money you re likely to need Most people retiring at 65 now will live to their early -80s (based on current figures from the Office for National Statistics): Even by the time you ve read this guide, the average life expectancy will have increased by about 5 10 minutes. With new medical advances helping to cure life-threatening diseases, your life expectancy could continue to rise. It s never too late Don t assume it s too late for you to contribute. The chances are you could still have a lot to gain. In many cases, even a small pension is better than none at all especially when Grant Thornton and the taxman are helping to pay for it. 4

7 SALARY SACRIFICE The Grant Thornton UK LLP Group Personal Pension offers salary sacrifice. This has the advantage of effectively reducing the amount of NI contributions you pay. With a typical company pension scheme, the employee pays contributions directly themselves into their pension plan. However, with salary sacrifice, you don t make contributions direct into your pension plan. Instead, your gross salary is reduced by the amount you want to sacrifice and this money is then paid into your pension plan as an employer contribution. Basically, this means that by sacrificing rather than paying directly you don t pay NI contributions on the amount contributed towards your pension plan. The result of salary sacrifice is: Exactly the same amount will be paid into your pension plan and Your net income increases slightly as you pay less NI contributions. There are examples on page 6 showing how this works. Salary sacrifice is a contractual agreement. Grant Thornton will decide how long the agreement will last. Normally, you can t change or stop the sacrifice during the agreement period but Grant Thornton may include the option to change the agreement if you experience a lifestyle change. Grant Thornton can provide more information on this. Remember Grant Thornton may also be paying their own contributions to your pension plan. THINGS TO CONSIDER Salary sacrifice may not be suitable for everyone. It s important to remember that by opting-in (or by not opting-out) you are entering into a legally binding contract. Other things that you should think about include: Other benefits which are linked to your salary, for example, benefits on death and over-time rates. Statutory benefits linked to your lower salary may also be impacted. These include: State pension. Statutory maternity, paternity and sick pay. Working or child tax credit. As mortgage lenders sometimes base the amount which can be borrowed on the salary after the sacrifice, this will reduce the amount that you can borrow. However, Grant Thornton maintains a notional salary (your original salary with no sacrifice). This is useful for things like mortgage references, over-time, life assurance multiples and salary reviews. You may wish to speak to your financial adviser for more information on salary sacrifice and whether it is suitable for you. You can sacrifice an amount which will keep your pension payments at the same level and have the NI contributions saving increase your take home pay. These payments will be shown as employer payments on any correspondence you receive such as illustrations or annual statements. 5

8 Here s how it works for basic rate taxpayers Let s assume: You re a basic rate tax payer earning 24,000 a year You currently pay a gross pension contribution of 1,200 a year (or 100 a month) You now agree to a salary sacrifice of 1,200 a year to keep your pension contributions at the same level and increase your take home pay. Here s how it works for higher and additional rate taxpayers Let s assume: You re a higher rate tax payer earning 60,000 a year You currently pay a gross pension contribution of 6,000 a year (or 500 a month) You now agree to a salary sacrifice of 6,000 a year to keep your pension contributions at the same level and increase your take home pay. Tax year 2014/15 Before sacrifice After sacrifice Tax year 2014/15 Before sacrifice After sacrifice Gross earnings 24,000 22,800 Gross earnings 60,000 54,000 Tax you pay 2,800 2,560 Tax you pay 13,627 11,227 National Insurance you pay 1,926 1,782 National Insurance you pay 4,432 4,312 Net earnings after tax and NI 19,274 18,458 Gross earnings after tax and NI 41,941 38,461 Minus current pension contribution 960 net ( 1,200 gross) n/a as amount has been sacrificed Minus current pension contribution 4,800 net ( 6,000 gross) n/a as amount has been sacrificed Take home pay 18,314 18,458 In the above example you have kept the gross payments to your pension at 1,200 and increased your take home pay to 18,458 a year. This example assumes that: You have a personal allowance of 10,000 a year (so you only pay tax on any amount earned above that) and You only pay NI contributions on any amount earned over 7,956, this is the primary earnings threshold for tax year 2014/15. Please note: NI contribution rates for employees is 12%. You do not have any other taxable income. You should remember that this is only an example and isn t guaranteed. The value of the tax benefits of a pension plan depends on your individual circumstances. Your circumstances and tax rules may change in the future. Take home pay (before reclaim of higher rate tax relief) Higher rate tax relief on gross pension contribution 37,141 38,461 1,200 n/a as amount has been sacrificed Final income 38,341 38,461 In the above example you have kept the gross payments to your pension at 6,000 and increased your take home pay to 38,461. This example assumes that: You have a personal allowance of 10,000 a year (so you only pay tax on any amount earned above that) and You pay 20% tax on your earnings up to 31,865 and then 40% on any earnings above this amount; 6

9 You pay NICs of 12% on any amount earned between 7,956 and 41,865 and NICs of 2% on any amount earned over 41,865. You do not have any other taxable income. Higher and additional rate taxpayers can claim further tax relief on any personal contributions they make via their self-assessment tax return. The personal income allowance will be reduced for those with incomes over 100,000, tapering down to zero. Please ask your financial adviser for more details. You should remember that this is only an example and isn t guaranteed. The value of the tax benefits of a pension plan depends on your individual circumstances. Your circumstances and tax rules may change in the future. Please note: these examples look only at employee contributions. Grant Thornton may also be paying to your pension plan. WHAT ABOUT RELYING ON THE STATE OR USING OTHER INVESTMENTS? A pension is one of the best ways to save for your retirement, but it s not your only option. What will I get from the State? Like most people, you ll probably get something from the Basic State Pension. The age at which you first receive the State Pension will depend on your date of birth, but is expected to increase gradually to 68 by mid 2030s. So many of us may have to work longer than we thought. Here are the current amounts for the tax year 2014/15 Basic State Pension Single person Married couple Will I get a full State Pension? You ll need to find out. According to the Department for Work and Pensions, 15% of those reaching State Pension Age are entitled to less than the full amount of Basic State Pension. How much you get will depend on how much you have paid in NI contributions during your working life. People reaching their State Pensionable Age (SPA) will need to have paid them for a full 30 years. As a result of salary sacrifice, your NI contributions will be lower. This may impact your Basic State Pension. How do I get a State Pension forecast? You can find out exactly how much money to expect by contacting The Pension Service. You can ask for a forecast by applying for one online at or by post Will I get the State Second Pension? How much State Second Pension (this is sometimes paid in addition to the Basic State Pension) you receive will be based on a combination of factors, including: Your average earnings How long you ve been employed Your National Insurance contribution history. If you are resident overseas or a non UK national, the state benefit you re entitled to (if any) may differ from those described above. Please speak to your financial adviser for further details. From 2016, a flat rate State Pension system is due to be introduced. Weekly amount Monthly total Yearly total 5, ,

10 WHAT ELSE COULD YOU BE RELYING ON IN YOUR OLD AGE? Some people enjoy planning their finances and being in control. Others avoid thinking about it for as long as possible, and some do nothing at all. There are a wide range of investments out there and some or all of them may play a part in your thinking, alongside the Grant Thornton UK LLP Group Personal Pension. Take a look below at some other options available to UK residents, and see how well they compare. See how the Grant Thornton UK LLP Group Personal Pension compares to some other investment options Investment options The Grant Thornton UK LLP Group company pension Buy-to-let property Inheriting money ISAs Grant Thornton can pay in # You can sacrifice your salary and increase your take home pay Other individuals can pay money in on your behalf (and you benefit from tax relief) You can t spend the investment before you retire You can take some of the proceeds or benefits tax-free All of the income or proceeds are tax-free 7** 7 7* 3** You don t have to give up your time to manage things # Grant Thornton may change its level of contributions. Any Grant Thornton contributions would stop if you leave the company. * If under the inheritance tax nil rate limit, this can be tax free. ** Please note it s not possible to reclaim the 10% tax credit on UK dividends. Tax treatment depends on your personal circumstances and may be subject to change in the future. For more information on any of these investment options or their tax implications, please speak to a financial adviser. 8

11 Topping up your Grant Thornton UK LLP Group Personal Pension plan with extra payments If you want to give your Grant Thornton UK LLP Group Personal Pension plan a boost, you can increase your payments or add lump sums to it at any time. For example, using money from: Windfalls or winnings An inheritance or gift Other savings from your bank or building society. Plus, you ll normally get UK tax relief on these payments too. You can read more about tax in the Key Features. WHAT ARE THE CHARGES? Regular charges based on the value of your plan are deducted automatically. The amount deducted, the Total Annual Fund Charge (TAFC), depends on the type of payment made and your choice of investment fund(s). Each investment fund has its own TAFC, and a discount may apply for certain payment types. The TAFC may be higher for some of the specialised funds we offer. The yearly rates of all these charges are expressed as percentages of fund values. These are shown on the Charges Sheet. The charges are reflected in the unit price of the fund(s) you re invested in. As an example, if your pension plan was valued at 5,000 throughout the year and the yearly charge of the fund it was invested in was 0.35%, the charge for that year would be Grant Thornton has negotiated with Scottish Widows to reduce the charges that apply to your plan while you remain in their employment and regular monthly contributions continue to be paid into your plan. This reduction is known as a scheme member discount. Even if you leave Grant Thornton, you may be able to retain the scheme member discount if you continue to make regular contributions at or above the minimum qualifying level applying at that time. However, if regular monthly payments stop being paid into your plan, the scheme member discount will stop and higher charges will apply. The two levels of charges are shown on the Charges Sheet. HOW WILL MY PENSION FUND BE INVESTED? You are free to choose what happens with your pension fund. You have three options: Select from one of the Risk Graded Portfolios designed by Grant Thornton Employee Benefits Consultancy. Choose one of the Scottish Widows Pension Investment Approaches, Be very hands-on selecting from Scottish Widows wide range of investment funds. If you do not make a choice then your Fund will be invested in the default option chosen by Grant Thornton Employee Benefits Consultancy which is the Scottish Widows Cash Fund. Once you ve joined the Grant Thornton UK LLP Group Personal Pension additional investment choices may be available to you through Scottish Widows Self Investment Option. This section of the guide explains what your investment options are in more detail. Whatever you decide, remember the value of the investment is not guaranteed and may go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). The value can fall below the amount of contributions paid in. Scottish Widows reserves the right to delay a request to sell or switch funds. The period of delay will be no more than six months for units in real or heritable property and will be no more than one month in all other cases. For more details please see your Policy Provisions. There may be restrictions on the amount you can invest in certain funds. Please contact us for any restrictions that may apply. We may change the selection of funds that we make available. If at any time the scheme member discount stops applying to your plan, Scottish Widows will write to let you know. Please note that charges, limits and terms can change. 9

12 GRANT THORNTON RISK GRADED PORTFOLIOS When joining the Grant Thornton UK LLP Group Personal Pension plan you have the option of investing in one of the Grant Thornton Risk Graded Portfolios (RGPs), which have been designed independently by Grant Thornton Employee Benefits Consultancy (GTEBC). The RGPs consist of six risk graded portfolios ranging from Cash Plus to Adventurous. The risk grading, definitions and descriptions for each RGP have been provided by GTEBC, and not Scottish Widows, who have had no involvement in allocating the risk ratings against these 6 funds. For information on the underlying funds of each RGP, please contact GTEBC. The Grant Thornton risk grading differs to that used by Scottish Widows for the Scottish Widows Pension Investment Approaches (detailed on page 14) and the Scottish Widows investment approaches for the range of funds. As property can be difficult to sell, the Cash Plus and Cautious Risk Profile portfolios do not invest in property. Investments in emerging markets and other specialist areas can help diversify the investment of your fund, but can also experience greater price variation. For this reason none of the RGPs invest more than 7% in emerging markets. The overall charges applying to each RGP can differ depending on the underlying funds. These are currently invested as described below. Grant Thornton will review the RGPs approximately every six months. The review includes the asset allocation, the funds used and a rebalancing of the portfolios. You will receive an following the review and this needs a positive response for any changes to be made. The RGPs are not reviewed or monitored by Scottish Widows. Whatever you decide, remember neither Grant Thornton or Scottish Widows will give you any advice. The information in this document is given to help you to make your own decisions but, if you need advice, you should contact your own financial adviser. GTEBC has recommended that you use the Finametrica risk profiling tool to help you determine which of the RGPs is most appropriate for you (for details see the GTEBC Q&A document). You will need to acknowledge during the application process that Finametrica has or should have been used and that Grant Thornton and Scottish Widows cannot accept any responsibility for the choice made on the level of risk you wish to take or the RGPs selected. THE GRANT THORNTON CASH PLUS PORTFOLIO This RGP is primarily suitable for those nearing retirement who intend to purchase an annuity. As with all the other portfolios, it is possible for the value of your fund to fall but the RGP is structured to help preserve the purchasing power of the fund. ASSET CLASS 89% Cash 3% Fixed Interest Gilts 3% UK Equity 3% European Equity 1% North American Equity 1% Japanese Equity Funds used % of total Scottish Widows Cash Fund 89 SW SSgA UK Conventional Gilts over 15 years Index Fund SW SSgA UK Equity Index 3 SW SSgA Europe ex UK Equity Index 3 SW SSgA North America Equity Index 1 3 As at 1st March 2014 SW SSgA Japanese Equity Index 1 10

13 THE GRANT THORNTON CAUTIOUS RISK PORTFOLIO This RGP is aimed at investors who are willing to accept low levels of risk for the prospect of slightly higher returns than a building society account. If you choose this RGP, it is possible for the value of your fund to fall. ASSET CLASS 50% Cash 16% Index Linked Gilts 15% Fixed Interest Gilts Funds used % of total Scottish Widows Cash 50 SW SSgA Index Linked Gilts All Stocks Index Fund 6% UK Equity SW SSgA UK Conventional Gilts over Years Index Fund 8% European Equity 3% North American Equity 2% Japanese Equity SW SSgA UK Equity Index SW SSgA Europe ex UK Equity Index 6 8 As at 1st March 2014 SW SSgA North America Equity Index 3 SW SSgA Japan Equity Index 2 16 THE GRANT THORNTON BELOW AVERAGE RISK PORTFOLIO This RGP is aimed at investors who are concerned about security but accept that returns cannot be achieved without some degree of investment risk. If you choose this RGP you will therefore accept some limited exposure to equities (stocks and shares) to achieve more attractive returns than a low risk investor. ASSET CLASS As at 1st March % Index linked Gilts 36% Fixed Interest 25% Commercial Property 10% UK Equity 12% European Equity 5% North American Equity 3% Japanese Equity 2% Emerging Markets Equity Funds used SW SSgA Index Linked Gilts All Stocks Index % of total Scottish Widows UK Fixed Interest Tracker 18 SW SSgA Sterling Corporate Bonds All Stocks Index Scottish Widows Property 25 SW SSgA UK Equity Index 10 SW SSgA Europe ex UK Equity Index 12 SW SSgA North America Equity Index 5 SW SSgA Japan Equity Index 3 SW SSgA Emerging Markets Equity Index

14 THE GRANT THORNTON AVERAGE RISK PORTFOLIO This RGP is aimed at investors who accept that investment risk is inevitable if you are looking for the potential to achieve reasonably attractive returns. If you choose this RGP you are therefore willing to accept a greater amount of your fund being invested in stocks and shares. ASSET CLASS As at 1st March % Fixed Interest 25% Commercial Property 13% UK Equity 17% European Equity 7% North American Equity 5% Japanese Equity 2% Emerging Markets Equity Funds used % of total Scottish Widows UK Fixed Interest Tracker 16 SW SSgA Sterling Corporate Bonds All Stocks Index Scottish Widows Property 25 SW SSgA UK Equity Index 13 SW SSgA Europe ex UK Equity Index 17 SW SSgA North America Equity Index 7 SW SSgA Japan Equity Index 5 SW SSgA Emerging Markets Equity Index 2 15 THE GRANT THORNTON ABOVE AVERAGE RISK PORTFOLIO This RGP is aimed at investors who are willing to accept a level of risk which may be greater than the average investor in the hope of above average returns. ASSET CLASS As at 1st March % Fixed Interest 24% Commercial Property 18% UK Equity 22% European Equity 10% North American Equity 6% Japanese Equity 1% Pacific Equity 3% Emerging Markets Equity Funds used % of total Scottish Widows UK Fixed Interest Tracker 8 SW SSgA Sterling Corporate Bonds All Stocks Index Scottish Widows Property 24 SW SSgA UK Equity Index 18 SW SSgA Europe ex UK Equity Index 22 SW SSgA North America Equity Index 10 SW SSgA Japan Equity Index 6 SW SSgA Asia Pacific ex Japan Equity Index SW SSgA Emerging Markets Equity Index

15 THE GRANT THORNTON ADVENTUROUS RISK PORTFOLIO This RGP is aimed at investors who have a high tolerance to investment risk. If you choose this RGP, the vast majority of your portfolio will be invested in stocks and shares. ASSET CLASS As at 1st March % Fixed Interest 17% Commercial Property 22% UK Equity 25% European Equity 11% North American Equity 7% Japanese Equity 7% Emerging Markets Equity Funds used % of total Scottish Widows UK Fixed Interest Tracker 6 SW SSgA Sterling Corporate Bonds All Stocks Index Scottish Widows Property 17 SW SSgA UK Equity Index 22 SW SSgA Europe ex UK Equity Index 25 SW SSgA North America Equity Index 11 SW SSgA Japan Equity Index 7 SW SSgA Emerging Markets Equity Index 5 7 WHAT ARE MY OTHER OPTIONS? If you do not wish to invest in one of the Risk Graded Portfolios designed by Grant Thornton Employee Benefits Consultancy, Scottish Widows have lots of options for you to choose from. You could choose one of Scottish Widows Pension Investment Approaches based on your feelings about risk, and let us manage this to retirement. Alternatively you could be very handson and select from Scottish Widows wide range of investment funds. If you do not make a choice then your fund will be invested in the default option chosen by Grant Thornton Employee Benefits Consultancy, which is the Scottish Widows Cash Fund. EXPLANATION OF TERMS SW SSgA Cash Commercial property Fixed Interest, corporate bonds & gilts Equities Emerging markets Scottish Widows. This is the company that the pension is invested with. State Street Global Advisors. This is one of the companies that manages the funds. This is a type of fund that is similar to bank deposit accounts but the funds cannot be withdrawn in the same way. Cash can be actively managed with fund managers moving money around different accounts, aiming to get a higher rate of interest. Cash funds can also fluctuate in value (including going down in value), compared to a Bank Account and are not as secure. Commercial property is another asset class and funds will usually invest in actual buildings. Fixed interest investments are issued by companies or governments as a way for them to borrow money. Corporate bonds are issued by companies and gilts are issued by the UK Government. Other governments issue similar investments but may have different names. Equities are basically shares in companies. Shares can fluctuate widely on a day to day basis. This is an equity based fund that invests in less developed countries. Index tracker This describes a fund that aims to mirror an index for example the FT-SE 100. An index describes an average growth across a group of funds in the sector. 13

16 ABOUT SCOTTISH WIDOWS THREE RISK-BASED PENSION INVESTMENT APPROACHES Not everyone wants to be actively involved with picking investments and keeping a close eye on what s happening in the market. If this sounds like you, one of Scottish Widows three specially designed Pension Investment Approaches may be just what you need. Simply tell us which one suits you best. They all work in a similar way. The difference between them is how much investment risk they take in trying to help your pension fund grow. With all three approaches, Scottish Widows gradually reduce the risk the closer you get to retirement, to help protect the final value of your pension fund. Adventurous Balanced Adventurous Pension Investment Approach A plan using this Pension Investment Approach is expected to have the most frequent and noticeable ups and downs in value. It has the potential to provide the highest growth over the longer term, but it could also make the biggest losses. Balanced Pension Investment Approach This Pension Investment Approach should have moderate ups and downs compared with the other two approaches. Cautious Cautious Pension Investment Approach A plan invested in this Pension Investment Approach should experience smaller and less-frequent ups and downs in value than the other two approaches. But its growth potential is lower as a result. 14

17 WHAT S SPECIAL ABOUT THE SCOTTISH WIDOWS PENSION INVESTMENT APPROACHES? They take into account the fact that investments need to do different jobs for your Grant Thornton UK LLP Group Personal Pension plan at different times: for the main part they aim to grow your pension fund as much as possible whilst matching the level of investment risk you ve chosen the closer you get to retirement, they gradually switch from an aim of going for growth to helping protect what you ve built up. HOW DOES SCOTTISH WIDOWS DECIDE WHICH INVESTMENTS TO USE? That s easy. Everything is decided in advance, based on rigorous investment testing. Instead of switching investments in reaction to what s happening day to day in the stockmarket, Scottish Widows invest according to the approach you ve selected and how close you are to retiring. When originally designing the Pension Investment Approaches, Scottish Widows put a huge range of investments under the microscope. This enabled Scottish Widows to: Rule out unsuitable ones too risky or not enough potential growing power Select types Scottish Widows felt were right for Scottish Widows company pensions Identify what Scottish Widows believe are the best investment combinations for people with different ideas about risk and different terms to retirement. HOW DOES SCOTTISH WIDOWS MONITOR YOUR INVESTMENTS? If you choose the Pension Investment Approaches Scottish Widows will monitor your Grant Thornton UK LLP Group Personal Pension plan, to ensure it is invested according to your chosen approach: Up to 15 years before you retire Scottish Widows check every three months to see if any investment ups and downs have caused investment mix to go adrift. If it has, Scottish Widows adjust it. The new mix will be based on how much closer you are to retirement at that time. From 15 years before you retire Scottish Widows gradually start replacing some of the higher risk investment funds with lower risk ones. Although this has the effect of reducing the potential for growth, it helps to protect the value of your plan during the run-up to your selected retirement date. At your retirement date your pension fund will be split approximately: 25% in our Cash Fund 75% in our Pension Protector Fund ready to provide your tax-free cash and taxable income for life. WANT MORE INFORMATION? Please see Scottish Widows Pension Investment Approach Guide. For more information on our fund aims and risks, please refer to our Pension Funds Investor s Guide. You ll find these on the website 15

18 WANT TO TAKE A MORE HANDS-ON APPROACH TO INVESTING YOUR GRANT THORNTON UK LLP GROUP PERSONAL PENSION PLAN? Your other option If you decide to invest in Scottish Widows investment funds instead of using the Grant Thornton Risk Graded Portfolios or Scottish Widows Pension Investment Approaches, you will be responsible for choosing funds that suit your attitude to risk. You can invest in up to 10 of them at one time (but there may be restrictions on the amount you can invest in some funds). Currently switches between them are free. These investment funds have been placed into Scottish Widows different risk approach ratings to help make your investment choice easier. You can find out more about them in Scottish Widows Pension Funds Investor s Guide. Please remember, if you go down this route: You should regularly review your investment choice to decide whether it s still right for you. If you decide it isn t, you can ask us to switch to another fund (or funds) as Scottish Widows won t automatically do this for you, Some of the funds may have a higher yearly charge than others. Please refer to the Charges Sheet or contact Scottish Widows for further details of the charges for each fund. We may change the selection of funds we make available at any time. Is being hands-on right for you? Have you done something like this before? If you re not confident about making the right moves at the right time, you may want a financial adviser to help you. Scottish Widows Self Investment Option Once you ve joined the Grant Thornton UK LLP Group Personal Pension plan, additional investment choices are available through the Self Investment Option. This allows members to set up a personal pension plan through our Retirement Account product alongside their group personal pension plan. The Self Investment Option has lots to choose from, including: A funds supermarket with approximately 1,000 funds from over 50 managers A panel of Discretionary Fund Managers The ability to invest directly in commercial property The option to invest directly in listed stocks, shares and other securities. With all this freedom of choice, the Self Investment Option adds an extra dimension to saving for your retirement. Remember, you should seek expert financial advice before making any investment decisions. Please contact Grant Thornton for more details on the Self Investment Option. CHANGING YOUR INVESTMENT CHOICE LATER ON Whatever investment choice you make at the start, you re free to change your mind and switch to something else later on Switching is currently free and you can: Ask to do it at any time which can be facilitated easily online Move from one of the Grant Thornton Risk Graded Portfolios into one of Scottish Widows Pension Investment Approaches, or into one or more investment funds Move from investment funds into one of the Pension Investment Approaches or one of the Risk Graded Portfolios Move from one of the Pension Investment Approaches, into one or more investment funds or one of the Risk Graded Portfolios Spread your Grant Thornton UK LLP Group Personal Pension plan in up to 10 investment funds at once. 16

19 But you can t invest: In one of the Risk Graded Portfolios along with other investment choices, In more than one Risk Graded Portfolios at one time, In more than one Pension Investment Approach at a time, or In both investment funds and a Pension Investment Approach at the same time. We reserve the right to delay the date of exchange for a switch. The period of the delay will be not more than six months if the units to be cancelled include units which relate to a fund which holds directly or indirectly assets in the form of real or heritable property. It will not be more than one month in all other cases. Whatever you decide, remember that the value of the investment is not guaranteed and may go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). The value can fall below the amount of contributions paid in. Will my pension fund go up and down in value? Yes, ups and downs are part and parcel of investing. But over the longer term the aim of the Grant Thornton Risk Graded Portfolios, Scottish Widows investment funds and the three Scottish Widows Pension Investment Approaches is to achieve long-term growth. Time to decide What investments will you choose for your Grant Thornton UK LLP Group Personal Pension plan Select one of the Grant Thornton Risk Graded Portfolios, Choose one of Scottish Widows Pension Investment Approaches, Are you going to be a hands-on investor and selfselect investment funds from Scottish Widows wide range of funds. If you don t make an investment choice, we ll automatically invest your pension fund for you, using our default investment approach, the Scottish Widows Cash Fund. For more details on this approach, please refer to the Pension Funds Investor s Guide found on the website 17

20 WHY GRANT THORNTON HAS CHOSEN SCOTTISH WIDOWS A name you can trust After researching the market, Grant Thornton has chosen us to provide the Grant Thornton UK LLP Group Personal Pension. Here are some reasons why they felt we came out top: We re part of the Lloyds Banking Group, one of the top 100 companies listed on the London Stock Exchange We re experts in group pensions, we currently look after around 40,000 schemes We treat our customers fairly giving you excellent, thoughtful service is very important to us We ve been around for nearly 200 years, and that s important. We ve been helping people save for a long time and we want to see if we can help you do the same. All these success factors help to make Scottish Widows one of the UK s leading financial institutions and a company you can rely on. 18

21 HOW TO CONTRIBUTE WHAT NEXT? Deciding to contribute will help increase your chances of a financially secure retirement. Before contributing, you should go to your Grant Thornton website at where you can view supporting tools and information, including: Key Features Example Illustrations Charges Sheet Important notes for application Pension Funds Investor s Guide Pension Investment Approach Guide Policy Provisions The Key Features and Example Illustrations provide important information about the Grant Thornton UK LLP Group Personal Pension. Please read these documents before starting to contribute and save or print a copy of each file for your own records. Pension Planner Use this to show how much you might get back when you retire. If you are unable to view these documents online, or would prefer a paper copy of these documents, please call We may record and monitor calls to help us improve our service. Need financial advice? It s your decision as to how your funds are invested and neither Grant Thornton or Scottish Widows will give you any advice. The information in this document is given to help you to make your own decisions but, if you need advice, you can: Use your own adviser, if you have one. Find a UK adviser in your local area, at The website is run by the body responsible for promoting professional financial advice in the UK, so you can be sure everyone listed is fully qualified and regulated. Visit the Money Advice Service website This contains free, clear, unbiased advice to help you manage your money. Overseas applicants The tax benefits referred to in this booklet are based on Scottish Widows understanding of HM Revenue and Customs practices and UK law at the date of publication. If your country of residence is not the UK, the laws and rules of the country in which you reside could affect the policy, including the benefits you can receive. You should speak with legal and/or tax professionals in your country of residence for full details. 19

22 How to start contributing It s easy to start contributing. Just go into your benefits, your choice which will enable you to join online. After you start contributing After you start contributing, we will send you a welcome pack which includes: Your policy documents, including the terms and conditions (known as policy provisions) that apply to the Grant Thornton UK LLP Group Personal Pension. A personal illustration We will communicate with you in English. Regular updates Every year we ll also send you a statement showing how much has been paid into your pension fund and what it s currently worth. Online access By contributing to the Grant Thornton UK LLP Group Personal Pension, you have online access to your policy. This includes: Current and historic fund values Access to unit purchase history Change address/contact details Request copies of previous annual benefit statements. Our range of online services provides you with a quick and simple way to keep track of your pension plan. You can access these facilities online at There s a log-in or register button at the top of the web page. Remember that all payments made via salary sacrifice will show as employer payments because you are using salary sacrifice. 20

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24 Scottish Widows plc. Registered in Scotland No Registered Office in the United Kingdom at 69 Morrison Street, Edinburgh EH3 8YF. Telephone: Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number JG 04/14