Aegon Master Trust Drawdown Member Guide

Transcription

1 Aegon Master Trust Drawdown Member Guide

2 Contents Income drawdown 4 Eligibility for the Drawdown Account 5 How does the Drawdown Account work? 5 Help is on hand 6 Your Drawdown Account choices 7 Other payments into the Drawdown Account 9 Investment funds 11 How your payments will be invested in the Drawdown Account 13 Timing of allocation of payments into investment funds 14 Changing your investment funds 14 Income payments 15 Choosing the amount of income you wish to receive 15 Stopping income payments 17 How your Drawdown Account investments are used to take income payments 17 Taxation 19 Income 19 Investments 19 Lifetime allowance 19 Money Purchase Annual Allowance (MPAA) 20 Pension commencement lump sum 20 General 20 [2] Aegon Master Trust Drawdown Member Guide

3 After starting income payments 21 Review your Drawdown Account regularly 21 Other benefit options 21 Buying an annuity 22 Transfers from a Drawdown Account 22 Death benefits 23 Tax treatment of death benefits 23 Death before age Death aged 75 or over 24 Death benefits and inheritance tax 24 Glossary 25 Aegon Master Trust Drawdown Member Guide [3]

4 Income drawdown The Drawdown Account enables you to leave your pension fund invested for future potential growth. While it is invested you can draw an income from your Drawdown Account. This is generally known as income drawdown. The Drawdown Account provides you with Flexi-access drawdown. Flexiaccess drawdown allows you complete freedom to take as much income as you like each year, subject to any limitations that may be imposed by the scheme rules. The Drawdown option assumes you re comfortable to remain invested in retirement and that you re aware that this means your fund may fall in value and you may run out of money too soon. As your fund remains invested into your retirement you should be aware that the value of investments can go down as well as up for a number of reasons, for example market and currency movements. You may get back less than you invest. You must be comfortable with how much risk you are prepared to take, and the balance of reward you might expect in return. Be aware that even lower risk investments can fall in value. If the income you take exceeds the growth of your fund each year you may run out of money too soon. If you don t feel confident in making those investment decisions you should speak to a financial adviser. Inevitably, there are some aspects of the drawdown option that require technical explanations, but we have tried to make these as easy to follow as possible. Any words printed in bold are explained in the Glossary which can be found on page 25. In reading this guide, you means you or your authorised representative and we/us means the Trustees of the Aegon Master Trust. There are a number of things to consider before you take out a Drawdown Account. These are explored in further detail throughout this guide. The information in this guide should be read together with your Options form, Drawdown Investment Options leaflet and Drawdown Account Summary. [4] Aegon Master Trust Drawdown Member Guide

5 Eligibility for the Drawdown Account You must be at least 55 years old or have ceased to carry on your normal occupation because of ill health. You must also have a UK bank account and be resident in the UK. The minimum amount that you can move from your Pension Account into your Drawdown Account initially is 30,000 after you have taken any pension commencement lump sum (PCLS) that you might be entitled to. If you re not moving all of your Pension Account into a Drawdown Account, the minimum you must transfer is 1,000 and you must leave at least 1,000 in your Pension Account. How does the Drawdown Account work? You open your Drawdown Account by instructing us to move some or all of your Pension Account into the Drawdown Account and telling us which investment funds you want us to invest in. We will set up your Drawdown Account to hold these funds and we will carry out your valid investment instructions. If you are not moving the whole of your Pension Account into the Drawdown Account, you will need to tell us from which of your current Pension Account investment funds you want us to move funds. The amount that we move into your Drawdown Account will be uncrystallised funds. Aegon Master Trust Drawdown Member Guide [5]

6 Help is on hand If you need help with any decisions relating to your finances you should speak to a financial adviser. They ll be able to give you advice based on your personal circumstances. This may incur a charge. You can find a financial adviser near you by using unbiased.co.uk. If you want help with deciding how best to take your benefits there is a free and impartial government guidance service called Pension Wise (pensionwise.gov.uk or ). Pension Wise offers guidance and can help you understand the information you need to make a decision, but won t give you personal advice and tell you which option is the most suitable for you based on your circumstances. You should shop around as other providers may offer pension decumulation products that are more appropriate for your needs and circumstances and may offer a higher level of retirement income. [6] Aegon Master Trust Drawdown Member Guide

7 Your Drawdown Account choices You have three ways to take your money from your Drawdown Account so you need to decide what is most appropriate for you. 1. One-off pension commencement lump sum (PCLS) with the option of taking income payments If you choose to take a PCLS immediately, you can either: defer taking an income until you need it, or set up regular income payments to begin at the same time as you take the PCLS. The PCLS is currently tax free and can be up to 25% of the amount you moved into the Drawdown Account. Income payments are subject to income tax. If you take a PCLS immediately, we will move three times the amount you take as a PCLS from your Pension Account into drawdown funds in your Drawdown Account. This is known as designating funds to income drawdown. Example: so if you have a pension fund of 100,000, you could designate 75,000 to drawdown funds, and have a maximum PCLS of 25,000 immediately. 100,000 INVESTED 75,000 You can take income payments on a monthly, quarterly, half-yearly or annual frequency. TAX FREE 25,000 Aegon Master Trust Drawdown Member Guide [7]

8 All references to taxation are based on our understanding of current, taxation law and HMRC practice, which may change. Once you have designated funds to income drawdown, you cannot use those funds in the future to provide you with a different sort of benefit other than a short-term annuity or lifetime annuity. Taking a PCLS and designating funds to income drawdown are both benefit crystallisation events. This means that we have to measure the PCLS and the funds designated to income drawdown against your remaining lifetime allowance. See page 12 for more details. You can choose to take an income straight away or you can defer taking an income until it suits you. See Income payments for more details. If you choose to take an income, you can tell us which of your drawdown investment funds you want us to pay your income from. If you don t tell us which funds to take the income from, we ll pay the income proportionately from all of the investment funds that hold drawdown funds for you. Under this option the drawdown funds remain invested in the investment funds you have chosen until they are needed for income payments. 2. Pension Commencement Lump Sum (PCLS) paid in instalments with Income Payments If you choose to set up your Drawdown Account in this way, there is no one-off PCLS payment up front. Instead you select the level of payment you require to be made from your Drawdown Account and the frequency. We ll then pay each instalment as part income and part PCLS. The PCLS (is tax free under current legislation) and the balance of the income payment will be subject to income tax. Each time a payment is made the PCLS and income payment are measured against your remaining lifetime allowance as PCLS and income payments are benefit crystallisation events. See the Glossary for more details. [8] Aegon Master Trust Drawdown Member Guide

9 Under this option, the balance of the uncrystallised funds in your Drawdown Account remain invested in the investment funds you have chosen. They are available for further PCLS and income payments as and when you want them. They can also be used in the future to provide you with a different sort of benefit. 3. A combination of options 1 and 2 You can choose to set up your Drawdown Account as a combination of 1 and 2. If you do this, your Drawdown Account will consist of a mixture of uncrystallised and drawdown funds. Other payments into the Drawdown Account Neither you nor your employer may make any contributions into your Drawdown Account. You may transfer the value of benefits from another registered pension scheme (or qualifying recognised overseas pension scheme) into your Drawdown Account at any time, subject to our agreement. However, you must always check first for any potential exit charges which could apply to the money being transferred, and for any guarantees that you might lose on transferring. If you are in any doubt, you should speak to an authorised financial adviser. We will not accept transfers into the Drawdown Account which include capped drawdown funds unless you agree to those capped drawdown funds being converted into Flexi-access drawdown funds as part of the transfer. The minimum transfer that can be accepted is 1,000. Please contact us if you are interested in transferring monies into your Drawdown Account. Aegon Master Trust Drawdown Member Guide [9]

10 You can also arrange for any pension credits awarded to you as part of a divorce settlement to be paid into your Drawdown Account. The scheme paying you the pension credit must provide us with information about your pension credit, including whether it is a disqualifying pension credit. The minimum pension credit that can be accepted is 1,000. No other payments can be made into the Drawdown Account. We may change the minimum payment value allowed to be made to the Drawdown Account at any time. [10] Aegon Master Trust Drawdown Member Guide

11 Investment funds The Drawdown Account offers a wide range of investment funds to choose from. These funds cover most investment sectors in the UK and abroad. You should think carefully about where you invest, as there are risks you need to consider. The value of an investment can fall as well as rise and isn t guaranteed. For advice as to whether a fund is suitable for you or if you need specific advice regarding investments in general you should speak to a financial adviser. They ll be able to give you advice based on your personal circumstances. This may incur a charge. You can find a financial adviser near you by using unbiased.co.uk. Each fund also has a yearly management charge (annual management charge (AMC)). The AMC is a fixed percentage applied to each fund and represents the percentage that will be deducted from the fund s value each year. These charges are expressed as an annual percentage but are calculated and deducted on a daily basis. The AMC includes the cost of managing the investments of the fund, the costs of administration, and other services such as maintaining a record of your savings and calculating the value each day. If a fund invests in a collective investment scheme, it will also bear its share of the costs of other services, such as the fees paid to the trustee/depositary, custodian, auditors and registrar. Where they are not included in the AMC, an estimate of these charges is shown under additional expenses in the table of funds. This figure is reviewed yearly and the ongoing charges figure is the sum of the AMC and the additional expenses. Where the AMC is inclusive of any additional expenses it is noted in the fund table. At any time you can access lwp.aegon.co.uk/targetplan to view all the funds, the risk rating and the charges associated with each fund. Aegon Master Trust Drawdown Member Guide [11]

12 When you take up a Drawdown Account, you will need to tell us which fund or funds you want your uncrystallised fund and drawdown funds to be invested in by completing an Options form. If you choose to set up your Drawdown Account using a mix of options 1 and 2 then, on the day your Drawdown Account is opened, your uncrystallised fund and drawdown fund(s) must be invested in the same investment funds and in the same proportions. As soon as your Drawdown Account is set up, you will have the facility to switch your uncrystallised and drawdown funds into different investment funds and in different proportions. The whole of your Drawdown Account (including both your drawdown funds and any uncrystallised funds) will be valued on working days only. You can view the daily value of your Drawdown Account on TargetPlan. You will receive a statement each year. This will show the value of the funds in your Drawdown Account and the amount of income (if any) you have taken during the last year. See your Drawdown Investment Options leaflet for more information on: all of your investment fund options; the annual management charge rate for each fund; the specific risks of each of the available funds, and switching investment funds. [12] Aegon Master Trust Drawdown Member Guide

13 How your payments will be invested in the Drawdown Account We will allocate an amount equal to 100% of the amount you have told us to move into the Drawdown Account to units in the investment funds that you have selected on your Options form in the proportions that you have chosen. The investment funds and the proportions you chose on your Options form will be shown on the Drawdown Account Summary that will be issued to you when your Drawdown Account is set up. Investments in your Drawdown Account can go down as well as up in value. We will not move any funds from your Pension Account into your Drawdown Account until you have completed an Options form which gives us clear formal instructions about which investment funds you have selected and the proportion of your funds that are to be invested in them. Formal instructions means that you or your authorised representative must give us clear instructions by letter, phone, or through our internet message facility and supply any documents that may reasonably be requested in order to carry out your instruction. Aegon Master Trust Drawdown Member Guide [13]

14 Your instructions will not be acted upon unless they are deemed to be clear and complete. We will invest any subsequent transfer payments or pension credits in the same funds and in the same proportions as your initial payment, unless you give us new instructions. Timing of allocation of payments into Investment Funds We will allocate your initial payment, any transfer-in payments or pension credits to your chosen investment fund(s) in accordance with the terms agreed between the Trustees and the provider of the investment funds. Changing your Investment Funds If you wish to change the allocation of units in your chosen investment funds at any time, you can request this by giving us formal instructions to switch funds. If you give us more than one switch instruction in quick succession, the second switch instruction will not be processed until the first has been completed. We will let you know when this happens. There is a period of up to 15 working days before we make income payments during which we will not be able to accept switch instructions in respect of funds which are being used to make income payments. Where we receive an will not be processed from you in these circumstances, we will contact you. [14] Aegon Master Trust Drawdown Member Guide

15 Income payments You need to consider the implications, and limitations, of the decisions you make, now and in the future. Choosing the amount of income you wish to receive You can give us instructions to start making income payments at any time. The level of income you choose can be between 0% (no income) and 100% (the whole) of your Drawdown Account value (including both your drawdown fund(s) and uncrystallised fund). If you choose to start receiving income payments, the minimum payment that you can receive is 100 before tax. We cannot pay amounts less than this. We may change the level of this minimum payment in the future and we will tell you if this happens. Your income payments are treated as earned income for tax purposes so you will be subject to income tax, at the prevailing rates in each tax year, on any income payments you receive. We will deduct any income tax that is due before we make your income payment. You can choose to have your income payments paid monthly, quarterly, half-yearly or annually and to have your income payments increased automatically on the anniversary of the commencement of those payments. You can select a fixed percentage increase of between 1% and 10% or the increase in the Retail Prices Index (RPI). If you choose to have your income payments increase by the RPI, the rate that will apply to any increases given in a particular tax year will be the increase in the RPI over the year prior to the previous September. Income payments can only be made on the 24th of each month, or the last working day immediately before the 24th. This is known as the payment date. There are 12 payment dates a year. You can give us instructions to change your income payments at any time but they will only take effect from the next available payment date. Aegon Master Trust Drawdown Member Guide [15]

16 There is a period of up to 15 working days immediately before each payment date during which we are unable to change the level of your income payments. If we receive an instruction to change the income you are receiving during this 15-day period, we will not action that request until after the payment date at the end of that period. Your income will then be changed from the following payment date. Please bear this in mind when you request changes in your income payment and give us sufficient notice if you need your income payment to change from the next available payment date. You can choose to receive regular income payments or one-off payments, subject to a maximum of 12 one-off payments in each year. One-off payments are available even if you are not receiving regular income payments. If you are receiving regular income payments, one-off payments will be paid with any regular income payments from the next available payment date. We can only make payments by direct credit to your nominated bank account. If the income you take exceeds the growth of your fund each year you may run out of money too soon. [16] Aegon Master Trust Drawdown Member Guide

17 Stopping income payments Once income payments have started, they will continue to be paid until: your death; your drawdown fund(s) and/or uncrystallised fund run out of funds; you decide to use the remaining funds to buy an annuity from a company of your choice; you transfer your whole Drawdown Account to another drawdown provider, or you instruct us to stop making payments. How your Drawdown Account investments are used to take income payments Income payments will be made by disinvesting (selling) units in your chosen investment fund(s). When you first select an income payment, if you have invested in more than one investment fund, you will need to tell us what investment funds the income payments should be paid from. Units will normally be disinvested from your drawdown fund(s) (if you have set up your Drawdown Account under option 1), your uncrystallised fund (if you have set up your Drawdown Account under option 2), or proportionately across your drawdown fund(s) and uncrystallised fund (if you have set up your Drawdown Account under option 3). To pay your income, we ll automatically disinvest funds to provide the amount of income (before deduction of tax) that you have chosen. If you are invested in more than one investment fund and an uncrystallised or drawdown fund you have selected to pay your income is exhausted, you must provide us with a new instruction. If no new instruction is received, we will either continue to make income payments from other drawdown funds or cease payments until new instructions are received. The exact treatment will depend on whether you are invested in an uncrystallised fund or drawdown funds and if you are in more than one investment fund as follows: Aegon Master Trust Drawdown Member Guide [17]

18 (a) If you still have drawdown funds invested from which income payments are not currently being made, we will make the final income payment from the depleted fund and top up the income payment from your other drawdown funds. We will continue to make income payments in accordance with your existing instructions from the other drawdown funds unless or until you provide us with new instructions; (b) If you have uncrystallised funds from which income payments are not currently being made, we will make the final income payment from the depleted fund and no further income payments will be made until we receive new instructions relating to the uncrystallised funds. The final payment will represent the amount left in your depleted fund on the day we sell the units to make the payment to you. This might be more or less than your expected income payment; (c) If you have investments remaining in more than one drawdown fund, the income payment will be made proportionately across the remaining funds based on the value of each fund holding at the time of the withdrawal. We will write to you when your funds are close to being depleted so that you can make other arrangements or give us new instructions. If all of your funds have been depleted, your income has ceased and we have received no further instructions from you, your Drawdown Account will be closed. You can, of course, change your instructions regarding funds or the level of income payment to be disinvested if you wish. [18] Aegon Master Trust Drawdown Member Guide

19 Taxation You should be aware of the latest tax rules and how they will affect your investments and income. Income The income you take from your Drawdown fund will be taxed under the Pay As You Earn (PAYE) system. The amount of income you take from your Drawdown Account in a tax year may impact on the rate of income tax you pay, so it s important to consider this when deciding how much and when to take an income. Investments Any investment growth on the funds held in your Drawdown Account is largely free of UK income tax and capital gains tax. However, we cannot reclaim the tax paid on dividends from UK companies. Lifetime allowance There are no restrictions on the value of the total benefits payable from all of your registered pension schemes. However, anything over a certain level, called the lifetime allowance, will be subject to a tax charge, called the lifetime allowance tax charge, of up to 55% on the excess. For most people, the lifetime allowance will be the standard lifetime allowance. However, you may be entitled to a higher protected personal lifetime allowance in certain circumstances. If you are entitled to a protected personal lifetime allowance you must tell us. You can find out more about the lifetime allowance and the lifetime allowance charge on the government s website pensionschemes/understanding-la.htm. You should speak to a financial adviser if you believe you may be affected by this. Aegon Master Trust Drawdown Member Guide [19]

20 Money Purchase Annual Allowance (MPAA) If you start to take an income from your Account, this will trigger the money purchase annual allowance if it hasn t been triggered already. This means that the amount that can be paid by or for you into money purchase arrangements without a tax charge arising may be restricted to the money purchase annual allowance. Details of the current money purchase annual allowance can be found at gov.uk/tax-on-your-private-pension/ annual-allowance. Pension commencement lump sum Any PCLS you receive can normally be paid tax-free. General All current rates of tax are available from gov.uk/income-tax-rates and will take into account any other income you receive and where you are resident for tax purposes. [20] Aegon Master Trust Drawdown Member Guide

21 After starting income payments Choosing a Drawdown Account isn t a one-off decision you can, and should, review your personal finances regularly to make sure the decisions you have made about your Drawdown Account remain suitable. Review your Drawdown Account regularly Your circumstances might change after you start taking your income, so you should regularly review your situation with your financial adviser, for the reasons set out below: if you take too much income too soon your Drawdown Account may run out of money before you die leaving you and, on your death, your spouse, civil partner or dependant without an income; if the amount of income you take from your Drawdown Account exceeds the rate of investment growth on your funds the capital value of your Drawdown Account will go down faster than you have anticipated. This may reduce the amount of income available to you and, on your death, your spouse, civil partner or dependant. Other benefit options There are other benefit options available to you other than income payments. The options differ depending on whether you have drawdown funds or uncrystallised funds. If you have uncrystallised funds you can: purchase an annuity; designate funds into drawdown; take a taxed uncrystallised fund pension lump sum (UFPLS), or a combination of the these three options. Aegon Master Trust Drawdown Member Guide [21]

22 From drawdown funds you can: buy a short term annuity; buy a lifetime annuity, or a combination of the two options above Buying an annuity You can use your Drawdown Account to purchase an annuity from an annuity provider at any time. You can buy an annuity from the provider of your choice. The annuity may be a short-term annuity (which is paid for a period of up to five years) bought using your drawdown funds or a lifetime annuity bought using your uncrystallised funds or your drawdown funds. It s critically important to shape an annuity to meet your needs. For example, if you have a spouse you may wish to include a spouse s level of income. This means that, should you die before your spouse, your spouse continues to receive an income from your annuity contract. Generally speaking, the older you are when you buy an annuity, the higher the annual income you should get for your money because your life expectancy will be shorter. Annuities may also be higher for people who have certain underlying health conditions. However, annuity rates may worsen in the future and this could impact on the level of income you will receive. Annuity rates can change significantly over short periods of time, both up and down, so it s important to shop around. Transfers from a Drawdown Account You may transfer the value of your Drawdown Account to another registered pension scheme that is willing to accept it, at any time. [22] Aegon Master Trust Drawdown Member Guide

23 Death benefits Any remaining assets may be passed on to your dependants and nominated beneficiaries on your death. On your death any assets remaining in your drawdown funds or uncrystallised funds may be paid as a lump sum to your nominated beneficiaries or, subject to meeting certain limits, may be paid to one or more dependant(s) or nominated beneficiaries to designate to a Drawdown Account in their own name, so they may receive an income after your death either in the form of income payments from their Drawdown Account or through the purchase of an annuity. The designation by your dependant(s) or nominated beneficiaries, of assets remaining in your uncrystallised fund or the use of those funds to purchase an annuity, will be a benefit crystallisation event. These assets will have to be measured against your lifetime allowance if you are aged under 75 when you die and if the designation occurs, or entitlement to the annuity arises, within two years of the earlier of the day we first knew or your death or could first reasonably have been expected to know of it (the two-year period ). See page 27 for more details on the lifetime allowance. Your dependant(s) or nominated beneficiaries have the same income payment options as you. See the Income Payments section of this booklet for more details. Tax treatment of death benefits The tax treatment of your death benefits will normally depend on whether your death occurs before or after age 75. Death before age 75 Any lump sum will generally be paid free of tax to your dependant(s) or nominated beneficiaries unless it is paid more than two years after we were notified of the member s death. It will then be subject to a tax charge before the lump sum is paid. Aegon Master Trust Drawdown Member Guide [23]

24 If you have not told the trustees who you would like any death benefits to be paid to, the remaining pension fund will be payable at their discretion as a lump sum. Death aged 75 or over Any lump sum payments will be subject to a tax charge which will be deducted before the lump sum is paid. If you have not told the trustees who you would like any death benefits to be paid to, the remaining pension fund will be payable at their discretion as a lump sum. Death benefits and inheritance tax Death benefits distributed at the discretion of the trustees are not normally subject to inheritance tax. [24] Aegon Master Trust Drawdown Member Guide

25 Glossary Certain key words and phrases with technical meanings appear throughout this guide in bold. Annuity Benefit crystallisation event Capped drawdown funds Disqualifying pension credit An annuity is a contract sold by an insurance company designed to provide payments at specified intervals which can be linked to a rate of escalation. There are many different type of annuities available. This is the name given to any event that happens that requires the trustees or managers of the scheme to measure the benefits you have taken against the lifetime allowance. Examples of the events that have to be measured are designating funds to income drawdown or taking a pension commencement lump sum. Before Flexi-access drawdown was introduced in April 2015, other forms of income drawdown existed which had more restrictive rules about the amount of income that could be taken from them. Capped drawdown funds is one of the forms of income drawdown that previously existed. The Drawdown Account cannot accept capped drawdown funds and will only accept a transfer payment that contains capped drawdown funds if you agree to them being converted to Flexi-access drawdown funds. This means that the pension credit you were awarded as part of a divorce settlement is not eligible to have a PCLS when the portion of your Drawdown Account that is made up of your pension credit comes into payment. Aegon Master Trust Drawdown Member Guide [25]

26 Drawdown funds Drawdown Account Flexi-access drawdown Your Drawdown Account will be made up of drawdown funds, uncrystallised funds or a mixture of both. Drawdown funds are funds that you have specifically designated to income drawdown and may have given rise to an entitlement to a PCLS. Uncrystallised funds are funds from which you have not yet chosen the benefits. When you choose to take up income drawdown in the Aegon Master Trust, we open a new Drawdown Account for you. This will be separate from your Personal Retirement Account in the scheme into which all contributions that you and your employer have paid have been held. The two Accounts will have their own Account numbers and there are separate Member Guides and Investment Option leaflets for each type of Account. A type of flexible income drawdown that was introduced from April The rules about how and when you can access your income with this type of income drawdown are much more flexible than previous versions of income drawdown. Your Drawdown Account is a Flexi-access drawdown arrangement. [26] Aegon Master Trust Drawdown Member Guide

27 Lifetime allowance The lifetime allowance is the amount of pension savings that you can build up over your working life without incurring additional tax charges. Designating uncrystallised funds in your Drawdown Account for income drawdown is a benefit crystallisation event that requires the benefits you are taking to be measured against the lifetime allowance. This may give rise to a lifetime allowance tax charge. You will need to supply us with information about the benefits you hold in other registered pension schemes to enable us to measure your benefits against the lifetime allowance. If you choose to set up your Drawdown Account under option 2 or 3, you will need to provide this information to us regularly on request. If your Drawdown Account has been subject to a lifetime allowance tax charge, you will receive a notification from us providing details of the tax charge that has been deducted. The payment of benefits on your death may also be a benefit crystallisation event and require that the benefits your dependant(s) or nominated beneficiaries take are measured against your remaining lifetime allowance. Aegon Master Trust Drawdown Member Guide [27]

28 Lifetime annuity Pension Account Pension commencement lump sum (PCLS) Pension credit Personal Retirement Account An annuity which is payable for life. Once you have bought a lifetime annuity, you will be paid an agreed set level of income for the rest of your life. The amount of annuity that you receive depends on factors like whether you want to provide an income for your spouse after your die, how old you are when you purchase the annuity, whether you have any underlying health conditions, and whether you want the income to increase each year in payment. Different annuity providers will offer different rates for an annuity so it is important that you shop around. This is the amount of your Personal Retirement Account that was shown to be available on TargetPlan when you completed your online Options form. The amount is not guaranteed and can go up or down. This is a cash sum (currently paid tax free) which can be paid when you start to take an annuity or designate funds to income drawdown. The maximum PCLS for most people is normally 25% of your Pension Account. This is an amount you may be awarded as part of a financial settlement in a divorce. This is the Account you have had in the Aegon Master Trust into which all of your and your employer s contributions have been made in the period up to your target retirement age. [28] Aegon Master Trust Drawdown Member Guide

29 Short-term annuity Uncrystallised funds A short-term annuity is an annuity that is bought from funds that have been designated into drawdown, and is payable for a period not exceeding five years. These are funds from which you have not yet chosen what benefits to take. Aegon Master Trust Drawdown Member Guide [29]

30 Want to know more? Aegon UK Aegon UK This document has been written and produced on our behalf by Aegon, the company we ve chosen to administer the Master Trust. Aegon is a brand name of Scottish Equitable plc. Scottish Equitable plc are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Their Financial Services Registration number is WP /18