PENSIONS AND ANNUITIES MADE SIMPLE

Transcription

1 PENSIONS AND ANNUITIES MADE SIMPLE

2 As you re reading this guide, it s likely that you re getting close to your retirement. Retirement is one of the most important stages in anyone s life. After years of hard work providing for yourself and your family, you must now think about the income you ll need for the rest of your life. As you approach retirement, you ll be faced with many decisions. It s really important that you choose the options which most suit your individual needs. Many decisions made at this point are irreversible, and so careful planning is vital. But many people don t know where to start when it comes to planning for their retirement. Don t worry if you re one of them. It s an area that can appear to be daunting, so this guide is intended to explore the options available and to explain the main differences between them, pointing out the advantages and disadvantages. We hope this guide will help you with the issues and give you confidence when making the transition from earned income to retirement income. At the back of this guide, you ll find a question and answer section and a glossary, which will help you in what can be a minefield of information. Not only does the glossary explain some terms that are contained in this guide but it also covers some of the most common terminology that you may come across throughout the retirement process. After reading this guide, we strongly recommend you should talk to a financial adviser. You can use this guide in the initial meeting with the adviser to discuss the options available, and also anything that you don t understand. You can get this and other documents from us in Braille, large print or on audio by contacting us. The information in this guide is based on our understanding of current legislation and HM Revenue & Customs practice which can change. Any questions? If you d like further information or help please call us on Freephone For textphone, dial first Lines are open 9am-8pm, Monday to Thursday and 9am-5pm Friday We may record and/or monitor calls for training and audit purposes 1

3 What do you need to consider? If you ve not already done so, you should speak to a professional financial adviser. After carrying out a detailed fact-find with you, they will offer expert advice and guidance in a number of areas, including: n clarifying the type of pension(s) you have and the choices available to you n discussing your existing investments n determining your attitude and understanding of investment risk n reviewing your income and expenditure, as well as your assets and liabilities n noting the tax status of you and your spouse/partner (where relevant) n confirming your medical details n establishing your financial goals n helping you to explore and understand your retirement income needs and how your existing pension and/or annuities or other products can meet these n discussing your retirement plans are you planning to continue to work after you take your benefits or are you retiring gradually? n finding the best pension income for you and advising on the open market option n answering any questions you may have The fact-find and discussion with your financial adviser is really important so that they can identify the products that will meet your goals and be the most suited to your needs and circumstances. You ll benefit by receiving the best and most appropriate advice. Remember to be completely honest with them, particularly about your health. Only then can they guide you to the right decision. Your current pension provider is likely to offer you an annuity, but you can normally also shop around to see what other insurance companies offer. This is called the Open Market Option (OMO). By receiving expert financial advice and using their Open Market Option, many people can achieve a higher amount of income each year from their pensions. Please note, you can t normally cash in or transfer your annuity once it s set up. 2

4 Your Rights When taking your retirement benefits, you have the following rights: n Seeking financial advice. It s strongly recommended that you use a professional financial adviser, who can advise you on the most suitable package for your individual needs. n Choosing when to take your benefits. Most pensions allow you to take retirement benefits from age 55 onwards. You don t have to retire in order to take your benefits. Some existing pension providers may charge a penalty for taking the benefits before your normal retirement date. n Choosing how to take your benefits. By using the Open Market Option (OMO) you have the right to shop around to find the best and most appropriate annuity product to buy. When considering your options, it s important to compare a variety of quotes. n Choosing to take a tax-free cash lump sum. For most pension schemes, you are entitled to receive a tax-free cash lump sum (technically known as a Pension Commencement Lump Sum) of up to 25% of the value of your pension fund. You don t have to take this payment or you can choose to take a proportion of this. Your Options When it s time for you to start drawing your retirement income, the chances are the money in your pension scheme will be used to buy an annuity. You normally have the right to choose who to buy the annuity from and what type of annuity to buy. There are many annuity options available, which we ll look at in more detail in the next section. You may be able to benefit from an enhanced or impaired life annuity, which pays a higher income, depending on your state of health or lifestyle. Even if you consider yourself to be healthy, if you re a smoker, are overweight or are on any medication you must let your financial adviser know as it could boost your retirement income. Because everyone s finances are uniquely different, buying an annuity at retirement may not always be the best option for you. If you don t want an annuity or if you decide to delay buying one there are a few other options you might consider. Some are only likely to be suitable if you have a large pension fund or other assets or sources of income, and are comfortable taking some risk with your fund. During the fact-find process with your financial adviser, your attitude to risk will be discussed. 3

5 The other options you have are: n If the total of all your pension funds is less than a minimum amount (currently 18,000), you can take a cash lump sum instead of an income. You must be aged 60 or over and you have to convert all your pension funds to cash within a 12-month period. 75% of the lump sum will be subject to income tax. n If you are aged 60 or over and have a small pension pot with a value of less than 2,000, it may be possible for it be paid as a lump sum. However there are some special rules around this, and not all providers will offer this option to you. So if you are considering this you should speak to your financial adviser. 75% of the fund will be subject to income tax. n Instead of buying an annuity, you could draw an income using drawdown. This is a way to receive an income from your pension fund while leaving it invested. n Hybrid products/flexible annuities these are fairly new. Only a few providers currently offer them and their products work in quite different ways. They re designed to bridge the gap between annuities and drawdown by providing more investment options, choice and control. These products pay a regular income and offer guarantees of either investment growth or the amount of pension fund you can expect to have left to buy an annuity later on. They vary in what they are called and the guarantees they offer and the charges they make to cover the cost of the guarantees. You generally have to give up some investment growth potential to pay for the guarantees. You can also choose to split your pension fund into different portions. You can then choose to take out different options with each portion, or you could leave some portions alone until later. If you have any queries about any of your options, speak to your financial adviser. What is a Pension Annuity? Simply, a pension annuity converts the pension fund that you have built up over the course of your working life into regular income that will be paid to you for the rest of your life. Because it is paid to you for as long as you live, it s a kind of insurance policy, to ensure you don t run out of money if you live longer than expected. The income you receive from your annuity is taxable in a similar way to earned income. Pension annuities are permanent and normally can t be changed at a later date, so choosing the right option is extremely important. Choosing the wrong provider or option could mean you lose out on thousands of pounds of income each year. If you have more than one pension plan or scheme, you might get a better income by combining them, although you don t have to use them all at the same time. This is a complicated decision so it s a good idea to get financial advice. 4

6 Annuity Options There are different types of annuities to suit your needs and circumstances, and your main choices are outlined below. In some cases, some of your choices may be restricted, for example if your pension includes or Guaranteed Minimum Pension. Your adviser will be able to confirm whether this affects you. Payment Frequency You can choose how often you want to receive your income. Many people choose to be paid monthly because they re used to receiving regular income and may need to use this to help with day-to-day living expenses. However, there are other options, usually quarterly, half-yearly or yearly. You can also opt for the money to go into your bank account at the start (in advance) or the end (in arrears) of each period. Being paid yearly in arrears will give you the highest income, as this gives the insurance company more time to invest your funds. Similarly, yearly in advance will provide the lowest income. The last income payment will normally be the one paid before you die. However, if you choose to receive your income in arrears, you can opt for a final payment to be made after your death. This will cover the period of time from your last income payment to your date of death. This option is called with proportion. You must select this option when you purchase your annuity and it will reduce your starting income. Guarantee Period You can guarantee your annuity for a specific number of years. This means it will continue to pay the income for a specified period, even if you die before the period is up. For example, if you were to select a five year guarantee, and die after three years, the annuity would continue to be paid for a further two years. In some circumstances, it s possible for the income payable under a Guarantee Period to be paid as a lump sum but you ll need to confirm this preference when you buy your annuity. If any payments under a Guarantee Period are made as a lump sum, it would be subject to a tax charge of 55%. Selecting a Guarantee Period will reduce the income you initially receive from your annuity, but it guarantees that your annuity will continue to be paid for a number of years after your death. Value Protection Value Protection is a way of protecting the value of your annuity should you die earlier than expected. If you select this option your annuity provider will return any unpaid income to your beneficiaries as a lump sum. The exact lump sum payable will be the initial amount used to buy your annuity (or you could elect to protect a proportion of this amount), less the sum of all payments made from the annuity. Any lump sum payable will be subject to a tax charge of 55%. Selecting Value Protection will reduce the income you initially receive from your annuity but it helps protect the value of your annuity if you die earlier than expected. 5

7 Joint Life Annuities You can normally choose whether to set your annuity up on a Single Life or a Joint Life basis. A Single Life annuity is an annuity just for you. It will normally stop paying out income when you die, although payments may continue for a limited time if you have chosen a Guarantee Period. A Single Life annuity may be best for you if you don t have any financial dependants or if they don t rely on you for income (for example if they have their own pension arrangement). However, if other people are also likely to depend on your annuity income, you may want to consider a Joint Life annuity. Selecting a Joint Life annuity will reduce the amount of income you ll receive from your annuity, as your annuity provider will take into account the additional payments that may be made to your dependant after you die. You can choose to select both a Joint Life annuity and a Guarantee Period, it is possible that payments would be payable under both options at the same time. This is called with overlap. However, you can specify that the continuing annuity paid to your dependant should only begin after the Guarantee Period has ended. This is called without overlap, and is unlikely to reduce your income by as much. A Joint Life annuity will pay you an income for the rest of your life. However, after you die, a Joint Life annuity will continue to pay an income to your spouse / civil partner or dependant for the rest of their life as well. This is also referred to as a Dependant s Annuity, and can be set up to pay them the same income that you were receiving, or a proportion of it. 6

8 Yearly Increases You can normally choose whether you would like to receive a fixed income for the rest of your life, or whether you would like it to change each year. Your main options are: n A Level Annuity this pays out the same income, year after year, throughout your life. The income is fixed and guaranteed never to fall. However, the buying power of this income is likely to fall over time due to the impact of inflation. This is discussed in more detail later. n An Escalating Annuity this type of annuity generally has a lower starting income than a Level Annuity, but will increase each year. Your can choose how you would like your income to increase each year. For example, it could increase by: n A fixed-rate your income increases each year by a fixed rate (for example 3% or 5%). The income is guaranteed never to fall but the purchasing power of it may vary due to how high inflation is; or n Inflation-linked your income goes up or down in line with inflation (commonly linked to the Retail Price Index RPI) There are two types of investment linked annuities: n With-Profits Annuities your pension fund is invested in an insurance company s with-profits fund, and your income is linked directly to the performance of this fund. This means that your income may go up or may go down, although most providers specify a minimum income amount that they will guarantee to pay. n Unit-Linked Annuities your pension fund is used to buy units in one or more investment funds, and your income is linked directly to the investment performance of these funds. You can usually choose the types of fund. For example medium-risk managed fund, higher-risk fund, and tracker fund. There aren t usually any guarantees associated with these types of annuities, so your income will go up or down depending on the investment performance of the funds. n An Investment Linked Annuity This type of annuity invests your pension fund in a range of assets, such as stocks and shares. The income you receive depends on how well these investments perform. This means that you could continue to benefit from stockmarket investments after retirement but there is also the risk that the value of your investments, and hence your income, could fall. Any questions? If you d like further information or help please call us on Freephone For textphone, dial first Lines are open 9am-8pm, Monday to Thursday and 9am-5pm Friday We may record and/or monitor calls for training and audit purposes 7

9 Considering Inflation If you buy a Level Annuity, the income you receive will be guaranteed to stay the same each year. On face value it would seem that there is no risk. This is not the case, as inflation will eat away at the real value. For example, if prices were to rise at 4% each year for the next 20 years, the buying power of your income would more than halve. This means that you would need double the income in 20 years time to buy the same amount of goods and services that you could buy with your income now. It s therefore very important to consider the future value of your income when you choose which retirement products to buy. An RPI linked (or inflation-linked) annuity will ensure that your income maintains its real value. However, this will significantly reduce the income you initially receive. Therefore, you may want to consider choosing another type of annuity, or make provision for the effects of inflation outside your pension scheme altogether. Your financial adviser will be able to explain all your options to you, and help you make the right decisions based on your personal circumstances. 8

10 Did you know a variety of common health conditions could provide you with more income? LV= offers a range of enhanced annuities including with profit investment options and a wide variety of benefit choices. An enhanced annuity, in some cases, could provide an income that is significantly higher than the income paid from a standard annuity. This guide details the most common out of the hundreds of conditions that could qualify you for an enhanced income. It is important that you provide full details of any medical conditions you have suffered from and any ongoing symptoms or treatments that you are receiving. Remember to disclose as much information about your health as possible, as this may give you a higher level of enhancement. This information helps to build up a complete picture for our underwriting process and as you will see from the case studies, can lead to an increase in the level of enhancement that you receive. It s impossible to give an exact list of what we cover as it depends on the stage and severity of the condition. The list on the following page outlines some examples of the more commonly known conditions that may, or may not qualify for the enhanced terms. Any questions? If you d like further information or help please call us on Freephone For textphone, dial first Lines are open 9am-8pm, Monday to Thursday and 9am-5pm Friday We may record and/or monitor calls for training and audit purposes 9

11 Enhanced terms may be available: *High blood pressure (on treatment) *High cholesterol (on treatment) *Obesity Smoking Angina Aortic aneurysm Atrial fibrillation Cancer Cardiomyopathy Crohn s disease Chronic congestive heart failure Chronic kidney failure Chronic lung disease Dementia Diabetes Epilepsy Heart attack Heart bypass and angioplasty Heart valve disorders Multiple sclerosis Parkinson s Peripheral vascular disease Rheumatoid arthritis Stroke Ulcerative colitis If your medical condition is not listed, please call us on and we can give you an answer over the phone as to whether your condition is likely to qualify. *These conditions are only likely to qualify for enhanced rates in conjunction with other medical conditions. In some circumstances increases to rates could be 100% or more so it s very important that you tell us about all aspects of your health. Annuity rates are based on your accurate and honest answers. We ll need evidence to support them (from your GP for example). If they can t be supported we have the right within six months to tell you that we ll reduce your annuity. Enhanced terms not available: Anaemia Barrett s oesophagus Basal cell carcinoma Deep vein thrombosis Depression Gall stones Glaucoma Heart block Hernia Meniere s disease Myalgic encephalomyelitis (ME) Osteoarthritis Osteoporosis Pacemaker Pneumonia Spondylosis Enhanced Annuity how it works Our Enhanced Annuity has been designed to offer personalised annuity rates based on an individual s lifestyle and medical history. Because these people are likely to have a lower than average life expectancy, we are able to offer them higher levels of income than conventional annuity providers who only offer standard rates. Our annuity offers a wide range of payment options and can for example guarantee payments in the event of early death. In some circumstances, we can also arrange for a lump sum to become payable on your death, or for income to continue to your spouse/civil partner or a dependant. By offering a full range of enhancements, we can be sure that our customers receive a rate that is both fair and appropriate to their personal circumstances. Please note that you cannot change the basis of your annuity, cash it in, or transfer your annuity once it is set up. 10

12 The following examples show that telling us about all aspects of your medical and lifestyle conditions could enhance your income: The figures/case studies shown are not based on real life cases, and are for illustration purposes only as at February Actual annuity amounts payable will depend on individual circumstances. Derek Derek is 65 and received an annuity quote from his current pension provider offering a level yearly income of 2,787. His financial adviser contacted LV= to enquire about an enhanced annuity. He told us that Derek is a regular smoker and had a 50,000 pension fund. As a result, we were able to offer Derek a level yearly income of 3,207. After further conversations it transpired that Derek also suffers from high blood pressure and high cholesterol as well as being classed as obese. By giving us this extra information, Derek qualified for a level yearly income of 3,321. Assuming that Derek lives until he is 78 this could amount to extra income of 1,482 over his lifetime and more than 6,942 extra than if he accepted the first offer from his current pension provider. Carol Carol is 60 and her financial adviser contacted LV= to enquire about an enhanced annuity. She told us that she suffered from lung cancer and had a 50,000 pension fund. This allows us to offer her a level yearly income of 4,590, compared to the 2,474 offered to her from her current pension provider. Assuming that Carol lives until she is 69 this could amount to an extra income of over 19,000 during those 9 years. 5,000 4,750 4,500 4,250 9,000 8,000 7,000 6,000 4,000 3,750 3,500 5,000 4,000 3,000 4,590 3,250 3,000 2,787 3,207 3,321 2,000 1,000 2,474 Current Pension Provider 1 Smoker Details Only 2 Full Medical Details 3 Current Pension Provider 1 Enhanced Rate 2 Source equals: 1 FSA Comparative tables at 22/02/2013 using an average of the highest 3 standard annuities. 2,3 LV= Quotation System at 21/02/

13 The next steps Process of buying an annuity It s sensible to approach a financial adviser well before you want to take any benefits from your annuity. A financial adviser will need to discuss your personal circumstances with you, and will then approach your existing pension providers. Buying an annuity generally follows the process below: 1. You ll be asked to complete a client fact find. This will provide detailed information about you, your health and your personal circumstances. The adviser will also ask you to sign a letter of authority, which will allow the company to speak to your existing pension provider(s) on your behalf. 2. After reviewing and discussing the fact find with you, the adviser will identify your needs and will discuss your retirement options with you. 3. Your adviser will then approach your existing pension provider(s) to request information about your current arrangements. This information is likely to include: n What the fund value and transfer value of your schemes are, and whether there are any penalties for taking benefits. n What retirement options your current pension provider will offer you. For example, some pension arrangements contain Guaranteed Annuity Rates. These can often provide existing customers with better annuity rates. n Whether there are any restrictions on the benefits that can be taken. n The adviser will also request the relevant discharge forms to allow the funds to be transferred to another insurance company, if applicable. Obtaining the information from your existing pension provider is often the longest part of the entire annuity process, and can take several weeks. Therefore, you may be asked to be patient during this period. 12

14 4. After your adviser has all the information they need, they will write a personalised report, including an illustration of the benefits you ll receive. This is their personalised recommendation to you, and will include the type of annuity they recommend you should buy. The report will take into account all the information provided by you and your existing pension company. 5. You should make sure you re comfortable with your adviser s annuity recommendation, as once your s is set up, it cannot normally be changed at a later date. This report will also determine whether buying your annuity will keep you within your Personal Lifetime Allowance. This is the maximum amount of pension savings you are allowed without incurring a tax charge. If you re likely to exceed this amount, your adviser will discuss your options with you. 7. Your existing pension provider(s) should send all the necessary paperwork, and the funds required to buy your annuity, directly to your annuity provider. 8. When all the paperwork has been received your new annuity provider will be able to set up your annuity and send you the documents. They will also pay you any tax-free cash you are entitled to (unless this has already been paid by your existing pension provider), and start your income payments. Your new annuity provider will deduct the relevant amount of tax from your annuity payments before you receive it, and will send a P60 tax certificate to you each year. Your adviser will also send you the relevant application forms you ll need to complete to buy your annuity. You may also be asked to provide additional documents, such as your original birth and marriage certificates. 6. When your adviser has got your documents, they will start the process of moving the funds from your existing provider(s) to the new chosen provider(s). Again, this process can take several weeks to complete. 13

15 Question & Answers How do I pay for financial advice? For years as consumers we have paid for services up front. For example when buying a home a solicitor may want a deposit to secure their services or when arranging a mortgage, the lender will want a reservation fee to secure the interest rate. So why has getting financial advice been any different? In fact, it hasn t professional financial advice has never been free but it s not always been crystal clear what and how you are being charged for the service. Payment for the advice has often come in the form of commission direct from the investment provider. From the start of 2013 advisers will no longer receive commission. Instead, you ll have the choice of paying the advice charge directly to your adviser up front, or from your pension pot. This means you ll be clear how much the advice will cost and you can be confident that the advice isn t being influenced by the amount of commission being paid. It is very possible that you won t be paying more for advice after 1 January 2013 than you were paying before. However, those charges will now be clearly set out in advance with the amount and how they will be paid needing to be directly authorised by you What if my pension fund is only very small? If your total pension savings are worth less than a minimum amount (currently 18,000) you can take the whole of your pension savings as a lump sum. You can only do this if you re aged 60 or over. 75% of the fund will usually be subject to income tax. If you are aged 60 or over and have a small pension pot with a value of less than 2,000, it may be possible for it be paid as a lump sum. However there are some special rules around this, and not all providers will offer this option to you. So if you are considering this you should speak to your financial adviser. 75% of the fund will usually be subject to income tax. What about tax? The tax treatment of annuities will, in part, depend on your personal tax status, which may change. Please refer to the Key Features for details of how payments from your annuity will be taxed. Any references we make to taxation are based on our understanding of current legislation and HM Revenue & Customs practice, which can change. If the Government changes the tax treatment of annuities the income paid to you may fall. How can I work out what type of retirement product I need? You have a number of choices to make at retirement, and the best option will depend on your personal circumstances. For example, if you are single, you might choose a Single-Life annuity, which could either be level or escalating. If you have a partner you want to provide for after your death you might buy a Joint-Life annuity. Your adviser will be able to guide you to the right retirement product and the right option for you. When can I buy an annuity? You can buy your annuity at any time from age 55 onwards. Who could qualify as a dependant? You can normally only buy a Joint Life annuity for a dependent who is financially dependant on you. Your spouse or civil partner, and any children under age 23 automatically qualify as a dependant. Otherwise, the person has to be financially dependent on you when you die. Can I provide an income from an annuity for my partner? Yes but only if you die. You can buy an annuity that continues to pay an income to your partner if you die. A partner is someone you are married to (this includes civil partnerships) or someone who, in the opinion of the administrator, is financially dependent on you at the date of your death. 14

16 How can I buy a retirement product? There are two key ways in which you can buy a retirement product. Firstly, you can use your Open Market Option to shop around for the best product. With this option, you take your tax-free cash lump sum from your current pension provider, but buy the product from a provider of your choice. All Defined Contribution Schemes contain this right, so talk to your current pension provider to discuss how you can use this. Alternatively, you can transfer your entire pension fund to your chosen provider. You will then become a member of a new pension scheme, and they will pay you your tax-free cash and check all your allowances. Your financial adviser will help you choose which option is best for you. I m a smoker. Will this affect the annuity rate I ll get? Some companies can offer you an enhanced annuity if you re a smoker, or suffer from certain medical conditions. Make sure you tell your financial adviser if you do smoke or have a medical condition, as this could significantly increase your income. Is it possible to change my annuity later on? No, you can only buy your annuity once. When you have brought your annuity, you can t normally change any aspect of it. How do I get quotes? Your financial adviser will be able to get all the quotes you need. Don t forget to tell them all relevant information, including your medical details, and personal and financial circumstances. Where can I get more information? Further information on the range of retirement solutions offered by LV= are available from your financial adviser, or from on our website at Why are there different types of annuity? Different people have different needs in retirement. Therefore, different options have been designed to help ensure you can buy the right product for your circumstances. 15

17 Glossary Benefit Crystallisation Event (BCE) A benefit crystallisation event (BCE) occurs when you become entitled to get a benefit from your pension fund, for example, when you retire. The total pension funds you take (or crystallise ) will be measured against your remaining lifetime allowance and taxed if it s exceeded. Defined Benefit Scheme This is a type of pension scheme that is established by an employer for its staff. In Defined Benefit Schemes, the benefits that you ll receive from the scheme are defined at outset. The benefits are normally expressed as a fraction of your length of service and salary. This type of scheme is sometimes referred to as a Final Salary scheme. Defined Contribution Scheme This is a type of pension scheme where the benefits are not defined at outset. Instead, the amount of income you ll receive depends entirely on how much is paid into the scheme, the investment returns and annuity rates when benefits are taken. These types of scheme are sometimes referred to as Money Purchase Schemes. All Personal Pensions and some Occupational Pension Schemes are Defined Contribution Schemes. Enhanced Annuities These are annuities that pay higher levels of income for those whose life expectancy is statistically lower than that of the general population. Qualification for Enhanced Annuities vary, but could include lifestyle factors such as smoking, obesity and occupation, or medical conditions from diabetes to cancer. Guaranteed Annuity Rate (GAR) Some older style private pension contracts have a guaranteed annuity rate at retirement. Because annuity rates were much higher when these pensions were originally set up, their GAR could give as much as 40% more retirement income than the best annuity on today s open market. So before using the open market option it s vital to check if your pension has a GAR included. Guaranteed Minimum Pension (GMP) The minimum benefit that a defined benefit scheme must provide, as a result of being contracted out of the state additional pension before 6 April Lifetime Allowance The maximum value of fund you can build up in all your pension schemes without incurring an additional tax charge when you take your benefits. Market Value Reduction (MVR) This is a penalty sometimes applied to with-profits funds which are surrendered or transferred out either before or after a member s retirement date. If you have either a withprofits personal pension or retirement annuity (the old style personal pension) then you should be aware that currently certain companies might still be operating MVRs on with-profits funds. It is important to take advice on this aspect before taking pension benefits. Occupational Pension Scheme This is a pension made available through your employers and run by the pension scheme trustees. These may operate on either a Defined Benefit or Defined Contribution basis. Personal Pension Plan A Defined Contribution pension, owned by you, into which you and/or your employer make contributions. 16

18 History of LV= It s 168 years since we welcomed our first customers. Back then, our aim was to help people on low incomes maintain a basic standard of living for their families and save for a decent funeral. It was all about making financial security and peace of mind available to more than just the privileged few. It s a heritage we are proud of. The Liverpool Victoria group of companies now has more than 5 million customers and members. That gives you some idea of the scale of our business. However, our aim has always been to be the best at what we do, rather than just the biggest. We re proud of the fact that we remain a mutual society, where one member has one vote. It means we can channel all our resources and energies into doing what s right for our customers and members. Those of you who know us well will have noticed that in 2007 we shortened our brand name and introduced a fresh new identity. It s all part of what is a very exciting time for us, with new products, services and partnerships springing up all the time. 17

19 Unlock the value in your home With property price rises over the years, you may have lots of equity tied up in your home. At the same time, you may have much less in savings. What s more, state pensions have fallen behind earnings for years, so your income may be less than you would like. Taking one of our lifetime mortgages allows you to free up a substantial part of the capital tied up in your home, without having to move. If you can answer yes to all of these questions then an LV= Lifetime Mortgage could be for you: Aged 60 95? Own a home worth at least 70,000 Wish to raise at least 10,000 A lifetime mortgage from LV= can help you make the most of retirement in many different ways. To find out more, visit our website where you ll find information on what products we offer and our downloadable equity release guide. This is a lifetime mortgage to understand the features and risks, ask for a personal illustration

20 Thank you for your time Any questions? If you d like further information or help please call us on Freephone For textphone, dial first Lines are open 9am-6pm, Monday to Thursday and 9am-5pm Friday We may record and/or monitor calls for training and audit purposes You can get this and other documents from us in Braille, large print or on audio by contacting us. Liverpool Victoria Friendly Society Limited: County Gates, Bournemouth BH1 2NF. 1 LV= is a registered trademark of Liverpool Victoria Friendly Society Limited (LVFS) and is a trading style of the Liverpool Victoria group of companies. LVFS is authorised and regulated by the Financial Services Authority (FSA), register number LVFS is a member of the ABI, AFM & ILAG. NM Pension Trustees Limited (registered in England No ), act as Trustees and Scheme Administrators. Authorised and regulated by the FSA, register number LV Equity Release Limited is authorised and regulated by the FSA, register number Registered address for all companies: County Gates, Bournemouth BH1 2NF. Tel: /13