These slides are for financial advisers only

Transcription

1 These slides are for financial advisers only Standard Life has provided these template slides for you to use with the employees of your corporate clients. You can use these slides to tell employees about auto-enrolment and changes to their Standard Life pension plan. You can pick and choose the slides you would like to use. You can add your own company logo and any regulatory requirements. These slides should be tailored to your audience and therefore some of the slides may not be required. Standard Life Assurance Limited is registered in Scotland (SC286833) at Standard Life House, 30 Lothian Road, Edinburgh EH1 2DH. Standard Life Assurance Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

2 Auto-enrolment and your Standard Life pension plan Date: Adviser name: Adviser firm: 2

3 Benefits of a company pension There are many benefits of saving into a company pension. It s the only way of saving for the future that gives you extra money from the Government and your employer. The pension belongs to you and not your employer. You can choose to pay in more if you want to. You can choose where your money is invested. You can make changes. It s your employer s way of helping you get the kind of life you want to live 3

4 How does it work? <Deduction from after-tax earnings> You Tax free lump sum (up to 25% of the total fund) Employer Remaining fund provides retirement income (taxed as earned income) Basic rate tax relief* Your individual pension fund * Higher and additional rate tax payers can claim further tax relief from HM Revenue & Customs. The size of your pension fund will depend on the amount paid in and any investment return less charges. As with any investment, the value of your fund can go up or down and may be less than the amount paid in. 4

5 How does it work? <Salary exchange version> Your individual pension pot What happens at retirement? Employer payment Your Salary exchange payment (before tax & NI contributions) Tax free lump sum (up to 25%) Remaining fund provides a pension income (taxed as earned income) The size of your pension fund will depend on the amount paid in and any investment return less charges. As with any investment, the value of your fund can go up or down and may be less than the amount paid in. Salary Exchange isn t right for some people. It could affect your state benefits, other company benefits or the amount your can borrow. 5

6 How the payments can add up an example using deduction from after-tax earnings Basic tax relief Your payment Total invested Employer payment Based on a pensionable pay of 20,000 3% employee and 3% employer monthly payments Tax year 2014/15 6

7 Payments an example using salary sacrifice Based on pensionable pay of 28,500 (Reference Salary 30,000) 5% employee and 10% employer monthly payments, Tax year 2014/ Salary sacrifice of 125 is paid in Total invested: by [employer] along with their payment of 250 Assuming basic rate taxpayer paying 20% income tax and 12% NI Reduction in take home pay: 85 7

8 Why pay more? Pay more, get more? The payments you make to your pension aren t set in stone and you should review them regularly to see if you re saving enough. Finding extra money can be really tough. But paying in even just a little bit more now can have a big impact on your standard of living when you retire. When you take charge of your pension, you're taking control of your future. Imagine you start at 25 years old and earn 25,000 a year. The chart below shows that starting with a slightly larger payment percentage can have a large effect on the final pension pot you build up. Important information and assumptions These figures are illustrations only to demonstrate the potential growth of your pension. What your pension will be worth depends on how your investments perform, it s not guaranteed. You may get more or less than that. The payment percentages and earnings may not represent your circumstances - for other payment or salary levels the figures can be adjusted proportionately. Some types of investment or savings plans, for example a savings account or cash ISA, do not take account of inflation, so may look more attractive than they actually are if you re comparing them to this illustration. These figures are shown in today s prices. We ve made some assumptions: that the tax and pension regulations don t change (based on our understanding of these as at 6 April 2014) and that you ll retire at 65. It also assumes that you make payments each month, that your earnings will increase by 4% each year, that your annual charges will be 1% and that your investments will grow at 2.5% per annum. In line with Financial Conduct Authority rules, the growth rate has been reduced by 2.5% to allow for inflation. The figures provided don't allow for any special terms that may apply. 8

9 The benefits of pension consolidation You may have pensions with other companies. There are benefits of bringing them all into your Standard Life plan You should find it easier to manage your retirement savings as everything is in one place You might pay less in charges Easier to review all your pension payments You could have more options around where your money is invested You may find it easier to keep track of how your investments are performing 9

10 Changes to your company pension what s happening There is an increased focus in pensions by the Government which has resulted in two fundamental changes. The government has set minimum criteria on workplace pensions. Increased flexibility and choice for you with your pension savings. 10

11 What these changes mean for you? April 2015 onwards Budget Flexible access to pensions from your pension age 2. Pension income restrictions to be abolished 3. Annual allowance of 10,000 once you re taking a flexible income 4. Death benefit tax to come down from 55% Key points: Still can t be touched until at least age 55 Free guidance for all Be tax aware Flexible, now you are in charge 11

12 What are my investment options? Choices to suit different levels of investor - no matter what your level of experience. Option 1 low involvement May be suitable for those who: don t want to select their own investment options don t want worry about moving investments around as they approach retirement Option 2 a selected investment range May be suitable for those who: want more choice about where to invest their money, but still get some direction Option 3 choose your own May be suitable for those who: want complete freedom to choose where their money is invested have a good idea of how they want to invest, have taken professional advice 12

13 Auto-enrolment The Government has introduced auto-enrolment to address the pension savings gap This will bring a new range of duties and responsibilities for all employers in the UK Your employer must provide you with and pay into a company pension that meets requirements set out by the Department for Work and Pensions. You can choose to pay more into your pension You can choose where your money is invested The pension belongs to you, not your employer 13

14 How does this affect me? Employee Category Action needed Employees already in the scheme on a qualifying basis (paying at least minimum contributions) All other employees Earning at least 787 a month ( 182 a week) and aged 22 SPA* Earning between 473 and 787 who are aged Earning at least 787 who are age or SPA* -74 Earning less than 473 a month ( 109 a week) and aged 16 SPA* *SPA means state pension age Note: Earnings are based on 2013/2014 tax year Existing members Eligible jobholders Non-eligible jobholders Entitled workers No joining action required Employers need to automatically enrol these employees into a Qualifying Workplace Pension Scheme (QWPS). Aren t eligible for auto-enrolment. However, they can choose to join a QWPS and receive employer contributions. Are entitled to join a pension scheme but employers don t have to contribute into it for them. 14

15 How much will be paid in? Pensionable pay = Basic pay October 2012 to September 2017 Minimum total (Employer + Employee) 3% Minimum Employer 2% October 2017 to September % 3% October 2018 onwards 9% 4% 15

16 How much will be paid in? Pensionable pay = Total pay October 2012 to September 2017 Minimum total (Employer + Employee) 2% Minimum Employer 1% October 2017 to September 2018 October 2018 onwards 5% 2% 7% 3% * Slide only applicable when upgrading via Good to Go 16

17 How much will be paid in? Pensionable pay = at least 85% of total pay October 2012 to September 2017 Minimum total (Employer + Employee) 2% Minimum Employer 1% October 2017 to September 2018 October 2018 onwards 5% 2% 8% 3% * Slide only applicable when upgrading via Good to Go 17

18 How much will be paid in? Pensionable pay = Qualifying band earnings October 2012 to September 2017 Minimum total (Employer + Employee) 2% Minimum Employer 1% October 2017 to September 2018 October 2018 onwards 5% 2% 8% 3% * Slide only applicable when upgrading via Good to Go 18

19 Can I opt out? Yes, but if you do you ll miss out on the extra money from your employer and tax benefits from the Government If I opt out, does that mean I m out for good? No. Roughly every three years - if you still meet the criteria - you will be automatically re-enrolled. Your employer will let you know when this is going to happen What if I want back in before three years comes around? Your employer has to give you the opportunity to rejoin, but you may have to wait up to 12 months before you can do this. Ask your employer for more details 19

20 Standard Life s default investment solution Strategic Active Plus III Profile (S3AP) Standard Life Active Plus III Pension Fund (DDNA) Standard Life Strategic Pre Retirement (A) Pension Fund (BDAE) Standard Life Strategic At Retirement Pension Fund (BDAD) 20

21 What s next? Go online Review your details Use the tools Decide on your payment Review your investment options If you re not sure seek financial advice 21

22 Services that I can provide Service 22

23 Where can I find out more? Standard Life Plan website Your HR & payroll contacts Your financial adviser Contact Standard Life on (or insert relevant number) (9am to 5pm Monday to Friday) Calls may be monitored and/or recorded to protect both you and us and help with our training. Call charges will vary. If in any doubt as to what to do, seek financial advice 23

24 Any questions?