WORKSAVE ISA: THE BASICS.

Transcription

1 WORKSAVE ISA WORKSAVE ISA: THE BASICS. This brochure provides an overview of investments and describes the main features of the WorkSave ISA product. INSURANCE. SAVINGS. INVESTMENT management.

2 CONTENTS

3 section 1 The essentials What is an ISA? Investment basics Are you ready to invest? section 2 Investing in the WorkSave ISA Fees and charges section 3 Questions and answers Help and support Other information Terms explained

4 1 THE BASICS section 1 section 1 THE ESSENTIALS. The WorkSave ISA is a stocks and shares ISA and helps you to invest for the future in a tax-efficient way. Sometimes the most difficult part of making a new investment is knowing where to start. This brochure explains the essential information you need to know before you invest and introduces the main benefits of the WorkSave ISA. The WorkSave ISA has flexible contribution methods and different investment options. Therefore we have designed our WorkSave ISA information pack to help you understand and make decisions about how and what to invest in, within the WorkSave ISA. There are five documents which explain the WorkSave ISA, the investment options available and the charges. Please read the documents opposite in the order they appear.

5 THE BASICS section WorkSave ISA The Basics This document should be read first and provides an overview of investments and describes the main features of the WorkSave ISA product. 2. WORKSAVE ISA The selected Range of Legal & General Unit Trusts (including simplified prospectus) This contains specific information about choosing to invest your contributions into the selected range of Legal & General unit trusts. 3. WORKSAVE ISA The Wider Investment Options This details information about the wider range of investment options available within your WorkSave ISA. 4. WORKSAVE ISA Fees and Charges This provides specific information on the fees and charges for investing in the WorkSave ISA. 5. WORKSAVE ISA Terms and Conditions This document describes the terms and conditions of the WorkSave ISA product. UNDERSTANDING THIS DOCUMENT Throughout this document you will notice certain words are in green. To help you use this guide, you can find definitions of these words in the Terms explained at the back of this brochure. Aims of this document To provide you with the background information relating to how you can invest in a WorkSave ISA, including some descriptions surrounding investment types as well as generic information on risk. To inform you of the risks and benefits of investing in the WorkSave ISA. To inform you of the charges associated with investing in the WorkSave ISA. WHAT IS AN ISA? ISAs (Individual Savings Accounts) are tax wrappers that investments can be placed within to make them more tax efficient. There are two types of ISA, a cash ISA and a stocks and shares ISA. ISAs are a great way to invest for the future because of the tax efficient benefits. When you make an investment into an ISA, you won t have to pay income tax or capital gains tax on the returns you receive, no matter how much the investment grows in the future or how much you take out. The value of tax savings and eligibility to invest in an ISA will depend on individual circumstances and all tax rules may change in the future. Please be aware that the cash ISA is not provided as part of the WorkSave ISA. Maximum investment The ISA allowance for the 2011/2012 tax year is 10,680. This limit includes any amount you invest in a cash ISA in the same tax year. ISA limits will increase each tax year in line with the Retail Prices Index (RPI). WHAT IS A STOCKS AND SHARES ISA? Stocks and shares ISAs are different to cash ISAs which are tax-free savings accounts. A stocks and shares ISA lets you put money into a range of qualifying investments, such as shares, most unit trusts, open ended investment companies (OEICs) and investment trusts. In a stocks and shares ISA the value of your investment can go down as well as up. WHAT IS THE WORKSAVE ISA? Above we have explained the basics of an ISA. The WorkSave ISA is a stocks and shares ISA, which is provided by Legal & General and can only be purchased through your employer. Depending on what your employer has agreed to provide its employees, you have two ways in which you can join the WorkSave ISA. You can join by making regular salary contributions or by investing shares from your company s maturing Save As You Earn (SAYE) share scheme. Once you have joined the WorkSave ISA you can make additional lump sum payments and transfer shares from either a maturing SAYE or Share Incentive Plan (SIP). If you already have a stocks and shares ISA with another provider and have contributed to it in the current tax year then you can t invest in another stocks and shares ISA in the same tax year. However, you can transfer your existing stocks and shares ISA to the WorkSave ISA and then make further contributions. You should take financial advice when you are considering a transfer. Please read Section 2 for more information on the WorkSave ISA. Minimum investments The minimum contribution for regular salary contributions is 50 per month. You can make additional lump sum payments of a minimum 200 per payment. Please note regular contributions must be invested into your choice of the selected range of Legal & General unit trusts. The minimum contribution for your first share contribution is 500 and for each subsequent share contribution and additional lump sum payments it is 200 per payment.

6 3 THE BASICS section 1 INVESTMENT BASICS. Before you decide whether a WorkSave ISA is right for you, you need to understand what you will be investing in. We have detailed below the different types of investments available to you and the general risks associated with them. You should consider these before making your investment decision. For the regular salary contribution option you should be aware of investment types available within the selected range of Legal & General unit trusts. ASSETS EXPLAINED Most people think of investing in terms of buying shares in a company. In fact, this is just one type of investment. There are different types of assets in which you could invest and these are explained below. A fund will generally invest in a mixture of these assets thus providing a greater spread of investment risk, which is explained later. EQUITIES FIXED INTEREST SECURITIES/BONDS PROPERTY Shares also known as equities buy you a small part of a company. This entitles you to a share of any profits the company makes. If the company is seen to be successful their shares may be wanted, pushing up the share price. Share prices do also fall. Share values can fluctuate significantly in the short term but can offer long-term growth potential. Invest in the growth potential of the UK, Europe, USA and the rest of the world. There is no set maturity date. Stay invested for as long as the company has shareholders. equities are suitable for medium to long-term investments, at least five years, preferably longer. Dividends may be paid if the company makes a profit, the value of which may fluctuate. The value of equities is not guaranteed and may fall as well as rise which could mean you losing some or all of your money. Fixed interest securities are more commonly known as bonds. All bonds are basically IOUs, a promise to pay back your original investment at a set date in the future, plus payments at regular intervals between now and then. The payments from some bonds are index linked and increase in line with inflation. Bonds can be corporate bonds, issued by companies to raise money, or government bonds. UK government bonds are sometimes referred to as gilts. Returns can come in two ways. Income is provided by the payments that the issuer pays over the lifetime of the bond. Bonds, like equities, can be traded so you may also be able to achieve capital growth by selling a bond during its lifetime for more than you bought it for. Bonds are particularly suited to providing an income. Bonds are a fixed term investment, and end on a pre-agreed date in the future. Bonds often provide more modest returns than equities but tend to fluctuate less over the short to medium term which can be advantageous when stock market values are falling. The value of fixed interest securities/bonds is not guaranteed and may fall as well as rise which could mean you losing some or all of your money. In investment terms, property means commercial property such as offices, shops, warehouses, factories, leisure facilities and other business buildings. Returns from commercial property can come in two ways: from rent paid by tenants and from increases in the market value of the property itself. Property can offer good prospects for long-term returns. Rental agreements produce a steady income stream. Property values do not always mirror stock market values which can be advantageous when stock market values are falling. Property can be difficult or take time to sell, so you cannot always trade when you want. Property values are a matter of the valuer s opinion rather than fact. The value of commercial property is not guaranteed and may fall as well as rise which could mean you losing some or all of your money. Property can only be invested into the WorkSave ISA through a fund.

7 THE BASICS section 1 4 Within our WorkSave ISA you can invest directly in equities through qualifying shares. You can invest in all asset types through funds investing in the wider market. CASH You may not think of cash as an investment but it s an important asset in its own right. Although the returns from cash are generally lower than other investments over the long term, it has a number of useful attributes. cash can offer capital security like bank and building society accounts. cash can at least produce some returns when stock markets are falling although potential returns are limited. cash adds flexibility and stability to mixed funds that invest in other assets. funds explained You can invest in the individual asset classes described by investing your money with other people into a wider range of investments known as funds and share the costs involved. There are a number of different funds available including unit trusts and open ended investment companies (OEICs). Funds may invest in some or all of the asset classes described. You can invest in certain equities directly within your WorkSave ISA as long as these are qualifying shares. You cannot invest in any of the other asset classes directly within your WorkSave ISA. Each fund is looked after by a fund manager. For example, a Legal & General investment manager will manage funds provided by Legal & General. Each fund is designed with a specific investment aim in mind, for example to provide growth on your investment or an income. It s the responsibility of the fund manager to choose the individual investments, which will make up a fund. The fund manager will choose individual investments that he believes will meet the fund s aims and enhance the performance. The fund manager will monitor the fund s performance on a regular basis and decide whether the investment mix of the fund is changed to help maximise performance. Alternatively, the fund can be managed to track as closely as possible the performance of a particular share index, for example the FTSE 100. If you decide to join the WorkSave ISA through making regular salary contributions, we will invest your money into a selected range of Legal & General funds called unit trusts. The Selected Range of Legal & General Unit Trusts brochure provides more detail on the investment aims and asset classes of each of the Legal & General selected range of unit trusts available for investment within the WorkSave ISA. This will help you decide which unit trusts you would like to invest in. Alternatively, you may choose to transfer your existing SAYE shares into the WorkSave ISA. Or you may want to sell your SAYE maturing shares and invest the money into the WorkSave ISA. You can then choose where to invest your money within the wider investment market and/or the selected range of Legal & General unit trusts. To make sure any fund meets your investment needs you must make sure you understand the aims of the fund before you invest. Please see The Wider Investment Options brochure for more information on making SAYE share contributions and investing in the wider market.

8 5 THE BASICS section 1 investment basics (continued). FUTURE POTENTIAL GROWTH. Investment in the stock market is widely believed to provide better growth potential than other investments over the long term, five years or more. History shows that stock market performance has fluctuated, there have been downward and upward trends and you should bear in mind that past performance may not be repeated. PERFORMANCE OF FTSE ALL SHARE INDEX OVER THE LAST 20 YEARS % Performance Dec 1990 Dec 1992 Dec 1994 Dec 1996 Dec 1998 Dec 2000 Dec 2002 Dec 2004 Dec 2006 Dec 2008 Dec 2010 ANNUAL CHANGE ANNUAL IN PERFORMANCE CHANGE IN PERFORMANCE OF FTSE ALL SHARE OF INDEX FTSE OVER ALL THE SHARE LAST INDEX 5 YEARS OVER THE LAST 5 YEARS December 2005 December % December 2006 December 2007 December 2007 December 2008 December 2008 December 2009 December 2009 December % % 30.12% 14.51% Source: Lipper Investment Management Other types of investments will perform in different ways, but will still demonstrate upward and downward trends. Past performance is not a guide to future performance. You should be aware that charges may be applicable if you invest in an equity related product or fund.

9 THE BASICS section 1 6 TAX The amount of tax you pay on your investments depends on the way you invest. ISAs for example enable you to invest free of any personal liability to income tax or capital gains tax. Other investments can help you reduce your inheritance tax liability so that when the time comes, you can pass on more of your money to your family and less to HM Revenue & Customs (HMRC). Please note that the law and tax rates may change in the future and the value of tax relief will depend on your individual circumstances. INTEREST RATES You need to consider the return you could get if your money is on deposit with a Bank or Building Society. INFLATION Even if you don t spend a penny of your savings, the effects of inflation could actually cause the purchasing power of the money you hold on deposit to diminish over time. Why? Because if inflation rates are higher than savings rates after tax has been taken into account, your money won t go as far when you come to spend it. EXAMPLE Assume the cost of an average supermarket shopping basket will increase by 10% over a period of a year but interest rates on savings remain at 3% throughout the same year. In simple terms, 100 of savings will grow to 103, but a 100 weekly shop will go up to 110. So you would have to spend more to buy the same amount of food.

10 7 THE BASICS section 1 ARE YOU READY TO INVEST? If you re in two minds about whether to invest, ask yourself, Why am I investing? By setting yourself an objective, it s easier to decide where to invest and what to invest in and the more likely it is you will be satisfied with the results. There is no single right way to invest. It all depends on your own circumstances. The answers to the following questions will help you decide if the time is right for you. what s your attitude to risk? How much risk are you prepared to take with your money? Are you willing to risk a loss in return for greater growth potential? Are you comfortable with the potential ups and downs of the market that could see the value of your investment fluctuating from week to week and month to month? Your attitude to risk will play a big part in deciding how you invest. Can you make a long-term commitment? Bear in mind that an investment should be considered a medium to long-term commitment of no less than five years, ideally more. Some investments penalise you for withdrawing your money early and if you do cash in early there s a greater risk that you will lose money. Our WorkSave ISA doesn t have any early exit penalties, but by withdrawing early you might not achieve your investment goals. What are your aims? Are you investing for a specific purpose such as moving home, paying for your children s university fees, a holiday of a lifetime, a wedding or your retirement? Growth or income? Are you more interested in growing a lump sum, collecting a regular income or would you like both? Is tax something to consider? Are you motivated by maximising your tax efficiency?

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12 9 THE BASICS section 2 section 2 INVESTING IN THE WORKSAVE ISA. The WorkSave ISA is a stocks and shares ISA provided by Legal & General through your employer. You can join the WorkSave ISA either by making regular salary contributions or making a share contribution through Save As You Earn (SAYE) shares from a maturing SAYE share scheme. Once you have joined the WorkSave ISA you can make additional lump sum payments and transfer shares from either a maturing SAYE or Share Incentive Plan (SIP). If you already have a stocks and shares ISA with another provider and have contributed to it in the current tax year, you can t invest in another stocks and shares ISA in the same tax year. You can transfer an existing stocks and shares ISA to the WorkSave ISA. The maximum amount you can invest within an ISA for the 2011/2012 tax year is 10,680.

13 THE BASICS section 2 10 WHAT ARE MY CHOICES? Depending what your employer may offer, all or some of the following options may be available. 1. Regular Salary Contributions If you choose to make regular salary contributions, your money will be used to purchase units in the selected range of Legal & General unit trusts. You must invest a minimum of 50 a month and you can select up to five unit trusts from the list below. Selected range of Legal & General unit trusts: All Stocks Gilt Index Trust Ethical Trust Fixed Interest Trust Global 100 Index Trust Growth Trust High Income Trust International Index Trust Pacific Index Trust UK Index Trust US Index Trust Before you invest it is important that you have read and understood The Selected Range of Legal & General Unit Trusts brochure, which provides specific information that you need to know about these unit trusts before you make the decision to invest. 2. SAYE Share Contributions You can join the WorkSave ISA by investing a minimum of 500 in value of your shares from a maturing SAYE share scheme into the wider market. If you choose to invest your maturing SAYE shares into your WorkSave ISA you have a number of options: You can maintain your SAYE share holding within the WorkSave ISA and take advantage of saving in a tax efficient way, through a potential capital gains tax saving and no liability to pay higher rate tax on dividends or; Sell your SAYE shares and use the proceeds to invest in the wider market or; Sell your SAYE shares and invest the proceeds in the selected range of Legal & General unit trusts or; Sell your SAYE shares and invest in both the selected range of Legal & General unit trusts and in the wider market. Before you invest it is important that you have read and understood The Wider Investment Options brochure, which provides specific information that you need to know about the wider market before you make the decision to invest. 3. Additional Lump Sum Payments Once you have joined and invested in the WorkSave ISA, you can make additional lump sum payments and transfer of shares from either a maturing Save As You Earn (SAYE) or Share Incentive Plan (SIP). There is a minimum contribution amount of 200 per payment for additional lump sum payments and share transfers. There are different investment options once you have joined and you will find more details about the investment options in The Selected Range of Legal & General Unit Trusts brochure and The Wider Investment Options brochure. Contribution Methods Regular Contributions (Monthly payment taken direct from salary) Lump Sum Payments (Invest additional lump sum payments) SAYE Share Contributions (Transfer your company shares) Investment Options the selected range of Legal & General unit trusts (including simplified prospectus) the Wider investment options

14 11 THE BASICS section 2 Fees and Charges. Investing in the selected range of Legal & General unit trusts: Administration Fee: This fee is payable annually. For the first year this fee is based on the value of your first contribution. On the anniversary of your first contribution this fee will be based on the value of your ISA at that anniversary. Annual Management Charge (AMC): The AMC is paid within the unit trusts and covers the following fees: investment management, valuation, accounting and the manager s own management costs. The daily unit price reflects these deductions. Extra Expenses Each year the unit trusts also pays extra expenses which may include: trustee fees and expenses; custodian fees (management); registrar fees; audit fees; regulator fees. Extra expenses are added to the AMC and are reflected in the unit prices which are quoted on our website CHARGING EXAMPLE Regular Contributions into the selected range of Legal & General unit trusts: Example* If you made a regular salary contribution of 150 per month and invested in the Fixed Interest Trust throughout the year, the charges over the year would be approximately: Administration 0.5% on your first monthly contribution (min 10 + VAT, max VAT) Annual Management Charge and Extra Expenses Fixed Interest 0.35% Please note that the above example assumes VAT at 20% Total charges for the year * The example charges provided are on a generic basis to give you an understanding of how our charges are calculated. The charges for you may be better or worse than those shown. For full details of the fees and charges that apply to the WorkSave ISA please refer to the Fees and Charges document.

15 THE BASICS section 2 12 Investing in the wider market: Administration Fee: This fee is payable annually. For the first year this fee is based on the value of your first contribution. On the anniversary of your first contribution this fee will be based on the value of your ISA at that anniversary. Stockbroker Fees: There is an annual fee which is deducted from your fund on setting up a stockbroker account and annually thereafter. There are also dealing fees which will apply every time you make a trade in the wider market. A stockbroker transfer fee will apply for share transfers and ISA transfers. There may be other charges associated with investing in the wider market which will depend on your investment choice. For example if you invest in a unit trust within the wider market you may pay annual management charges to cover ongoing costs of managing the fund, including investment management. CHARGING EXAMPLE The Charging Example below details what you would be charged when transferring your shares from your maturing SAYE share scheme into your WorkSave ISA: Example* Year 1 Charges: 5,000 shares at 1 = 5,000 Administration 0.5% on the value of your share contribution (min 10 + VAT, max VAT) Stockbroker Annual Fee ( 20 + VAT) Stockbroker Transfer Fee Total charges for the year Please note that the above example assumes VAT at 20%. * The example charges provided are on a generic basis and assume all of the shares remain within the WorkSave ISA, to give you an understanding of how our charges are calculated. The charges for you may be better or worse than those shown. Please be aware that for smaller investments the charges may be high in comparison to the amount invested. For full details of the fees and charges that apply to the WorkSave ISA please refer to the Fees and Charges document.

16 13 THE BASICS section 3 section 3 QUESTIONS and ANSWERS. WHO CAN INVEST? To invest, you must be 18 years old or over. You must be resident and ordinarily resident in the UK for tax purposes. If you are classed as a US person, you are not eligible to invest in the WorkSave ISA. A US person generally means any person who is a citizen of the United States or has the right to live in the United States. WHY DO I NEED TO PROVE MY IDENTITY? To protect you and us from financial crime, we may need to confirm your identity from time to time. We may do this by using reference agencies to search sources of information about you (an identity search). This will not affect your credit rating. If this identity search fails, we may ask you for documents to confirm your identity. In certain circumstances, we may need to contact you to obtain more information about your investment. WHAT IF I ALREADY HAVE AN ISA? If you have an existing stocks and shares ISA with Legal & General and have contributed in previous years or this tax year, you can continue with that ISA and contribute into the WorkSave ISA as well, as long as you remain within the current tax year ISA limits. You can transfer ISAs between different managers. You can also transfer from a cash ISA into a stocks and shares ISA. A copy of the transfer form can be found in your pack. If you wish to transfer an existing ISA to us please complete the relevant section of the transfer form. If you have an ISA from a previous tax year you can transfer this ISA to us. If you have a stocks and shares ISA taken out in the current tax year with another provider, you have to transfer the whole investment to us before you can make a contribution into our WorkSave ISA. You can transfer an existing stocks and shares ISA in cash and/or in shares. When we receive your transfer application form, we send it to your existing manager who takes it as authority to close your investment according to their terms and conditions. They then send the transfer value to us for investment. Your existing manager may charge you for doing this. When transferring an ISA, you should keep the following points in mind: You can transfer as many of your existing ISAs as you wish. You will not benefit from any rise in the markets whilst the transfer is taking place. You may lose some income or growth. If you are transferring a stocks and shares ISA which includes investments made in this tax year, and you have not used your maximum allowance, you must wait for the process to complete before making any further investments. You can transfer from a cash ISA to a stocks and shares ISA, but not from a stocks and shares ISA to a cash ISA. If you start a cash ISA and then transfer it to a stocks and shares ISA in the same tax year, any amount you have contributed will count towards your stocks and shares allowance rather than your cash allowance.

17 THE BASICS section 3 14 CAN I TRANSFER MY WORKSAVE ISA TO ANOTHER PROVIDER? To transfer your WorkSave ISA from us to another manager, you will need to complete the relevant paperwork as detailed by your new ISA provider. When we receive notification, we will either sell your investments and transfer the value to your new ISA manager to invest or transfer your shares to them WHAT HAPPENS IF I CHANGE MY JOB? When you leave your employment your ISA is no longer tied to your employer. You will continue to keep the same charging basis. If you pay regular contributions into the WorkSave ISA through your employer or make share contributions these will stop unless your new employer offers the WorkSave ISA. If you wish to make future contributions to your WorkSave ISA you can only contribute through lump sum payments, and the minimum contribution level is 200 per payment HOW DO I FIND OUT HOW MY INVESTMENT IS DOING? In addition to your annual statement, you can ask us for a valuation at any time by contacting us on the number below. You can also monitor your investment online at All prices are quoted in pence and are for the previous working day. Remember when considering the value of your investment, you need to keep in mind that it will be affected by the size of your investment, the amount of withdrawals taken, contributions made, daily unit prices and any charges deducted. HOW DO I GET MY MONEY OUT? Contact us with your instruction. If you re withdrawing part of your investment, the minimum withdrawal amount is 200. Or, you can sell all your investments to close your WorkSave ISA. If you withdraw money from your WorkSave ISA you can only make additional contributions to your ISA if your total subscriptions remain within your ISA allowance for that tax year. WHAT IF I NEED MORE INFORMATION ON WHETHER THE WORKSAVE ISA IS SUITABLE FOR ME? We can t give you advice on whether the WorkSave ISA is right for you. It s important that you understand how the product works to ensure that you are satisfied that this is the right product for you. If you re unsure whether this product is right for you, please speak to a financial adviser, who may charge you for any advice given. WHAT DO I DO NEXT? Ensure you read the accompanying documentation. If you d like to proceed, complete the application form and return to your employer. If you have any general queries about the scheme, please call the Legal & General Employer Savings Team on: Monday to Friday 8.30am 7.00pm Saturday 9.00am noon Call charges may vary. We may record and monitor calls. Alternatively us on: worksave@landg.com

18 15 THE BASICS section 3 HELP and SUPPORT. Where can I get advice on whether an investment is suitable for me? We recommend that you speak to a financial adviser about your investment needs and to find out what options are available to suit you. How can I get help with my WORKSAVE ISA? You can call us on Lines are open Monday to Friday 8.30am to 7.00pm, and Saturday 9.00am to noon. Calls to this number will not exceed your fixed line or mobile phone provider s national rate and will be included in any inclusive free minute plan or discount scheme you may have with your telephone provider. Call charges will vary between telephone providers. This number may not be available from outside the UK. Calls may be monitored and recorded. You can write to us if you need any information, or to give us instructions on your investment, or if you have any queries or complaints. Workplace Savings Employer Savings Team Legal & General (Portfolio Management Services) Limited Legal & General House St Monicas Road Kingswood KT20 6EU We ll only act on instruction from you, or your authorised representative(s), unless we believe it is unreasonable or breaks any law, rule or regulation. WHAT CAN I DO IF I M NOT HAPPY WITH THE PRODUCT/ SERVICE PROVIDED? If you have a complaint about any part of our service, or would like us to send you a copy of our internal complaint handling procedure, please contact us by telephone or in writing. Any complaints we cannot settle can be referred to: Financial Ombudsman Service South Quay Plaza 183 Marsh Wall London E14 9SR Making a complaint will not affect your right to take legal proceedings.

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20 17 THE BASICS section 3 OTHER INFORMATION. WHO ARE WE? The Legal & General Group, established in 1836, is one of the UK s leading financial services companies. As at 31 December 2010, we were responsible for investing 365 billion worldwide on behalf of investors, policyholders and shareholders. We also had over seven million customers in the UK for our life assurance, pensions, investments and general insurance plans. Legal & General is one of the biggest providers of index-tracking investments in the UK, managing 228 billion as at 30 June OUR REGULATOR Legal & General (Portfolio Management Services) Limited is authorised and regulated by the Financial Services Authority. We are entered on their register under number You can check this at: or call them on Their address is: 25 The North Colonnade, Canary Wharf, London, E14 5HS. HOW SECURE IS MY MONEY? The Financial Services Compensation Scheme (FSCS) is designed to pay customers compensation if they lose money because an authorised firm cannot meet its obligations and therefore fails. Your ability to claim and the amount you may be able to claim will depend on the specific circumstances of your claim. If we were to fail, you may be entitled to compensation under the FSCS and could claim up to 50,000 compensation. Depending on the nature of the assets that you invest into and who provides them, within this plan, different compensation levels will apply and some may not be covered by the FSCS at all. Any money either awaiting investment or whilst we are arranging a withdrawal for you, is held in trust in a cash reserve account provided by a bank or building society. This means that your money is separate from our money and is protected from our creditors in the event that we cannot meet claims from these creditors. However, you may be able to claim compensation for any loss you suffer in the event that the bank or building society which provides our client bank account is unable to pay back your money. Any claim would again be limited to the first 85,000 you hold with that bank or building society and so any money you have in other accounts you hold with that bank or building society would count towards this limit. The rules of the FSCS may change and the FSCS may take a different approach on the application of these rules to a particular firm depending on the circumstances of the failure. For further information about the FSCS (including amounts and eligibility to claim) please refer to their website or call them on

21 THE BASICS section 3 18 CLIENT CATEGORISATION The Financial Services Authority (our regulator) requires us to put our customers into groups so that we can treat them according to their level of knowledge about investment. These groups are: retail customer professional client eligible counterparty. We have decided to treat all of our customers as retail customers. This gives you the greatest level of protection under the regulations and ensures you get full information about any products you buy. If, under the regulations, you could be treated as a professional client or an eligible counterparty we ll still treat you as a retail client, although this does not necessarily mean that you ll be eligible to refer any complaints to the Financial Ombudsman Service or to make a claim under the Financial Services Compensation Scheme. CONFLICTS OF INTEREST During the term of your investment, conflicts of interest may arise between you and us, our employees, our associated companies or our representatives. A conflict of interest is where our duties to you as a customer may conflict with what is best for us. To ensure we treat customers consistently and fairly, we have a policy on how to identify and manage these conflicts. A copy of the policy is available on request. If you would like a copy of the documentation or any other item of our literature in larger print, Braille or in audio format, please contact us at: DDA Transcription Service Legal & General Kingswood, Surrey KT20 6EU

22 19 THE BASICS section 3 TERMS EXPLAINED. An explanation of some common terms used in THIS DOCUMENT.

23 THE BASICS section 3 20 Terms explained. Assets: Cash ISA: Cash reserve account: Dividends: Equities: Funds: Qualifying investment: Qualifying shares: Save As You Earn (SAYE): Selected range of Legal & General unit trusts: Share Incentive Plan (SIP): Stocks and shares ISA: The Selected Range of Legal & General Unit Trusts: The Wider Investment Options: Unit trust: Wider market: Investments held within the WorkSave ISA in accordance with the Terms and Conditions and may include shares and/or investments in unit trusts and/or open ended investment companies (OEICs). An individual savings account to hold cash, which earns interest tax-free. The bank account held by us in accordance with FSA rules, the ISA regulations and any other regulations or guidance issued by HM Revenue & Customs (HMRC) from time to time and which is used to pay fees and charges, hold income received from your investments temporarily pending your investment instructions and used for new investment purchases within your WorkSave ISA. This is a non-interest bearing account. All monies held in this account are on a temporary basis awaiting your investment. Payments made by a company to its shareholders, as a portion of its profits. Shares held on a recognised stock market. The range of unit trusts and open ended investment companies (OEICs) sub-funds authorised by the FSA that we specify as available for investment within your WorkSave ISA. Shares, collective investments and any other investments that are allowable in the ISA under ISA regulations and any other regulations or guidance issued by HM Revenue & Customs (HMRC) from time to time. Please note that not all of these investments are allowable within the WorkSave ISA, please see The Wider Investment Options brochure for more information. Shares in UK companies which are allowable in the WorkSave ISA under the ISA Regulations and other rules and regulations issued by HM Revenue & Customs from time to time and which are permitted for investment under the Terms and Conditions of the WorkSave ISA. HM Revenue & Customs (HMRC) approved share option scheme, set up by an employer, under which an employee may be given a right, known as a share option, to buy a certain number of shares at a fixed price at a particular time. The shares can only be bought using amounts saved under a Save As You Earn contract. The range of unit trust funds which Legal & General offers within the WorkSave ISA. The full list can be found on page 10 of this document. An HMRC approved, tax efficient all employee share plan. There are four main elements to a SIP of which companies can use one or more of the following Free Shares, Partnership Shares, Matching Shares, Dividend Shares. An Individual Savings Account which allows you to invest in qualifying investments consisting of shares and collectives, such as unit trusts and open ended investment companies (OEICs). Brochure (including Simplified Prospectus) detailing the product disclosure for consumers in relation to our Unit Trusts. The product information is contained in this document. Brochure detailing information about investing in the wider market beyond the selected range of Legal & General unit trusts. A form of collective investment, where the value of the underlying asset is represented by the total number of units issued multiplied by the unit price less any charges. Investments within the wider market are UK ISA qualifying shares and UK authorised collectives (OEICs/unit trusts/investment trusts etc) for investment within the WorkSave ISA. These investments are in addition to the selected range of Legal & General unit trusts and include other Legal & General unit trusts that are available within the wider market.

24 Legal & General (Portfolio Management Services) Limited. Registered in England No Registered office: One Coleman Street, London EC2R 5AA We are authorised and regulated by the Financial Services Authority. Q /11 H122411