KEY FEATURES OF THE SELF-INVESTED PERSONAL PENSION (SIPP) FOR INCOME DRAWDOWN OR PHASED RETIREMENT. Important information you need to read

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1 KEY FEATURES OF THE SELF-INVESTED PERSONAL PENSION (SIPP) FOR INCOME DRAWDOWN OR PHASED RETIREMENT Important information you need to read

2 THE FINANCIAL CONDUCT AUTHORITY IS A FINANCIAL SERVICES REGULATOR. IT REQUIRES US, SCOTTISH WIDOWS, TO GIVE YOU THIS IMPORTANT INFORMATION TO HELP YOU TO DECIDE WHETHER OUR SELF-INVESTED PERSONAL PENSION (SIPP) FOR INCOME DRAWDOWN OR PHASED RETIREMENT IS RIGHT FOR YOU. YOU SHOULD READ THIS DOCUMENT CAREFULLY SO THAT YOU UNDERSTAND WHAT YOU ARE BUYING, AND THEN KEEP IT SAFE FOR FUTURE REFERENCE. THESE KEY FEATURES COVER THE SELF-INVESTED PART OF THE PLAN. THEY SHOULD BE READ WITH THE PRODUCT LITERATURE THAT YOU RECEIVED WHEN YOU TOOK OUT YOUR INCOME DRAWDOWN OR PHASED RETIREMENT PLAN. ITS AIMS YOUR COMMITMENT To support you financially in retirement in a taxefficient way. To let you take a flexible taxable income and any tax-free cash entitlement from the value of your plan. To let you invest the self-invested part of your plan in any investments we allow. To allow you to keep your pension plan value invested. To make the payments you agree to pay. To make some of the payment(s) to a Scottish Widows Income Drawdown or Phased Retirement plan. 1

3 RISKS The value of your plan can go down as well as up, and could fall below the amount(s) paid in. The final value available to buy annuities isn t guaranteed. It may be lower than you expect if, for example: you don t make all the payments. investment performance is lower. the cost of buying your pension is higher. you start taking your pension earlier than your selected retirement date. the charges are higher. inflation is higher than we ve assumed. tax rules change. High levels of income may not be sustainable and in some cases could reduce the value to zero. You should consider the impact this might have on your income in retirement. The cost of buying annuities can change significantly over time. If the cost increases, the annuity income you can buy with the final value will be lower than illustrated. If any income and the charges deducted from your plan are more than any investment growth, the value of your plan will go down. This could reduce the amount of income you can take in the future and the income from any annuity bought later. The income from your plan and any annuity bought later may be less than you could have received if you had bought an annuity at the start. When people buy an annuity, those who live longer gain at the expense of those who die early. If you delay buying your annuity and live longer, you ll not gain to the same extent. The self-invested part of your plan can invest in a wide range of investments that carry different types and levels of risk. Their value can go down as well as up, and could fall below the amount(s) paid in. Please refer to Where can the payments be invested? for further details. Some investments, such as property, can take longer to buy or sell than others. This may delay switching between investments and when benefits or any transfer payments can be taken. If you transfer from another pension plan, you could lose any guaranteed benefits and may not be able to return to it. If you change your mind within 30 days of receiving your cancellation notice, the amount returned may be less than was invested. 2

4 QUESTIONS & ANSWERS WHAT PAYMENTS CAN BE MADE TO THE SELF-INVESTED PART? You can transfer the value of your existing pension plan(s) into this plan. Before you can invest any payments in the selfinvested part of your plan, you must make the minimum payment(s) to the insured part. The minimum payments can change from time to time, contact us for details. Please read the product literature that you received when you took out your Income Drawdown Plan or Phased Retirement Plan, for further details. WHERE CAN THE PAYMENTS BE INVESTED? You or your investment manager can choose to invest in a range of permitted investments, including: stocks and shares; unit trusts and Open Ended Investment Companies; commercial property. The investment options available may change at any time. The value of these investments can go down as well as up and could fall below the amount(s) paid in. The actual value of certain investments, for example property, will not be known for certain until they are sold. You can change the investments, though charges, minimum investment limits and other restrictions can apply. Further details of the investment options, including the types of risks that can apply, are given in our booklet Self-Invested Personal Pension Giving you more investment choice. (12600). Scottish Widows has appointed James Hay Partnership to deal with the day-to-day administration of the self-invested part of the plan. WHAT CAN I GET BACK FROM THE SELF-INVESTED PART OF MY PLAN? From age 55 you can start taking income from the value of your plan, or convert its value in stages to buy one or more annuities. In certain circumstances, you may be able to do so earlier, for example if you re in ill health. The age from which you can start taking benefits from your pension may change. JARGON BUSTER Annuity This provides an income for life, the amount of which depends on circumstances when it s bought including: interest rates your age how long people are expected to live. You can choose from different types of annuities. You may also be able to take a tax-free cash sum(s). The self-invested part will be used in the same way as the insured part to provide benefits. Please refer to the product literature you were given when you took out your Income Drawdown or Phased Retirement plan. WHAT HAPPENS TO THE SELF-INVESTED PART IF I DIE BEFORE I HAVE TAKEN ALL MY BENEFITS? When the investments are sold, their value less charges will be used to provide benefits to your dependants or beneficiaries. The self-invested part will be used in the same way as the insured part to provide benefits. Please refer to the product literature you were given when you took out your Income Drawdown or Phased Retirement plan. 3

5 WHAT ARE THE CHARGES FOR THE SELF-INVESTED PART? Administration and investment charges will apply. The amount of these charges will depend on the type of investments you choose and how often you trade. Details of the current charges are shown in our booklet Self-Invested Personal Pension Giving you more investment choice. WHAT ABOUT TAX? There s no tax relief on transfer payments. The income provided by the self-invested part of your plan will be taxed in payment. You may be able to take a tax-free cash sum(s). If you die before you are 75, any lump sum or income paid to a dependant or beneficiary will not normally be subject to tax. Although the value of pension funds is generally not subject to Inheritance Tax, in certain circumstances the value of death benefits may be subject to tax charges. As this is a complex area you should contact your adviser or tax office for further guidance. Your plan s investments are generally free of UK income and capital gains tax. The value of the tax benefits of your plan depend on your individual circumstances. Your circumstances and tax rules may change in the future. Please refer to the product literature you were given when you took out your Income Drawdown or Phased Retirement plan for tax rules that apply to the insured part of your plan. If you take a pension encashment or flexibly access your benefits, tax relief will only be available on contributions up to the Money Purchase Annual Allowance. This is 4,000 for the 2018/2019 tax year. If you pay in more than this to any money purchase pensions you will be subject to an annual allowance charge. CAN I TRANSFER MY PLAN? You can transfer the value of your plan to another pension plan. You can normally ask to do so at any time, though there may be a delay until investments are sold. For an Income Drawdown plan, you are unable to transfer within the first year of the plan. Charges will normally apply for the self-invested part. Please refer to the booklet Self-Invested Personal Pension Giving you more investment choice. Or alternatively ask us for further details. CAN I CHANGE MY MIND? You can change your mind within 30 days of receiving your cancellation notice. If you cancel, we ll return all self-invested payments less any fall in their value. If you change your mind, it may not be possible to return the value of transfer payment(s) to your previous pension plan(s). You may have to take out a new plan. If you don t cancel the plan, it will continue. HOW WILL I KNOW HOW MY PLAN IS DOING? You ll receive a statement each year. You should regularly review your plan to check if it remains on track for your needs. 4

6 HOW TO CONTACT US OTHER INFORMATION Your financial adviser will normally be your first point of contact. If you ve any questions about your plan, or any changes you want to make to it, please contact us. You can phone us or write to us. Call us on during the following times: Monday to Friday 8am 6pm We may record and monitor calls to help us to improve our service. Website Office address Scottish Widows Limited, 15 Dalkeith Road Edinburgh EH16 5BU HOW TO COMPLAIN If you ever need to complain, please contact us. If you re not satisfied with our response, you can complain to: The Financial Ombudsman Service Exchange Tower, London E14 9SR Tel Website Complaining to the Ombudsman won t affect your legal rights. We ll communicate with you in English. 5

7 TERMS AND CONDITIONS These Key Features give a summary of the Scottish Widows Self-Invested Personal Pension for Income Drawdown or Phased Retirement. Further details of the benefits, charges and conditions are given in the product literature, Scheme Rules and Policy Provisions, which are available from us. We may change some of the terms and conditions at any time. We ll write and explain if this affects your plan. LAW For legal purposes the law of England and Wales will apply. This information represents Scottish Widows interpretation of the law and HM Revenue & Customs practice as at date of publication. Changes to tax rules and other laws may affect your contract terms. FINANCIAL SERVICES COMPENSATION SCHEME (FSCS) The insured part of your plan with Scottish Widows is fully covered by the Financial Services Compensation Scheme. You may also be entitled to compensation under the Financial Services Compensation Scheme if the provider(s) of other investments or deposits held by your plan become insolvent and are unable to meet their obligations. More information about compensation arrangements is available from the Financial Services Compensation Scheme, who can be contacted on or or via their website at For compensation on the Scottish Widows investments please refer to the product literature that you received when you took out your Income Drawdown or Phased Retirement Plan. SOLVENCY AND FINANCIAL CONDITION REPORT (SFCR) Our SFCR provides information on the performance and management of our business, including its financial strength. It s produced each year and is available on our website at: financial_information/solvency-2-returns.html 6

8 Scottish Widows Limited. Registered in England and Wales No Registered office in the United Kingdom at 25 Gresham Street, London EC2V 7HN. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number /18