Key Features. CanRetire. Pension Investment Plan

Transcription

1 Key Features CanRetire Pension Investment Plan

2 The CanRetire Pension Investment Plan The Financial Conduct Authority is a financial services regulator. It requires us, Canada Life, to give you this important information to help you decide whether the CanRetire Pension Investment Plan is right for you. Please read it with your Personal Example, which shows what you may get back. You should keep it with the documents relating to your Pension Investment Plan for future reference. The CanRetire Pension Investment Plan is a personal pension designed for individuals who want to consolidate their pension savings into one plan. It also allows individuals and their employers to make single lump sum contributions which could benefit from tax relief. The CanRetire Pension Investment Plan will allow your savings to be invested in a range of funds of your choice. At any time after reaching age 55 you can withdraw pension lump sums, part of which (25%) can usually be paid to you tax free. 2 CanRetire Personal Investment Plan Key Features

3 Its aims To help you build up your retirement fund in a tax efficient way. To help you consolidate your pension savings in one place. To allow you or your employer to make contributions into the plan. To offer you a range of investment choices. To allow you to move your money from one investment fund to another. To give you flexibility and choice over when and how you take your retirement income. To allow you to take a pension commencement tax free lump sum. To provide death benefits to your beneficiaries should you die before taking all your retirement benefits. Your commitment You should retain the services of a professional adviser as you may need ongoing advice, for example, the choice of investment funds available within this plan. To inform us of any Lifetime Allowance that you have used up previously (see page 4 for more information). This should take into account any benefits you have taken from other pension arrangements. To wait until you are aged 55 before accessing your savings. To give up all rights in any pension schemes that you are transferring to us (unless this is a partial transfer). To review your plan on a regular basis. Risk factors The value of your savings can go down as well as up. You may not get back the full amount you invested. Past performance is not a guide for how the funds you have chosen will perform in the future. What you get back may be less than the amount shown in your Personal Example. This could be the case if: investment growth is lower than assumed, you make more withdrawals or start drawing out funds earlier than shown in your Personal Example our charges increase. The cost of converting your pension savings into a lifetime income may be more than shown in your Personal Example. If you decide to withdraw amounts from the plan that are greater than the growth achieved in your chosen funds, the value of your plan will go down and this may be less than the amount you have invested. This could leave you without an income or with a reduced income in the future. Our funds have different levels of exposure to investment risk. In addition, some funds have other risks which may affect your return. You should speak with your professional adviser to ensure you are comfortable with the funds you choose. If you invest in the property fund or any fund which holds property, we have the right to delay switching any amounts out of the fund or paying claims (except death claims) for up to six months if we think this is necessary to protect our other policyholders interests. If you are transferring a defined benefit pension (a pension linked to your final salary) then you may be giving up valuable guaranteed benefits that cannot be replaced. The amount of withdrawals you make will be added to your taxable income which could mean you paying a higher rate of income tax. If the Government changes the way your plan is taxed, this may affect how much you get back from your plan or the amount available to your beneficiaries in the event of your death. If you cancel your plan within the cancellation period, you may not get back all of your original investment. Please read Can I change my mind? section on page 7. CanRetire Personal Investment Plan Key Features 3

4 Questions and answers Do I need advice? We do not provide financial advice. To help you decide if the Pension Investment Plan is suitable for you, you should speak with your professional adviser. If you do not have an adviser, you can find one local to you by using the following website: What is the Pension Investment Plan? Pension Investment Plan is a personal pension plan available to anyone aged over 18 looking for a tax-efficient way to build a retirement fund. It can accept both lump sum contributions as well as transfers from other pension schemes. Personal or employer contributions must cease prior to your 75th birthday. There is a wide range of investment funds and portfolios of funds available and each plan can invest in up to 10 different funds or portfolios at a given time. After age 55, the plan gives you full flexible access to your pension savings in a number of ways as shown on page 5. How much can I invest? The minimum initial investment amount is 5,000 and can be made by you or your employer or by transferring from existing pension plans you hold elsewhere. Subsequent investment amounts have a minimum of 500. Lump sum contributions made by you can attract tax relief at your highest rate of income tax. For example, if you are a higher rate tax payer and make a gross contribution of 1,250, you will only pay 1,000 to us and we will claim the remainder from HM Revenue and Customs to make your contribution 1,250 if you are a 40% tax payer. You can then claim a further 20% in your self assessment tax return. Is the Pension Investment Plan suitable for me? The Pension Investment Plan may be suitable if you; are self-employed, employed, unemployed or retired (subject to certain restrictions and conditions). want to consolidate your pension savings into one pension arrangement. want to continue making contributions to the plan. require this arrangement to allow your savings to be withdrawn in a flexible way when you reach age 55. Can I apply for this plan? Yes, if you re a UK resident and aged 18 or over. You must be under age 75 to make contributions to the plan. Is there a limit to how much I can save into Pension Investment Plan? There is a limit on the total amount of pension savings you can build up in your lifetime, before you ll have to pay a tax charge. This limit is the Lifetime Allowance. The current standard limit is 1,250,000. This will reduce to 1,000,000 for tax year 2016/17. If, when you come to take your benefits, the value of all of your pension funds is higher than this, then a tax charge will be payable on the excess above the limit. This will be at the rate of 55% if taken as a lump sum and 25% if used to provide pension income. The charge is lower if taken as an income because you ll also pay income tax on your pension. You may have some form of protection and have a higher personal Lifetime Allowance limit. If you have, you should ask your professional adviser how this works for you and the implications of having such protection. You or your employer can make contributions to the plan and all the other schemes you belong to, up to the Annual Allowance, currently 40,000 per year. If you have unused Annual Allowances from the previous three tax years, you may be able to pay more. From April 2016, restrictions on pension tax relief will affect you if your income, including the value of any employer contributions, is over 150,000. Please speak with your professional adviser for more information. You may be on a reduced Money Purchase Annual Allowance of 10,000 if you have taken benefits under the Pension Freedom rules introduced from 6 April Please speak to your professional adviser for more information. What are uncrystallised and crystallised savings? Uncrystallised is the term given to pension savings before they are used to provide a benefit or allocated to an income product. Crystallised is the term given to pension savings once they are used to provide a benefit or allocated to an income product (such as, a CanRetire Flexible Drawdown Plan). What is an Uncrystallised Fund Pension Lump Sum (UFPLS)? This is the term used to describe lump sum withdrawals from a pension plan where the remaining funds are left uncrystallised. For example, if you had 50,000 in your Pension Investment Plan and wanted to draw 10,000, under UFPLS the first 2,500 would be free of tax and the remaining 7,500 would be taxable at your marginal income tax rate. The remaining 40,000 will remain in your Pension Investment Plan as uncrystallised savings. 4 CanRetire Personal Investment Plan Key Features

5 What is a Pension Commencement Lump Sum (PCLS)? This is the amount HM Revenue and Customs allows you to take tax free this is normally 25% of your uncrystallised pension savings. You can take PCLS when you move some or all of your pension savings into an income-generating product, such as a flexible-access drawdown plan or buy an annuity. For example if you have 50,000 in your Pension Investment Plan and want to move it into a drawdown plan, you can take up to 12,500 (25% of 50,000) as a PCLS and the remaining 37,500 will go into your new drawdown plan. Where and how will my pension savings be invested? Where you are transferring money from other pension schemes or making lump sum contributions, we treat these payments as separate elements within your plan. Each element can invest in up to 10 different funds or portfolios. As soon as we receive your application and payments, we will purchase units in your chosen investment fund(s). We have a range of individual funds and portfolios of funds available, which includes funds managed by some of the leading investment companies from around the world. For details of our fund range including fund fact sheets, charges and fund performance, please see our leaflet Canada Life Fund Range or visit co.uk/canada-life/funds.asp. If you invest in a Canada Life portfolio, we rebalance the weightings of each portfolio on a daily basis to ensure the risk weighting remains consistent. How can I switch my investments? You can move savings from one or more funds at any time. You, or your adviser if you have given permission, can instruct us to switch all or part of your investment between the different funds within our range. We do not currently apply a charge for this service and there is no restriction on how often you do this but we reserve the right to apply a charge in future. How much do I need to keep invested in the plan? Although there are no limits on how much you can withdraw, where you make regular withdrawals we will write to you when your investment value reaches a level where only two more withdrawals, including the one being paid at the time, may be possible and outline your options. What pension plans can I transfer into the Pension Investment Plan? You can transfer uncrystallised funds from any UK registered pension scheme into a Pension Investment Plan. If you are considering transferring your pension from another scheme, you should ensure that you have fully considered the differences between your existing plan and the Pension Investment Plan. For example, this plan may have higher charges or greater investment risks than your existing pension arrangement and if you transfer, you may get back less than if you d stayed in your existing scheme. If you re unsure whether this plan is suitable for you please seek professional advice. Methods of payment Any transfer payments can be made by cheque or direct transfer. Can I transfer my Pension Investment Plan savings to another plan? Yes, you can transfer the value of your Pension Investment Plan to another UK registered pension scheme at any time. Please note if you do this: you won t receive a refund of any charges paid to us. your investments will be sold and may not be worth as much as they were bought for. we may make a transaction charge for the sale of each investment. if you know that you are in serious ill health when you transfer, should you die within two years, the amount transferred could become liable to inheritance tax. What age can I take benefits from this plan? You can start to take benefits at any time from age 55 although this is likely to rise in future to age 57 in line with increases to state pension age. You may be able to take your benefits earlier than this if you are in ill health you can contact us for details if you feel this might apply to you at any time in the future. CanRetire Personal Investment Plan Key Features 5

6 Questions and answers How will my pension funds be taxed while they remain invested? Your fund will grow free of UK income and capital gains tax. The only exception is tax on dividend income from UK equities, which can t be reclaimed. Your tax position, the way that pension funds and contributions are taxed or the range of benefits available from a pension plan could change in the future. This could reduce the potential growth from your investment, or mean that you need to pay more into the plan to achieve the level of pension income that you need. Any references to taxation are based on our understanding of current legislation and HM Revenue & Customs practice, which can change. What are the options when I decide to access my Pension Investment Plan savings and how are they taxed? The two main ways you can access some or all of your savings are: By taking an UFPLS withdrawal. 25% of each withdrawal will be tax free. The remaining 75% will then be taxed at your marginal income tax rate. or You can take a PCLS (up to 25% of amount withdrawn), this will be tax free. The remaining 75% must be used to invest in an income generating retirement product, such as: a flexible drawdown plan, (although you do not have to take any income). a lifetime annuity (or enhanced lifetime annuity), or a fixed term annuity. Income from these products will then be taxed at your marginal income tax rate. What happens to my savings and how are they taxed if I die? Your savings can be passed on to your spouse/civil partner, dependant or nominated beneficiary as a death benefit. We ask you to indicate how you would like the benefits paid and to whom. This is done by completing a form called My Death Benefit Preferences when you take the plan out. If the death benefit is to be paid as a lump sum, it will be tax free providing your death occurs before age 75. If your death occurs at age 75 or after, death benefit is to be paid as a lump sum and taxed at 45% (this is subject to change in the future). If the death benefit is to be used to set-up a Beneficiary s Flexi-Access Drawdown arrangement, the beneficiary can; withdraw the savings from the flexible-access drawdown, tax free, if your death occurred before age 75. withdraw the savings from the flexible-access drawdown, taxed at their marginal rate, if your death occurred aged 75 or after. on the death of the beneficiary, they have the option to pass on any remaining savings to a nominated successor. Canada Life retains discretion over the type of death benefit to pay and who should receive it. We will normally follow your wishes. This means the death benefit should fall outside your estate for inheritance tax purposes. How will I know how my plan is doing? We ll send you a statement each year showing the current value of each of the investments in your plan. We strongly recommend that you review your plan regularly with your professional adviser so you can review your investment choices. This will help you to keep track of whether your plan is on course to provide you with the level of income that you need when you retire. You can also ring our customer services team who will provide you with the value of your plan. 6 CanRetire Personal Investment Plan Key Features

7 What are the charges for the Pension Investment Plan? The charges for your plan will depend on the size of your savings pot and the investment choices you make. The charges we apply cover Managing the Pension Investment Plan we will apply an annual management charge, which is a percentage of the value of your plan. 1/12 th of the annual management charge is applied and taken on a monthly basis from your plan. t his charge is taken by deducting units to the value of the charge from your plan. the greater the amount you have invested, the lower the percentage charge. Investment management charges (also known as Ongoing Fund Charges) investment management charges are applied by the fund manager to cover the cost of day to day management of the fund and vary depending on the fund (s) you are investing in. the fund manager can change the charges from time to time and you can monitor these by referring to our Fund List brochure or visiting our website. the charges are reflected in the unit price of each fund. For details of how these charges affect you, please refer to your Personal Example. Adviser charges we can facilitate payments to your professional adviser for the service they provide you in relation to your plan. Adviser charges can include: Initial adviser charge taken at the outset of your plan. Ongoing adviser charge a regular fee payable over a period you agree with your adviser. Ad-hoc adviser charge this can be a one-off fee that you agree to pay to your adviser for any specific services they provide after the plan has been set up. details of the charges that will apply to your Pension Investment Plan when you take it out or make additional contributions to it are shown in your Personal Example. How much will any advice from my professional adviser cost? Your professional adviser will agree with you details about the cost of providing advice. You may agree to pay your adviser a fee directly or ask Canada Life to facilitate the payment. Can I change my mind? Yes. When you apply, you ll have the right to cancel your plan. You will need to let us know within 30 days of your plan being issued. To do this you should write to us quoting your plan number or complete and return the cancellation notice. Please see the address details in the How to contact us section on the back cover. If you have not exercised your right to cancel within 30 days of your plan being issued, your plan will continue in accordance with the Policy Provisions and charges will be deducted as shown in your Personal Example. If you cancel within the 30 day cancellation period and any transfers or payments into the plan and your chosen investments have fallen in value, the amount we return may be less than the amount invested. If the value of your investment has increased before we receive your cancellation notice, we will return the original value of any contributions. Any contributions made by your employer and/or a third party, will be returned to them after we have received your request to cancel your plan. Transfer values will be returned (where possible) to the ceding scheme. Any charges we have taken up to the point we receive your notice to cancel the plan will be refunded as applicable. Fees charged by third parties (for example, fund manager s charges) will still be deducted. If you have made any withdrawals during the cancellation period, you will need to pay these back to us before we can cancel your plan. Any adviser charges we have taken from your plan and paid to your professional adviser, up to the point we receive your notice to cancel the plan, will be refunded in full. You may still be liable to pay your professional adviser for the advice or services you have received. If you exercise your right to cancel a transfer into the plan from another Registered Pension Scheme, the original transferring scheme is under no obligation to accept a return of the transfer payment, in which case you will need to find an alternative provider to transfer the payment to. CanRetire Personal Investment Plan Key Features 7

8 Further information You should contact your professional adviser in the first instance. How to contact us If you have any questions you can contact us in the following ways: Phone: (lines are open Monday to Friday 9am 5pm) Head office address: Customer Services Team Canada Life Limited Canada Life Place Potters Bar Hertfordshire EN6 5BA Website: How to complain If you need to complain about any part of the service we have provided, please contact us using the details above. If you are not happy with our response you can contact: The Financial Ombudsman Service Exchange Tower London E14 9SR Phone: Website: Making a complaint will not affect your right to take legal action against us. Compensation We are covered by the Financial Services Compensation Scheme (FSCS). This is the UK s statutory fund of last resort for customers of authorised financial services firms, such as Canada Life Limited. If you have a valid claim against us and we are not able to meet our responsibilities in full, you may be entitled to compensation from the FSCS. Currently the scheme covers 100% of the value of a valid claim. For further information on the scheme you can get a copy of this leaflet by writing to the FSCS or by visiting their website. The Financial Services Compensation Scheme 10th Floor, Beaufort House 15 St Botolph Street London EC3A 7QU Phone: enquiries@fscs.org.uk Website: Please contact us if you would like any information on compensation arrangements. Law This plan will be subject to and governed by the laws of England and Wales. Terms and conditions This document is a guide to the Key Features of the Pension Investment Plan. You can read the full terms and conditions in the Pension Investment Plan Policy Provisions. The policy provisions and policy schedule, together with the application form and Personal Example shall constitute the legally binding contract between you and us. The terms are based on our understanding of relevant legislation as at January 2016 and could be subject to change in the future. We suggest you take your own independent tax advice before considering any retirement product. For further information about Canada Life Limited, please visit or call us on Canada Life Limited, registered in England no Registered office: Canada Life Place, Potters Bar, Hertfordshire EN6 5BA. Telephone: Fax: Member of the Association of British Insurers. Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. This paper is made from recycled materials ID R