SELF-INVESTED PERSONAL PENSION GIVING YOU MORE INVESTMENT CHOICE

Transcription

1 SELF-INVESTED PERSONAL PENSION GIVING YOU MORE INVESTMENT CHOICE

2 INTRODUCTION SCOTTISH WIDOWS HAS BEEN LOOKING AFTER THE FINANCIAL WELL-BEING OF PEOPLE FROM ALL WALKS OF LIFE FOR 200 YEARS. THROUGH THE COMBINED ORGANISATION OF SCOTTISH WIDOWS AND LLOYDS BANKING GROUP PLANNING FOR A SECURE AND SUCCESSFUL FUTURE COULDN T BE EASIER. YOU HAVE ACCESS TO A WIDE RANGE OF ATTRACTIVE PRODUCTS, SUPPORTED BY A WEALTH OF KNOWLEDGE AND EXPERIENCE. YOU CAN REST ASSURED THAT YOU LL BE IN THE HANDS OF A GROUP WHICH IS COMMITTED TO GIVING YOU THE HIGHEST STANDARDS OF PERSONAL SERVICE AND THE BENEFIT OF CONSIDERABLE EXPERIENCE.

3 PAGE 2 MANAGE YOUR PENSION WITH SELF-INVESTMENT SELF-INVESTED PERSONAL PENSIONS PAGE 3 SELF-INVESTMENT PAGE 4 HOW IT WORKS PAGE 5 HOW IT WORKS (NOTES) THE SELF-INVESTED PART OF YOUR PENSION FUND PAGE 6 OTHER INFORMATION PROPERTY (UK ONLY) PAGE 7 BANKING PAGE 8 BENEFITS COMPLAINTS AND INVESTOR PROTECTION PAGE 9 APPENDIX 1 PAGE 10 APPENDIX 2 PAGE 12 APPENDIX 3 PAGE 14 APPENDIX 4 PAGE 15 APPENDIX 5 PAGE 16 APPENDIX 6 1

4 MANAGE YOUR PENSION WITH SELF-INVESTMENT WHEN YOU NEED TO MAKE A DECISION ABOUT YOUR RETIREMENT NEEDS, THERE S NO DOUBT YOU NEED TO PLAN AHEAD. IF YOU LIKE TO TAKE CONTROL AND MAKE INVESTMENT DECISIONS THEN A SELF-INVESTED PERSONAL PENSION (SIPP) COULD BE A GREAT CHOICE FOR YOU. YOU CAN PREPARE YOUR PENSION FOR THE YEARS TO COME YET HAVE MORE CONTROL AT THE SAME TIME. SELF-INVESTED PERSONAL PENSIONS The self-investment of a personal pension plan can give you the option of more control over managing the investments in your personal pension plan. Under Scottish Widows range of Personal Pension Plans, including Income Drawdown and Phased Retirement, we offer a wide range of our own funds in which you can invest your pension contributions*. Please refer to the key features for further details on the aims, commitments and risks of the products. Scottish Widows reserves the right to alter the selection of funds it makes available from time to time. With a self-investment option we allow you to manage the investment of part of your pension fund. The self-invested part of your pension fund allows you to work within your own investment objectives investing in stocks and shares on the London Stock Exchange or buying business property, for example. (See Appendix 1 for a list of acceptable investments). Pensions are a long-term investment. The retirement benefits you receive from your pension plan will depend on a number of factors including the value of your plan when you decide to take your benefits which isn t guaranteed, and can go down as well as up. The value of your plan could fall below the amount(s) paid in. If you take pension encashments, this will reduce the value of your pension fund. It may leave you with insufficient funds when you are older. High levels of pension encashments may not be sustainable and could reduce the value to zero. We recommend that you take financial advice before making any decisions about how to invest for your pension. Your adviser may charge a fee for this advice. *(Self-investment is only available on Personal Pension, Phased Retirement or Income Drawdown policies that were taken out prior to 1 July Self-investment is not available under our Stakeholder Pension Plan.). 2

5 SELF-INVESTMENT What does Scottish Widows do? We are the provider of the Scottish Widows Appropriate Personal Pension Scheme which is registered under Part 4 of the Finance Act We are the Scheme Administrator for the Scheme and are responsible for running it according to the Scheme Rules. Our subsidiary, Scottish Widows Trustees Ltd, is Trustee of the Scheme. We will receive all of your contributions whether they are invested in our investment funds or are to be self-invested. We claim basic rate tax relief* on all your personal contributions. We can t claim tax relief on any employer contributions although employers can claim tax relief as a business expense in their accounts. There is no tax relief on transfer payments. *If you are a Scottish taxpayer, the tax relief you are entitled to will be at the Scottish Rate of income tax, which may be different from the rest of the UK in the future. Where your contribution is to be invested in our funds we will apply the gross amount of contribution immediately without waiting to receive the tax relief from HMRC. Where your contribution is to be used for self-investment, we will forward the net amount to James Hay Partnership. James Hay Partnership will deposit this in a designated bank account opened for this part of your fund. When we receive the tax relief we will forward this to James Hay Partnership, who will add it to your designated bank account. The amount of tax relief you can receive is subject to an upper limit set by the Government. In each tax year, relief is normally only available on payments which do not exceed the higher of 100% of your relevant UK earnings, and 3,600 gross. If your payments to this plan, and any other pension plans you have, when added to the basic rate tax relief received, exceed this limit, the excess will not be eligible to tax relief and will be refunded. Tax charges will normally apply if the Government s Annual Allowance, Tapered Annual Allowance, Money Purchase Annual Allowance or Lifetime Allowance is exceeded. Please see your product illustration and literature for further details. The tax benefits depend on your individual circumstances. Tax rules and your circumstances may change in the future. What does James Hay Partnership do? They are responsible for the day-to-day administration of the self-invested part of your pension fund. Normally, instructions to James Hay Partnership should be made in writing. James Hay Partnership may accept oral or facsimile instructions but may refuse to act until they receive the instruction in writing. Instructions should be directed to: James Hay Partnership, Dunn s House, St Paul s Road, Salisbury, SP2 7BF Tel Fax JH.contactteam17@jameshay.co.uk See Appendix 3 for a full list of services provided by James Hay Partnership. James Hay Partnership will make charges for the services it provides. These are listed in Appendix 4. Any future contributions to be self-invested will be forwarded straight to James Hay Partnership who will transfer them (plus the tax relief received later) to your designated bank account. It normally takes about six weeks for us to receive the tax relief from HMRC. 3

6 HOW IT WORKS Scottish Widows You send your contribution and application forms to Scottish Widows. You specify the amount to be invested in Scottish Widows funds and how much is to be self-invested. James Hay Partnership Your chosen amount is invested in Scottish Widows funds. You can switch between these funds throughout the lifetime of the plan. Income drawdown An income is withdrawn from your fund. This income is withdrawn proportionately from your Scottish Widows and self-invested funds. Please see the Key Features for details. Phased retirement An income (usually made up of tax-free cash and annuity) can be provided from your fund. This income is provided proportionately by your Scottish Widows and self-invested funds. Please see the Key Features for details. Personal pension You can choose one or more of the following options - take one or more pension encashments (subject to restrictions which apply), 25% of each will be tax-free and the remainder taxable buy one or more annuities transfer some or all of the fund to another plan, which for instance, may allow income drawdown. Please see the Key Features for details. Your chosen amount and any tax relief is forwarded to James Hay Partnership with details of any investment manager you have selected and the scope of their power to deal with your investments. James Hay Partnership deposit this amount into a designated bank account with Santander UK Plc. This will stay here until James Hay Partnership receive investment instructions from you or your investment manager to invest or to transfer to a client account of your investment manager. Appendix 1 contains a list of acceptable investments. Any income from your investments or from the sale of your investments will be deposited in your designated bank account. Scottish Widows will pay your benefits, or where appropriate transfer your fund to an authorised pension provider. (Remember there may be a delay in realising some of your self-invested assets especially property). 4

7 HOW IT WORKS (NOTES) If some or all of your personal pension is held in our investment funds you may be able to switch part of your personal pension from these funds to self-investment and vice-versa. You must, however leave a minimum amount in our investment funds. The minimum amounts that must be invested in our funds before we allow self-investment are set out in Appendix 6. There may be a restriction on the amount that can be invested in some of our funds. Scottish Widows reserves the right to change the selection of funds we make available from time to time. We reserve the right to delay the date of any switch between our investment funds. The period of delay will not be more than six months if the units cancelled relate to funds which directly or indirectly hold assets in the form of real or heritable property. It will not be more than one month in all other cases. THE SELF-INVESTED PART OF YOUR PENSION FUND Investment Management For the investment strategy of your self-invested funds you have the choice of: Execution-only basis You decide on how your funds are to be invested and direct your Investment Manager to act. You will be responsible for notifying your Investment Manager of all investment transactions you want to make. All stockmarket investments or sales will be actioned by the stockbroker you have chosen and with whom James Hay Partnership have opened an account for your plan at that time (unless another arrangement has been agreed with you). Advisory basis You choose an investment adviser. You or your adviser then direct James Hay Partnership to implement your investment decisions. You or your adviser will inform James Hay Partnership of the transactions you wish to make. You discuss the investment strategy for your fund with your adviser, but you make the final decision on how to act. If you or your investment adviser wish to invest in exchange traded instruments, such as listed stocks and shares, you will need to instruct James Hay Partnership to open an account with a stockbroker or investment manager who can do this. You or your investment adviser would then instruct the stockbroker or investment manager directly to make trades. If you wish the cost of this advice to be met from your fund, Scottish Widows Trustees Ltd may arrange for payment. You will still be responsible for making the final decision on investments, and you or your adviser still pass investment instructions to James Hay Partnership. Discretionary basis You choose an Investment Manager to hold all or part of your self-invested funds, and to decide and implement investment transactions on your behalf. The investment manager will account to James Hay Partnership for all money held by him or her and all investment transactions made. You should receive copies of all contract notes and statements of account, including bank statements or equivalent. Valuations of your investments will be received on a frequency agreed between you and your chosen investment manager. It is usual for the investment manager to use his or her standard nominee and custody facilities. James Hay Partnership will make the necessary arrangements for designation of bank accounts and nominee accounts, but neither James Hay Partnership nor Scottish Widows will accept liability for any loss by the investment manager or his or her nominee or custodian. Fees or charges will be paid from the self-invested part of your fund. Investment management agreements These are needed for advisory arrangements where the adviser is paid from the fund and for discretionary arrangements. An investment manager will normally have a standard agreement which Scottish Widows will enter into provided it meets certain conditions. 5

8 OTHER INFORMATION Scottish Widows, as trustee, will always retain the right to veto an investment or to realise an investment without your consent. However, failure by us to veto an investment does not imply our endorsement of the investment. We take no responsibility for investment advice. If you have not chosen the discretionary basis and funds are to be invested in securities or investment trusts, the investments will normally be made through Execution-only stockbrokers nominated by you and with whom James Hay Partnership have opened an account for your plan. All Stockbroker commissions, fees and disbursements (i.e. money paid out, expenditure on your behalf) will be paid from the self-invested part of your fund. The assets of the self-invested part of your fund will be registered in the name of Scottish Widows Trustees Ltd or in the name of a nominee company. Some investments must be registered in the name of a nominee controlled by a custodian. The custodian will make charges for their services, which will be paid from the self-invested part of your fund. If James Hay Partnership receives any dividend or interest payments from your plan investments, they will credit them to your designated client account. If your investment manager receives any such dividend or interest payments, they may be credited to your designated client account or held by your investment manager in accordance with the applicable terms of business. Where possible James Hay Partnership will reclaim any tax deducted at source on your investments. However, James Hay Partnership will not reclaim withholding tax on foreign dividends. PROPERTY (UK ONLY) Commercial property may be bought by the self-invested part of your fund. This property can then be leased to the tenant. If it is being leased to someone connected to you (as defined on page 9) this must be at market terms and rates. Scottish Widows will appoint: a Solicitor, a Surveyor* who will be responsible for any survey of the property you may nominate a Royal Institute Chartered Surveyors (RICS) qualified surveyor. James Hay Partnership will appoint a property manager who will be RICS qualified. Fees for solicitors and surveyors, stamp duty and disbursements, will be paid from the self-invested funds. Fees will be charged by James Hay Partnership and other parties for work completed even if the purchase itself is not completed. If the purchase price of the property is more than the self-invested part of your fund it may be possible to obtain a mortgage to finance the balance of the property purchase. The amount of the mortgage will be limited to the lesser of 50% of the net fund value and the lender s limit. You must arrange the mortgage, which will be in the name of Scottish Widows Trustees Ltd. Scottish Widows may not permit investments in certain types of property. Details are available from James Hay Partnership. * If you nominate a RICS qualified Surveyor, the Surveyor must not be a connected person (as defined on page 9). Scottish Widows will not exercise any voting rights that may exist in relation to any investment. If any corporate action activity requires you to make any election and no investment manager has been appointed, James Hay Partnership will tell you about this and you will be responsible for telling them what election you wish to make. If you give James Hay Partnership your instructions within their stated deadlines then they will take all reasonable steps to ensure that your instructions are acted upon. Otherwise, James Hay Partnership will not take any action and the custodian s default position will then be applied. For any investments made through a stockbroker or investment manager, when opening the account for your plan James Hay Partnership will ask the stockbroker or investment manager to send you directly a copy of the contract note for any investments. For other investments where James Hay Partnership place the investment, they will forward you a copy of the contract note once they have received it. 6

9 BANKING Scottish Widows receives your contribution(s) as already explained. The self-invested part will be forwarded to James Hay Partnership who will bank it in a designated client account with Santander UK Plc (Scottish Widows reserves the right to change the bank used at any time). The account will be held in the name of Scottish Widows Trustees Limited. James Hay Partnership will be the authorised signatory to this account. Interest will be paid on any credit balance in this account. Overdrawn balances will not be allowed. All or part of the self-invested part of your fund may be invested in any long-term bank or money market accounts subject to certain restrictions. Where appropriate, James Hay Partnership will open an account with the organisation chosen by you or your adviser. If money is forwarded to your investment manager by James Hay Partnership, he or she will be responsible for the establishment of a designated bank account. James Hay Partnership should be notified regularly of all interest payments and transactions from that account. This must be in a form acceptable to Scottish Widows. Interest will be paid on any credit balances. The rate currently payable is % below the base rate for the time being of the Bank of England. This rate is subject to change from time to time if there are changes to the Bank of England base rate or to our arrangement with the bank. Where the base rate is less than %, no interest will be paid. The current Bank of England base rate can be found on the Bank of England website ( or in the press. No overdraft is permitted on any designated client account. You are responsible for ensuring that the account remains in credit and that there are sufficient funds available in good time to pay charges, settle investments and pay any other sums that may properly become due from your account. If James Hay Partnership are obliged to make a payment to a third party, then they may do so even if this means that there will be an unauthorised overdraft on your designated client account. James Hay Partnership will notify you if this happens and you must arrange for funds to be immediately paid into the account to bring it back into credit by selling assets held in your plan. Currently no charges are made in relation to the normal operation of your designated client account. James Hay Partnership may receive and benefit from payments from the bank calculated by reference to the total balance of all designated client accounts held within the scheme. This may change in the future if there are changes to our arrangement with the bank and we will notify you if this occurs. Charges will be made if your designated client account becomes overdrawn, and such charges must be paid for out of your plan. Currently, debit interest charges are made by the bank on overdrawn accounts at the rate of 8% above the Bank of England base rate. This rate is subject to change from time to time if there are changes to the Bank of England base rate or to our arrangement with the bank. The current Bank of England base rate can be found on the Bank of England website ( or in the press. Please note that if due to any overdraft the total amount of borrowing in respect of your plan exceeds 50% of the net fund value, HMRC may treat any borrowing in excess of 50% as unauthorised borrowing and so may impose a tax charge on you or your plan. You are responsible for ensuring that there is enough money in your designated client account in good time to pay charges, settle investments and to pay any other sums that may properly become due from your plan or from you personally under this agreement. If at any time there is not enough money in your designated client account to pay any sums due, or if your account becomes overdrawn, James Hay Partnership will notify you and ask you to make funds available. If there is still not enough money in your account 30 days after their first notice, or earlier if this is reasonably necessary, James Hay Partnership may cover the shortfall by arranging the sale of assets held within your plan without further reference to you. James Hay Partnership will normally do this on a largest holding first basis but are not obliged to do so and may sell assets in an order at their discretion. Important: If any shortfall remains after the sale of other assets held within your plan, then you will be personally responsible for paying the outstanding charges or other sums due to us. If you do not pay the charges or other sums due, then we may take legal action against you personally. 7

10 BENEFITS Retirement You can normally start taking retirement benefits at any time after 55, even if you are still working. You can take retirement benefits before age 55 if because of ill health you are incapable of continuing in your current occupation. The minimum age from which you can start taking benefits from your pension may change. When you start taking retirement benefits, all transactions in progress will be completed and James Hay Partnership will continue to operate your designated client account for the purpose of settling or receiving monies for these transactions. Any fees or expenses due will be paid from the bank account before the final payment of your fund. Once all transactions are settled and fees paid, James Hay Partnership will forward your balance to Scottish Widows. We will then combine it with the proceeds of your fund held in Scottish Widows investment funds and use the total to provide the benefits. By age 75 at the latest, you must take all of the benefits under your plan or transfer to another pension provider. Death Benefits from your Scottish Widows plan can be paid upon your death to your nominated beneficiaries that may include any dependants. We ll normally pay the value as a lump sum and this will normally be tax-free if you die before you are age 75. Income payments Where you are receiving income payments from your Income Drawdown plan this income will be provided proportionately from the Scottish Widows and selfinvested parts of your fund under each arrangement. COMPLAINTS AND INVESTOR PROTECTION All information held by Scottish Widows or James Hay Partnership will be confidential and will not be disclosed without your permission to any third party unless we are legally required to do so. For complaints and Investor Protection relating to your investment please see the relevant Key Features. Transfer We can accept transfers from other UK and overseas pension schemes. These transfers can be made not only in cash but also by a transfer of assets (called an in specie transfer) subject to our scheme being able to hold the assets in question, likewise we can transfer all or part of your pension plan to another UK registered pension scheme or qualifying recognised overseas pension scheme (QROPS). 8

11 APPENDIX 1: SELF-INVESTMENT UNCOVERED RANGE OF ACCEPTABLE INVESTMENTS Investments can be made in any of the following: Securities listed or dealt on the London Stock Exchange (including the Alternative Investment Market) or on any stock exchange recognised by HMRC including: equities (including investment trusts), loan stock issued by governments or other bodies, permanent interest bearing shares, convertible securities, warrants (for equities), and exchange traded products, such as ETFs, ETCs and ETNs. Depository Interests including CREST depository interests. Units in a Collective Investments Scheme (CIS) authorised or recognised for the purposes of the Financial Services and Markets Act Insurance policies investing in insurance company managed funds, unit linked funds or investment funds of an insurance company based in the UK. Offshore insurance policies, including offshore portfolio bonds, may be permitted but are subject to our specific approval. Deposit accounts held in any currency with any deposit taker, but subject in all cases to our specific approval. Structured products including structured product investment plans, subject to our specific approval, and structured deposits Commercial property (Subject to certain restrictions see page 6. Please see the Commercial Property Risks section on page 11). Please note that the value of the investment is not guaranteed and may go up and down depending upon investment performance (and current exchange rates where a fund invests overseas), and could fall below the amounts paid in. USE OF SCHEME FUNDS Scheme funds must not be used to invest in: 1. Investments that are not readily realisable Any investment in which, in the reasonable judgement of Scottish Widows and James Hay Partnership, opportunities to realise the holding are insufficiently frequent to meet the Scheme s legal and regulatory requirements. 2. Certain loans and borrowings Personal pension funds must not be used to provide loans to you or anybody connected to you. No loan, from any source, made to you should in any way affect the return on the investments representing your interest in the scheme. 3. Unquoted securities Your personal pension fund cannot buy or hold any security not quoted on any HMRC recognised stock exchange including any security traded over the counter on a matched bargain basis. 4. Certain other investments Your personal pension fund: must not hold residential property, land connected with residential property or personal chattels capable in any way of private use. This includes commercial premises with residential accommodation if this accommodation is occupied by someone connected with you may lease allowable commercial property to a business or partnership connected with you but the lease, including the rent payable, must be on commercial terms as determined by a professional valuation. CONNECTED PERSONS A person is connected to you if that person falls within the definition of connected persons in Sections of ITA 2007, as amended, James Hay Partnership will ensure that any transaction is made at market value. Note: Scottish Widows reserves the right to further restrict the investment of the self-invested part of your pension fund including commercial property (see Customer Agreement). 9

12 APPENDIX 2: IMPORTANT NOTICES SALE OF INVESTMENTS Some investments may take longer to sell than others and you may not be able to realise your investment immediately at the time when you choose to take your pension benefits. These investments are known as relatively illiquid and we will require a properly completed Important Information declaration before a relatively illiquid investment is made. TAXABLE PROPERTY Investments in taxable property (including residential property and tangible assets such as art, antiques, jewellery, fine wines, boats, classic and vintage cars, stamp collections or rare books) are not generally permitted. We may permit your plan to invest in genuinely diverse investment vehicles that invest in taxable property, subject to approval and receipt of a properly completed Taxable Property Risk declaration from you. DEPOSIT ACCOUNTS Your plan may invest in deposit accounts subject to our specific approval. When deciding whether to invest in such accounts, please bear in mind the following points: The account may bear charges. If the account is held in a foreign currency, there may be additional charges for paying money into or out of the account (See also below). Accounts held outside the UK are subject to a different legal and regulatory regime, which may offer a different level of protection. For example, if an overseas bank fails, you may not get the same protection as you would get if in the event of a UK bank failure. UNREGULATED INVESTMENTS Your plan may, subject to approval where required, make certain investments which are not regulated by the Financial Conduct Authority. This means that the protections provided by such regulation, including access to the Financial Services Compensation Scheme and the Financial Ombudsman Service, may not apply. INVESTMENTS OUTSIDE THE UK When you tell us to purchase investments that are held or administered outside the UK, we may have to pass money to another broker or settlement agent located outside the UK. Such a person or firm will be subject to a different legal and regulatory regime, which may offer a different level of protection. For example, if an overseas broker or settlement agent fails, you may not get the same protection as you would get if in the event of a person or firm failing in the UK. EXCHANGE RATES Investments denominated in a foreign currency will be affected by changes in exchange rates. Such changes may have an effect on the value, price or income from the investments, and they may result in either gains or losses to your plan. WARRANTS & SECURITISED DERIVATIVES Warrants and securitised derivatives are more complex investments than equities, and their prices can be very volatile. They are also time-limited, and if the investor fails to exercise their rights under the warrant within the specified time-scale then the investment becomes worthless. For this reason, we will not accept instructions directly from you to deal in warrants and securitised derivatives. However, we will accept instructions from your financial adviser provided your adviser confirms in writing that he or she has recommended this as a suitable investment appropriate for your needs. 10

13 FUTURES, OPTIONS AND CONTRACTS FOR DIFFERENCES These types of investment are not permitted. COMMERCIAL PROPERTY RISKS The following factors should be taken into account before deciding to invest in commercial property. The list is not intended to be exhaustive, but rather highlights some of the main risks. The value of a property can fall as well as rise, and could fall below the amount invested. The value of a property is dependent on the opinion of the valuer and also on a tenant being in place. The actual value of the property will not be known until the property is sold. If a property is purchased from your business, it can no longer be used as security for business borrowing purposes. Your business credit score may be reduced. You will have far less control over how the property is managed and used than if you owned the property yourself. This may be particularly relevant where the property is used as your business premises. In addition conditions may be imposed on tenants (which may include you or your business) who lease the property. When the property comes to be sold, unless you or your business can afford to repurchase the property, it will be sold to a third party. This could affect the ability of your business to continue to trade, or if your intention is to sell the business, its attractiveness to potential buyers. There can be delays in selling property, and you may not be able to take retirement benefits when you want to. Property can be expensive to purchase, hold and dispose of. For example, investing in property will incur professional fees, service and maintenance costs. Property-related charges and expenses may increase over time. Any loan repayments may also increase, for example, as a result of an increase in interest rates. In certain circumstances, it may be necessary for Scottish Widows to sell a property, for example, to settle outstanding costs. The sale proceeds may be less than the market value of the property, and less than the value paid for the property. Investing in property may limit the ability to diversify. You should be careful not to put all eggs in one basket. Your eventual pension benefits may be highly dependent on the performance of just one investment. OTHER RISKS You should remember that the value of an investment can go up and down as a result of market and currency movements. Your plan value may be less than you invested. All investments carry some risks and it s important that you understand these before making an investment. For more information, you should speak to your Financial Adviser. Please see the other Personal Pension and Self-Invested Personal Pension literature you have received for further details. 11

14 APPENDIX 3: JAMES HAY PARTNERSHIP Contact details James Hay Partnership, Dunn s House, St Pauls Road, Salisbury, SP2 7BF Tel Fax JH.contactteam17@jameshay.co.uk ON RECEIVING YOUR FIRST SELF-INVESTED CONTRIBUTION JAMES HAY PARTNERSHIP WILL: Set up a record for you on their record system (James Hay will allocate you a separate number on their system to your Scottish Widows Plan Number and advise you of this). Set up a designated bank account in the name of Scottish Widows Trustees Limited for your plan. Deduct the establishment charge from the designated bank account. Record details of your investment adviser or manager. THROUGHOUT THE LIFE OF YOUR PLAN JAMES HAY PARTNERSHIP WILL: Record and bank: contributions to the self-invested part of your pension fund dividends received from investments dividend tax interest reclaims where applicable. Record bank interest and charges. Change your self-investment records as and when appropriate. Prepare information for HMRC returns as required. Reconcile your designated bank account. ON RETIREMENT, DEATH OR TRANSFER TO ANOTHER SCHEME JAMES HAY PARTNERSHIP WILL: Carry out a reconciliation of your self-invested assets. Dispose of your self-invested assets (this may take some time especially where property is held). Pay the value of the self-invested part of your pension fund to Scottish Widows. INVESTMENT The involvement of James Hay Partnership in the investments made by the self-invested part of your pension fund will depend on the investment basis you have chosen. WHERE THE INVESTMENT BASIS IS EXECUTION-ONLY, JAMES HAY PARTNERSHIP WILL: Receive instructions from you or your adviser. Check that the investment is allowable. Check the value of the funds available to purchase the investments. Appoint the Stockbroker you have nominated (subject to the Stockbroker being UK based and regulated and agreeing to James Hay Partnership s operational requirements). Instruct the Stockbroker to accept trading instructions from you directly. Receive applications if investing in insurance company investments and other investments which require an application form and supporting documents. Arrange for contract notes, receipts and investment allocations to be sent to you or your adviser directly. Record transactions. Arrange settlement. Prepare and issue annual summaries of your investments. 12

15 WHERE THE INVESTMENT BASIS IS ADVISORY JAMES HAY PARTNERSHIP WILL: Perform all services as for execution-only and also, if your adviser is to be paid from your fund: Confirm that Scottish Widows accepts your chosen adviser. Arrange for the completion of an Investment Management Agreement between Scottish Widows Trustees Ltd and your adviser. Obtain confirmation from you of the Investment Management Agreement and your agreement to and authorisation of the adviser s remuneration. Accept the adviser s invoices and pay the fees. WHERE THE INVESTMENT BASIS IS DISCRETIONARY JAMES HAY PARTNERSHIP WILL: Confirm that your investment manager is acceptable to Scottish Widows. Confirm the status of your investment manager and the scope of business your investment manager is allowed to transact. Agree and arrange completion of the Investment Management Agreement. Obtain confirmation from you of the Investment Management Agreement and your agreement to and authorisation of the adviser s remuneration. Arrange for funds to be transferred to your investment manager. Record transactions. Track movement of funds. Accept the investment managers invoices and pay the fees. 13

16 APPENDIX 4: LOOKING AT THE COSTS - FEES FOR SELF-INVESTMENT FEES FOR THE SELF-INVESTED PART OF YOUR FUND The current level of fees is listed below. These fees are payable to James Hay Partnership and depend on the services you receive from them as listed in Appendix 3. Please see notes below. Establishment fee For setting-up the self-invested part of your fund Annual administration charge Payable on setting-up and each anniversary following (see note 2 below) Investment Administration Buy/Sell Securities Investment into external TIP funds 75 Bank account 75 Building Society account 120 Transfer in specie in per line of stock 30 Transfer in specie out per line of stock 30 Discretionary investment managers 150 Capital actions 30 Custodian and Settlement charges in respect of the Trustee nominee facility are set out in Appendix 5. NOTES 1. The establishment fee is due on receipt of the first self-investment contribution. Any annual administration charge is due at this time and every year thereafter on the anniversary of the receipt of the first contribution. Other fees are due on the completion of each transaction. Fees will be paid automatically from your selfinvested funds on the date which they are due. 2. Administration charges will be increased annually on 5 April in line with the average annual rise in the Average Weekly Earnings Index during the 12 months to the previous October. 3. James Hay Partnership reserves the right to make changes to these fees and charges at any time. One month s notice will be given of such changes. Income withdrawal facility First tranche of fund opened for income withdrawal Subsequent tranches (except where the triennial review coincides with an earlier tranche) Additional ad hoc payments Payment of tax-free cash sum not by Telegraphic Transfer Uncrystallised Funds Pension Lump Sum fee Change of Investment Manager On the appointment of an investment manager where you have been acting on your own behalf or, a change from one manager to another PROPERTY TRANSACTION FEES Acquisition: 635 once solicitor appointed on completion if mortgage arranged ONGOING ADMINISTRATION: 820 per annum first member 76 per annum each additional member 120 per annum if VAT elected 300 per annum if rent in arrears Sale/Transfer pa 82pa per tranche 75 per payment 75 per payment 100 per event 150 Development refurbishment 0.5% of final contract price, minimum 1,140 Exceptional Time Costing 130 per hour Other fees for property transactions such as solicitor s and surveyor s fees will be charged in addition 14

17 APPENDIX 5: LOOKING AT THE COSTS STOCKBROKING CHARGES CHARLES STANLEY EXECUTION ONLY SHARE DEALING CHARGES If you do not have a preference over which share dealing or nominee service you wish to use, you can use our default share dealing service provided through Charles Stanley. Their charges are as follows but Charles Stanley reserves the right to amend these at any time and without notice: Annual service charge 150 plus VAT Transaction charges UK securities, Irish government and Corporation stocks Based on value of transaction Government stamp duty is applied on purchases In addition we are obliged to levy a charge on purchases or sales worth 10,000 and over. This sum goes towards funding The Panel on Takeovers and Mergers. Other charges may apply for incidental activities, including but not limited to - international payments and payment by CHAPS. As we are not qualified to give advice, it is your responsibility to choose whether you use our default services or select another share dealing service and/or custodian. First 10, % next 10,000 to 100, % balance over 100, % Minimum charge of 25 Transfer out of nominee 10 per stock holding Certificated/paper transactions and/or transfers: 50 per relevant transaction. Overseas securities (registered overseas) Bonds and non-sterling Fixed-Interest Issues Based on value of transaction First 10, % next 10,000 to 100, % balance over 100, % Minimum charge of 75 Custody of overseas securities 30 per stock per year, pro rata Securities movement charge 20 (includes Euroclear internal, Canada and USA. Charge for other countries available on request.) Transfer out of nominee 25 per stock holding All securities - industry-related charges: 15

18 APPENDIX 6: CONTRIBUTIONS AND FUNDS Minimum investment in Scottish Widows funds In order to self-invest part of your pension fund there are certain minimum amounts which must be invested in Scottish Widows funds through your Scottish Widows Plan. These are as follows: Self-investment of new contributions You can self-invest all or part of the initial or any new contributions to your pension fund provided that after payment of the contribution at least the following minimum amounts remain (or, where appropriate, are being) invested in Scottish Widows funds: Plan Income Drawdown or Phased Retirement Personal Pension Plan Minimum amount invested in Scottish Widows funds 50, pm/ 2,000pa of continuing regular contributions 20,000 for single contributions/transfer payments Switch from Scottish Widows funds to self-investment You can switch funds you ve built up in your pension fund to self-investment subject to the following minima: Plan Minimum amount remaining invested in Scottish Widows funds Minimum amount of Switch Income Drawdown or Phased Retirement 50,000 10,000 Personal Pension Plan 200pm/ 2,000pa of continuing regular contributions 20,000 for single contributions 10,000 You can also switch funds back from self-investment to Scottish Widows funds at any time. If any amount greater than nil remains self-invested then the above amounts must remain invested in Scottish Widows funds and self-investment fees will continue to apply. Charges, terms and limits may change. 16

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20 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 /17