MEMBER S POLICY BOOKLET.

Transcription

1 STAKEHOLDER PENSION SCHEME MEMBER S POLICY BOOKLET. Stakeholder Pension Plan including the Group Stakeholder Pension Plan. This is an important document. Please keep it safe for future reference.

2 2 STAKEHOLDER PENSION SCHEME MEMBER S POLICY BOOKLET CONTENTS. INTRODUCTION PAYMENTS INTO THE SCHEME APPLICATION OF PENSION CONTRIBUTIONS TAKING YOUR BENEFITS BENEFITS ON TRANSFER OR DEATH TAXATION OF BENEFITS CALCULATION OF PENSION FUND FUNDS AND THEIR OPERATION AMOUNT AND DEDUCTION OF MANAGEMENT CHARGES CHANGING THE TERMS OF THE PLAN ABOUT THE SCHEME GLOSSARY POLICY

3 STAKEHOLDER PENSION SCHEME MEMBER S POLICY BOOKLET 3 INTRODUCTION. EXPLANATION of terms A number of terms are used frequently in this booklet. For ease of reference these terms are shown in red and an explanation of their meanings can be found in the Glossary on pages 21 and 22 of this booklet. Where this document refers to Legal & General it means Legal & General Assurance Society Limited as Manager and Administrator of the scheme. 1. MEMBERSHIP of the scheme Your membership of the Legal & General Stakeholder Pension Scheme ( the scheme ), and your entitlement to benefits under it, is confirmed by a membership certificate or certificates (see below) issued to you with this booklet. You should keep both the booklet and the certificate(s) in a safe place. This booklet sets out the terms and conditions applying to your membership of the scheme. The way in which the scheme operates is explained in About the scheme on page 19. If you have started a Group Stakeholder Pension through your employer then you become a member of the scheme described above. 2. ARRANGEMENTS under the scheme The scheme provides benefits for many members, of whom you are one. Each member may have one or more pension arrangement which provides his or her benefits. If you do have more than one pension arrangement, they do not have to have the same selected retirement date and you may have more than one membership certificate. Each pension arrangement will have a separate membership number. The terms and conditions in this booklet should then be read as applying separately in respect of each pension arrangement, except for section 8 of Payments into the scheme on page CONTACTING LEGAL & GENERAL Any enquiries about your pension arrangement should be addressed, unless you have been notified otherwise in writing by Legal & General, to: Legal & General Assurance Society Limited Document Control Centre Cardiff 5th Floor Brunel House 2 Fitzalan Road Cardiff CF24 0EB or: Legal & General Assurance Society Limited City Park The Droveway Hove BN3 7PY Legal & General will have written to you to confirm which of these addresses you should write to. You should quote your membership number in any correspondence or enquiry. 4. CHANGES in circumstances Some of the features described in this booklet apply differently to people in different circumstances. You must tell Legal & General if: you cease to be resident in the United Kingdom, or you cease to have relevant UK earnings or having ceased to have relevant UK earnings, you start to have them again, or you are in an occupation for which, before 6 April 2006, HM Revenue & Customs (HMRC) permitted an exceptionally early retirement age and you leave that occupation, or you cease to be entitled to receive tax relief on your contributions to the scheme. 5. CONTRACTS (RIGHTS of THIRD PARTIES) ACT 1999 The provisions of this booklet are not intended to be enforceable by virtue of the Contracts (Rights of Third Parties) Act 1999 (the Act) by anyone who does not have an arrangement under the scheme. Any power of Legal & General to terminate or amend the scheme rules or the policy, shall not require the consent of a member or any other person who may be or become entitled to benefits under the scheme by virtue of the Act unless this booklet or the scheme rules expressly provides that their consent is required.

4 4 STAKEHOLDER PENSION SCHEME MEMBER S POLICY BOOKLET PAYMENTS INTO THE SCHEME. 1. PAYMENTS INTO YOUR ARRANGEMENT Payments made to your arrangement for pension benefits may be any one or more of the following: Regular contributions Single contributions Transfer payments. The types of payment that can be made to your arrangement are described in your Key Features document. Regular and single contributions may be paid to the scheme by you or on your behalf by your employer or another person. They must be paid in a form and by a method which a Stakeholder Pension Scheme is required to accept from time to time or by any other method acceptable to Legal & General. You may also make transfer payments to the scheme. You can find out what forms and methods are acceptable by contacting Legal & General. The conditions applying to payment of contributions of each type are set out in the following sections. 2. REGULAR contributions Regular contributions into an arrangement can commence from a date which is agreed between you and Legal & General. However, the date must be at least five years before your selected retirement date. The amount of regular contributions can be changed at any time before your selected retirement date. No regular contributions can be paid after your selected retirement date. However, single contributions and transfer payments can still be made as long as you have not taken your pension benefits. Your selected retirement date can be changed at any time, however it cannot exceed age 99. The amount you can pay, and the amount of any increase, must meet Legal & General s minimum requirements at the time the contributions start or are changed. You can find out the current minimums that apply by contacting Legal & General. This minimum amount may be less than, but will not be more than, the minimum contribution which is allowed to be imposed in respect of stakeholder pension schemes from time to time. Where applicable, the contribution paid by you must meet the minimum requirements under the Pensions Act The terms applying to any increase in regular contributions may be different from those applying to your original level of contributions. Please see Changing the terms of the plan on page 17 for more information. Regular contributions will be payable at the frequency, that is monthly or yearly, agreed between you and Legal & General, ending with the last payment falling due before your selected retirement date. 3. YEARLY regular contributions Yearly contributions will be paid each year on the anniversary of their commencement. Any contributions paid at any other time will be treated as single contributions. Increases in yearly contributions may only be made from such an anniversary. 4. STOPPING regular contributions You can stop paying regular contributions at any time. If you do stop you may restart paying regular contributions at any time you agree with Legal & General. The terms applying to future payments made to your arrangement may be different from the terms that originally applied. Please see Changing the terms of the plan on page 17 for more information. Charges will continue to be deducted in accordance with Amount and deduction of management charges on page 15 even though you may have stopped paying contributions. 5. SINGLE contributions You may arrange for payment of a single contribution at any date agreed between you and Legal & General. Any single contribution must be at least equal to the minimum acceptable to Legal & General at that time. You can find out the current minimums and terms that apply by contacting Legal & General. The terms applying to future payments made to your arrangement may be different from the terms that originally applied. Please see Changing the terms of the plan on page 17 for more information. A single contribution may be made by you and/or your employer or another person on your behalf. 6. TRANSFER payments Transfer payments may be made in accordance with the scheme rules from another Registered Pension Scheme or from a Qualifying Recognised Overseas Pension Scheme. They will be treated as a single payment paid to the scheme on the date on which they are received by Legal & General. Any transfer payment must be at least equal to the minimum acceptable to Legal & General at that time. You can find out the current minimums that apply by contacting Legal & General. The terms applying to future payments made to your arrangement may be different from the terms that originally applied. Please see Changing the terms of the plan on page 17 for more information.

5 STAKEHOLDER PENSION SCHEME MEMBER S POLICY BOOKLET 5 7. TAX relief on contributions Until you reach age 75, you are entitled when making a contribution to the scheme to deduct an amount in respect of tax relief at the basic rate of income tax applicable at the time the contribution is paid. Any contribution you pay or your employer pays on your behalf will therefore be treated as paid after deduction of this relief. An amount equal to the tax relief deducted will be reclaimed by Legal & General from HMRC, and Legal & General will treat the contribution as having been paid in full at the date your net contribution was paid. The amount after basic rate tax relief is added is called the gross contribution. Any relief against higher or additional rates of tax to which you may be entitled must be claimed when making your yearly tax return. How much tax relief you will receive may depend on which country you live within the UK. HMRC will tell Legal & General which rate to apply. You can find out what this means for you at gov.uk/income-tax-rates Tax relief will not be added in respect of any employer contributions or Transfer Payments. These are gross amounts. You are only entitled to claim tax relief in respect of a tax year in which you are a relevant UK individual. This means: you must have relevant UK earnings chargeable to income tax, or you must be resident in the UK for at least part of the tax year, or you must have been resident in the UK in one of the preceding five tax years and when you joined the scheme, or you or your spouse or registered civil partner must have in the tax year general earnings from overseas Crown employment subject to UK tax. If you contribute on or after your 75th birthday you will not receive tax relief on your contributions. As your contract is for the gross contribution the amount you pay will increase. Your personal circumstances can affect how these conditions apply to you. If you are no longer a UK resident, of if you have any earnings outside the UK, there may be tax implications for you. If you are not sure, Legal & General recommends you seek advice from a tax, legal or financial adviser. 8. LIMITS on tax relief and TAX charges ON contributions Up to age 75, you are entitled to tax relief on gross contributions of up to 100% of your relevant UK earnings in each tax year. However, if your relevant UK earnings are less than a basic amount ( 3,600 for tax year 2018/2019) you can still pay up to 3,600 gross. If the total of all contributions paid into all registered pension schemes by or for you is more than the annual allowance, plus any unused annual allowance carried forward from the previous three tax years, you will be subject to a tax charge on the excess. The amount of the charge will be dependent on your personal circumstances. Refunding contributions in accordance with section 9 below will not stop the tax charge being applied. If you have benefits under a defined benefit scheme, it is the increase in value of your benefits over the scheme year that counts and not the actual contributions to that scheme. Any transfer payments from another registered pension scheme do not count for the purposes of the annual allowance. Once you have accessed your pensions savings, the total contributions you can make over a tax year may be limited depending on how you accessed your money. This limit is the money purchase annual allowance. It applies to all the pension savings you may have and will apply from the time that you first access them. This section is only intended to summarise the operation of pensions tax legislation. The rules relating to the annual allowance, and in particular, the operation of the annual allowance carry forward facility are complex. Legal & General recommends that you seek specialist advice if you think you may be affected by the annual allowance, or the money purchase annual allowance. 9. REFUND of contributions Once a contribution has been paid to the scheme, and the 30 day cancellation period has ended, it will not be refunded if you were entitled to receive tax relief on it. If you were not entitled to receive tax relief Legal & General may refund your contribution. The amount refunded to you may reflect any change in investment value between the time it was invested and the time Legal & General make the refund. Before any refund is made you will be required to provide proof, satisfactory to Legal & General, that the contribution did not qualify for tax relief. Please contact Legal & General to find out what proof is required. Any refund must be made within the six tax years following the tax year in which the contribution was made.

6 6 STAKEHOLDER PENSION SCHEME MEMBER S POLICY BOOKLET APPLICATION OF PENSION CONTRIBUTIONS. 1. BUYING units Each payment into the scheme for pension benefit will be used to buy units in one or more of the funds described in Funds and their operation on page 13. The number of units to be allocated will be calculated by applying a percentage of each payment at the unit price as described in Funds and their operation on page 13 of the relevant fund calculated on the valuation date which next follows the date of receipt of the contribution by Legal & General. Where the payment is received before noon on a valuation date, the price will be that calculated on that day. At the outset this percentage will be at least 100% of each contribution. However, Legal & General may change the percentage in future in accordance with Legal & General s right to make changes on page 17. Legal & General will notify you in writing of any changes before any payment is made which is affected by the change. Where the payment of any contribution is not cleared through the bank account of the person from whom it is made, any units credited in respect of that contribution will be cancelled. Crediting units operates only as a means of linking your arrangement to the funds for the purpose of calculating the value of your pension fund. However, the legal and beneficial interest in the units and the underlying assets of the fund do not belong to you. 2. SELECTION of funds Initially the fund or funds in which units are to be credited to your arrangement will be those which you have agreed with Legal & General in your application, or those notified to you by your employer. If you have selected more than one fund, your contributions will be applied towards units in each fund in the proportions which you have specified. Allocation of future contributions will continue on the same basis unless you choose otherwise. You may at any time instruct Legal & General in writing (or by any other means which has been notified to you by Legal & General as being acceptable) that the allocation of contributions between funds is to be changed for future contributions. 3. SwITCHES between funds You may instruct Legal & General in writing (or by any other means which has been notified to you by Legal & General as being acceptable) at any time to exchange units already credited to your arrangement for units of equal value in a different fund or funds specified by you. This option, which is often called switching, is subject to the conditions described below: The value of the units in the funds to be switched will normally be calculated at their respective unit prices (calculated as described in Funds and their operation on page 13) on the valuation date next following the receipt date on which your instruction is received by Legal & General at the address given in the introduction or any other address notified to you. However, if the notification is received on a valuation date before noon, the unit prices will normally be those calculated on that date. However, Legal & General may delay calculating the value of units by up to 48 hours if the number of movements on any day involving any fund (in respect of all policies linked to that fund) is higher than the daily average for the previous six months and is considered by the actuary to be at such a level as to adversely affect the performance of the fund for policyholders who continue to be credited with units in that fund. In certain circumstances any switch out of a fund may be delayed. The possible reasons for this are explained in Calculation of pension fund on page 11. The annual management charge due in respect of the period from the last date on which such charges were deducted, up to and including the date on which the switch is made, will be deducted on the date of the switch in accordance with section 2 of Amount and deduction of management charges on page 15 On the next following date on which management charges are deducted in accordance with section 2 of Amount and deduction of management charges on page 15, the charges deducted will be those due in respect of the period from the date of the switch to the last day of the normal monthly interval. Legal & General may restrict or refuse any switch between funds if the value of the units subject to the switch is less than 100 or such other amount as Legal & General may notify you in writing from time to time, or if the switch would result in you investing in more than the maximum number of funds allowed or if the fund you have chosen is about to close. No charge is made for switching, nor is there a limit on the number of switches you can make. However, Legal & General may introduce such a charge in the future or impose a limit on the number of switches allowed at no charge. See Legal & General s right to make changes section on page 17. Future contributions will continue to be allocated to the fund or funds which you last specified, unless you tell Legal & General that this is also to change.

7 STAKEHOLDER PENSION SCHEME MEMBER S POLICY BOOKLET 7 TAKING YOUR BENEFITS. 1. COMMENCEMENT of your benefits If you are a member, and you haven t previously accessed your benefits, Legal & General will, within a reasonable time period and at least four months before your selected retirement date, provide you with information about the available options. If you want to take your benefits before or after your selected retirement date and you have reached the minimum pension age 55, please contact us and Legal & General will send you information about your options. You do not have to take all your benefits at the same time or on the same basis or from the same provider. The options available from this plan will depend upon what Legal & General are making available at the time you want to take your benefits and any benefit minimums Legal & General have in place at that time. If you are in ill health or serious ill health you may be able to take your benefits before the minimum pension age of 55. You will need to provide Legal & General with satisfactory medical evidence, from a registered medical practitioner, that you have stopped work because you are (and will continue to be) incapable of carrying on your occupation because of physical or mental impairment. For serious ill health, where there is a life expectancy of less than one year, you may be able to take the value of your pension fund as a single lump sum payment (known as a serious ill health lump sum ) If you think ill health or serious ill health may apply to you, please contact Legal & General at the address shown at the start of this booklet. Depending on how you chose to invest your pension arrangements there may be unavoidable delays in selling assets, which could delay Legal & General making payments to you. If Legal & General think this may occur Legal & General will let you know as soon as is practical after we have received your instruction (see section 1 of Calculation of Pension Fund on page 11). You must take all your benefits from your arrangement(s) by the time you reach your 99 th birthday. However, you can instead choose to transfer your pension fund to another Registered Pension Scheme or Qualifying Recognised Overseas Pension Scheme. If you wish to exercise any of the options described in this section, you must tell Legal & General in writing at lease one month before the date when you want to take your benefits. Legal & General will make any payments by bank transfer, directly to the UK bank account you have nominated for this purpose in your application to take your benefits, or by subsequent notification to Legal & General in writing that Legal & General have acknowledged. Legal & General will not make any payments to third parties. 2. benefit options You can take your benefits in a number of ways: i) a tax-free lump sum and a pension annuity; ii) use all or part of an arrangement to purchase a pension annuity; iii) as an uncrystallised funds pension lump sum (UFPLS); iv) as a small pot ; or v) as a serious ill health lump sum. You can combine options to best meet your needs. The current options available under this plan are as follows. 2.1 Tax-free lump sum (pension commencement lump sum) This is a tax-free lump sum paid from an arrangement that has been selected (designated) to provide benefits for you. If you do not take the taxfree lump sum as the time you designate the relevant part of an arrangement you will not be able to take it later on. Normally the maximum amount which you may take without incurring a tax charge is one quarter (25%) of that part of your arrangement which is being used at that time to provide benefits for you. A higher or lower amount may be available to you if you had transitional rights in respect of benefits earned before April This is sometimes called protected tax-free cash. If you think this may apply to you, please contact Legal & General. 2.2 Pension Annuity You can choose to use all or part of an arrangement to buy a pension annuity that will provide you with a guaranteed income for life or for a fixed term. You can buy the pension annuity from a Legal & General Group company or Legal & General can instead, purchase it on your behalf from another insurance company of your choice. There are a number of things you need to consider before you buy the pension annuity. Legal & General recommend you discuss all the options available to you with you financial adviser. Any income paid from your pension annuity and any taxation will be the responsibilty of the pension annuity provider. The type of pension annuity purchased may result in your annual allowance for future pension saving being reduced to the money purchase annual allowance level (see section 4 on page 10 for further information). 2.3 Uncrystallised Funds Pension Lump Sum (UFPLS) You can choose to take lump sums directly from your uncrystallised arrangement(s). This is part of your pension pot that you have not yet selected (designated) to provide any other benefits. Legal & General will provide you with written details of the minimums and charges that apply at the time you select this option and you should read those together with this booklet.

8 8 STAKEHOLDER PENSION SCHEME MEMBER S POLICY BOOKLET In addition, to be eligible to take a UFPLS, you must have some available lifetime allowance, as outlined in sections 3 and 5 of Taxation of your benefits on page 10. You will not be eligible for this option if you have a protected lifetime allowance or if you have protected or restricted rights to a tax-free lump sum. You can either take a full UFPLS, which means you take your entire pension pot as an UFPLS, or a partial UFPLS, which allows you to withdraw lump sums as and when you need them, leaving your remaining pension arrangement(s) invested in your chosen investment fund(s). If you take an UFPLS, your annual allowance for future pension saving will be reduced to the money purchase annual allowance (see section 4 on page 10 for further information). 2.4 Small pension pots. If your pension fund is 10,000 or less, this is called a small pension pot. You can take up to three small pension pots in your lifetime. Taking a small pot will not affect your annual allowance. 2.5 Serious ill health lump sum Where there is a life expectancy of less than one year, you may be able to take the value of your pension fund as a single lump sum payment (known as a serious ill health lump sum ). 3. OTHER THINGS TO CONSIDER Alternatively, you can transfer your whole pension pot to another suitable pension product where other options such as taking a flexible income directly from your pension pot may be available. Legal & General will write to you as your selected retirement date approaches with details of the choices you have. If you want to access your pension pot before your selected retirement date, you will need to contact Legal & General. 4. REACHING AGE 99 At age 99 you can only choose, under the scheme, to take your income as a pension annuity. However, you can instead choose to transfer your pension fund to another Registered Pension Scheme or Qualifying Recognised Overseas Pension Scheme. BENEFITS ON TRANSFER OR DEATH. 1. TRANSFER out You may choose, at any time before benefits are first paid from your pension fund, to have a transfer payment paid from the scheme to another Registered Pension Scheme or to a Qualifying Recognised Overseas Pension Scheme acceptable under the Finance Act. So long as the transfer is to another Registered Pension Scheme or Qualifying Recognised Overseas Pension Scheme, the transfer will not give rise to any tax charge under UK tax law. The amount payable as a transfer payment will be the available pension fund at that date calculated as described in Calculation of pension fund on page 11. In certain circumstances a transfer may need to be delayed. The reason for this is explained in section 1, in Calculation of pension fund on page 11. No further benefit will be payable under the scheme in respect of any part of the pension fund which has been transferred as described above. Once such a payment has been made, no further contributions may be paid by or in respect of you unless Legal & General agrees otherwise. 2. DEATH before payment of a pension If you die before payment of your pension has commenced, or before benefits are first paid from your pension fund, the pension fund will be applied to provide the benefit or benefits described in section 3 and/or 4 following. 3. PENSION for a surviving spouse / REGISTERED civil partner or dependant You can choose to provide a pension for your surviving spouse/registered civil partner or for a dependant named by you by giving Legal & General written instructions to that effect before your death. Legal & General is not bound by your request and may decide to apply some or all of the pension fund in accordance with section 4 on page 9. Where you have not instructed Legal & General to pay such a pension, your pension fund will be paid in accordance with section 4 on page 9.

9 STAKEHOLDER PENSION SCHEME MEMBER S POLICY BOOKLET 9 Your surviving spouse/registered civil partner or other dependant (as applicable) will be able to purchase the permitted pension annuity from Legal & General or from another insurer. If purchased from Legal & General, any pension payable to a surviving spouse/registered civil partner or dependant will normally be payable as a level amount by monthly instalments in advance during his or her lifetime. However, the surviving spouse/registered civil partner or dependant may choose before it commences: that it should be payable in arrears, and/or that it should be payable at quarterly, half yearly or yearly intervals, and/or that it should increase each year. A pension annuity which is paid to your child cannot provide a pension beyond the child ceasing to qualify as a dependant. 4. PAYMENT of lump sum death benefit Any part of the retirement fund which is not applied to provide a pension under the previous section will be paid as a lump sum in such proportions and to such recipient(s) as Legal & General decides. The class of potential recipients comprises, broadly: i) any trust which you have made available for inclusion within the class of potential recipients. You may wish to set up a trust for this purpose, in which case Legal & General recommends that before doing so you seek appropriate advice in order to manage any inheritance tax issues that might arise; ii) any person(s), charity, association or other body you have nominated for inclusion in the class of potential recipients; iii) your widow(er) or surviving registered civil partner; iv) your dependants; v) your antecedents and descendants; vi) your legal personal representative or any person or body entitled under your will to any interest in your estate; vii) any person who, or body which, Legal & General believes you would have wished to benefit. If Legal & General determines that it has insufficient information to enable it to pay the lump sum under this section, it will not be obliged to pay it. Notes: Legal & General is not bound to distribute any lump sum death benefit payable under this section in accordance with any nomination you make. You may establish a trust or make a nomination at any time when you are a member. You may also make a nomination in your application for membership, to take effect on your becoming a member. You must be 18 or over to establish a trust or make a nomination. You must notify the identity of the trustees to Legal & General in writing before the date of your death for Legal & General to be bound by it. Any nomination must be made in writing and received by Legal & General before your death. If any person you have nominated is under age 18 at the date of your death, Legal & General may make payment to that person s parent or guardian, or to any other it decides, for the benefit of that person. Once made, you cannot revoke a nomination. However, you may, at any time, replace your nomination with a new nomination. Any trust or nomination cannot benefit you or your estate. If a trust is declared it will override any nomination. If a person you nominated is no longer alive, Legal & General may pay part or all of the benefit either to your estate or to that of the person you nominated. Accordingly, if a person you have nominated dies, you should make a new nomination unless you want Legal & General to consider paying it to that person s estate.

10 10 STAKEHOLDER PENSION SCHEME MEMBER S POLICY BOOKLET TAXATION OF BENEFITS. This section is only intended to summarise the operation of pensions tax legislation which can be complex and is subject to change from time to time. Tax law overrides anything set out in this booklet and if you have any questions about your personal tax position, Legal & General recommend you speak to a tax adviser. 1. INCOME If you buy an annuity, income payments are taxable as pension income. Tax will be deducted at the appropriate rate based on the Pay As You Earn (PAYE) coding of the relevant individual as notified by HMRC. 2. TAX-FREE LUMP SUM (PENSION COMMENCEMENT LUMP SUM) Any tax-free lump sum will be paid tax-free. Any amount over the maximum allowed by HMRC will be subject to a tax charge, the level of which is dependent on your personal circumstances. 3. uncrystallised pension funds lump SUM (UFPLS) Where you have not reached age 75 when we make the payment and the payment is within your available lifetime allowance: 75% (three quarters) of the value of the sum will be treated as income for tax purposes and 25% (one quarter) will be paid tax-free. Any amount paid above your lifetime allowance is not a UFPLS payment and will be taxed in accordance with HMRC requirements. Where you are aged 75 or over, when Legal & General make the UFPLS payment, it is only necessary to have part of the UFPLS payment within your remaining lifetime allowance and if this is the case, the UFPLS payment will be taxed as follows: The part of the UFPLS that is equal to one quarter (25%) of your lifetime allowance at the time Legal & General make the payment will be paid tax free. The balance of the UFPLS will be treated as income for tax purposes. 4. MONEY PURCHASE ANNUAL ALLOWANCE Once you have access to your benefits by taking an UFPLS or a pension income, your future pension savings will be subject to the money purchase annual allowance. Legal & General recommend you speak to a tax adviser if you think this might apply to you. 5. LIFETIME ALLOWANCE If, when you take any pension benefits up to the age of 75, the total amount being used to provide benefits to you, together with any amounts previously used under all Registered Pension Schemes to provide benefits,exceeds you lifetime allowance, you will be liable to a tax charge on the amount by which the value has exceeded your lifetime allowance. The value given to benefits for this purpose is determined by law and depends on the type of benefits which have been paid. In most cases, the value will be the amount of your funds that are used for the payment of the benefit. A similar tax charge will be payable if the amount payable as a lump sum on your death in accordance with section 4 of Benefits on transfer of death on page 8 exceeds your remaining lifetime allowance. If at age 75 some or all of your pension fund has not be used to provide a pension annuity, there will at that point be a test (which, if you have already taken benefits from your pension fund, may be a second test) against your lifetime allowance. Special rules dictate the amount which is tested against your lifetime allowance in these circumstances. The amount of any tax charge will depend on the way in which you take the benefits relating to the excess over the lifetime allowance. If you take the excess as a lump sum there will be a tax charge at the rates applicable at that time. Any income will be taxed as described in section 1 and on this page as well. 6. TAX CHARGES Legal & General will bear no liability in respect of any tax charge or unauthorised payment (as defined in the Finance Act) made by or in respect of the Scheme. If any such charge is incurred in respect of your pension fund, Legal & General shall be entitled to take steps to recover any fees or tax charges in respect of such liability from your pension fund. 7. TAXATION OF DEATH BENEFITS Death before age 75: If you die before age 75, any lump sum payment will be free of tax provided the payment is made within two years from the day Legal & General first knew, or could reasonably have been expected to know, of your death. Any death benefit is tested against your remaining lifetime allowance. Death after age 75: If you die on or after your 75 th birthday, any lump sum death benefits paid to your beneficiaries will be subject to a tax charge at the appropriate rate based on the PAYE code of the person receiving the payment. If you die leaving no surviving dependants and Legal & General pay a lump sum benefit to a charity nominated by you, the lump sum benefit won t generally be subject to tax. Any lump sum death benefit described in section 4 of Benefits on Transfer or Death on page 8, is not normally liable to Inheritance Tax under present legislation. 8.SERIOUS ILL HEALTH If you are under age 75, the lump sum is paid tax-free subject to it being within your remaining lifetime allowance. If you are aged 75 or over at the date of payment, any lump sum will be taxed as pension income (that is, at your marginal rate of tax). You must have some lifetime allowance left (even if the serious ill health lump sum is paid after age 75). Important information: This section is only intended to summarise the operation of pension legislation which can be complex and subject to change from time to time. Tax law overrides anything set out in the booklet and if you have any questions about your personal tax position, Legal & General recommend that you speak to a tax adviser.

11 STAKEHOLDER PENSION SCHEME MEMBER S POLICY BOOKLET 11 CALCULATION OF PENSION FUND. 1. POSSIBLE delays in calculating the value of your PENSION fund or switch values In order to protect all investors, there are some circumstances where Legal & General may need to delay calculating transfer values, switch values or benefit payments. This could delay Legal & General dealing with your request if the transfer, switch or benefit payment (as applicable) is to be made at any date: before your selected retirement date, or after your selected retirement date, for any reason other than death. Set out below are some of the reasons why Legal & General may need to delay. Exceptional market conditions. These include: Situations where it becomes impossible to buy or sell assets, such as action by an overseas government that freezes assets invested in that country. Situations where it is not possible to ensure fairness to all investors in the fund, for example if by calculating a unit price it means paying too much to those leaving the fund at the expense of those remaining. Any events listed in the Events beyond Legal & General s reasonable control subsection in Changing the terms of the plan on page 17. Failure of another company Legal & General may rely upon. This includes: The failure of an external fund manager to do something that would normally be expected of them in running their business. The failure of a stock exchange (such as the London Stock Exchange). Major power failures or the failure of essential IT or communications systems. Funds with assets that cannot be sold immediately. If a large number of people want to sell their units at the same time it may be necessary to sell particular types of assets. For example, the process of selling commercial property (such as office blocks, shopping centres, industrial warehouses) can take a long time. For an internal fund Legal & General may need to delay calculating the cash in or switch value for up to six months. For an external fund any delay could be indefinite. See Investment linked funds available under Funds and their operation on page 13 for an explanation of internal and external funds. This allows the fund manager time to obtain an appropriate price for the assets that may need to be sold. If a quick sale was forced through, the fund manager may get an artificially reduced value, which could impact both those leaving the fund and those remaining in it. If any of these situations occur, it may not be possible to tell you about it before it happens. If at all possible, we ll do everything we can to let you know as far in advance as we can. 2. fund at selected retirement date The amount available to provide benefits at your selected retirement date will be the value at that date of the units credited to your arrangement, once any outstanding management charges have been deducted in accordance with Amount and deduction of management charges on page 15. The value of the units will be calculated as described in section 6 on page fund after selected retirement date If payment of your benefits or any part of them does not start until after your selected retirement date your arrangement will remain credited with the units in the funds (which are described in Funds and their operation on page 13) in which they are invested at that date. You may pay additional single contributions at any time up to age 99 on terms specified by Legal & General at that time. At any subsequent date on which benefits become payable, the amount available to provide those benefits will be calculated as in section 2 above, at that date.

12 12 STAKEHOLDER PENSION SCHEME MEMBER S POLICY BOOKLET 4. fund before selected retirement date If any benefit becomes payable at any date before your selected retirement date, the value of your pension fund available at that date will be calculated as in section 2 on page 11 at that date. 5. Value of fund where benefits are TAKEN at different dates If your benefits become payable at more than one date, then the amount available to provide benefits at each date will be calculated separately in respect of the benefits payable at each of those dates. This amount will be calculated in accordance with sections 2, 3 or 4 depending on whether the relevant date falls on, before or after your selected retirement date. 6. CURRENT unit price For the purposes of calculating the value of the pension fund in the above circumstances, the current price of units must be established. Normally, the current unit price will be that calculated on the valuation date immediately following the receipt date on which Legal & General receives, at the address given in the introduction or any other address notified to you, all the information and/or evidence it requires to pay the particular benefit. You can find out what information and/or evidence is required by contacting Legal & General. Where the information and/or evidence is received before noon on that valuation date, the current unit price will be that calculated on the date it is received. In certain circumstances, the unit price used will be that calculated for a different day. i) If benefits become payable after your death while units are still credited to your arrangement (unless iv) below applies), Legal & General will use the unit price calculated on the receipt date on which evidence of your death, acceptable to Legal & General, is received by Legal & General, and ii) Where benefits are to be paid from a specified date and the receipt date of all the necessary information and/or evidence required by Legal & General is before that date, Legal & General will use the unit price calculated on that specified date, and iii) Where the payment of benefits is delayed in accordance with section 1 on page 11, Legal & General will use the unit price calculated on the working day those units are en cashed, and iv) If the value of your pension is being calculated on or after your 99th birthday, Legal & General will use the unit price calculated on the working day immediately preceding your 99th birthday.

13 STAKEHOLDER PENSION SCHEME MEMBER S POLICY BOOKLET 13 FUNDS AND THEIR OPERATION. 1. FUNDS and units Each arrangement under the scheme is a separate policy which is linked to investment linked funds. Each fund is divided into units. These funds form part of Legal & General s Long Term Insurance Fund. The assets underlying them may be managed by Legal & General (or its associated companies), or by an external fund manager. Legal & General are not responsible for the choices and actions taken by you, your employer, or any financial adviser appointed by you in selecting funds or monitoring your individual fund choices. 2. InvESTMENT linked funds available Your arrangement may be linked to any one or a combination of fund types available at the date your contribution is received by Legal & General. The fund types currently available are as follows. Internal funds Funds managed by a Legal & General company. External funds Funds which are maintained by the insurer which invest in a fund managed by an external fund manager. Details of all the funds available for investment under your arrangement are set out in a brochure available from Legal & General on request. Legal & General may make new funds available from time to time. You can choose a maximum of 10 funds. Legal & General may change this from time to time. 3. INVESTING IN AN EXTERNAL FUND When you invest in an external fund, Legal & General buy you units in a Legal & General fund that invests in the corresponding authorised fund. You do not hold units directly in the authorised fund. Legal & General don t have any direct influence over how external fund managers manage their funds. Legal & General also have no control over the method of calculation they use to value their fund. Legal & General s valuation of an external fund depends on the external fund manager meeting their contractual obligations to provide Legal & General with information, including the valuation of their fund. If Legal & General value an external fund and then find out later that Legal & General were given incorrect information, Legal & General may increase or reduce the number of units you hold or pay compensation. External fund managers sometimes adjust the valuation of their fund to cover exceptional costs that may arise when people buy or sell units in their authorised fund. Legal & General cannot predict when an external fund manager will make such a charge. If and when it happens, Legal & General make a deduction when calculating the unit price. You do not have the same rights as you would if you invested directly into the authorised fund. An external fund manager may fail to meet its obligations under its contract with Legal & General. Also, they may make fundamental changes to an external fund, such as changing its aim, the assets it invests in or the countries where it s invested. If there are any significant changes to funds that affect you, Legal & General will let you know. If you need to take some action, Legal & General will give you some options and explain what Legal & General plan to do if Legal & General don t hear back from you within a specified period. 4. FUNDAMENTAL change to an external FUND If Legal & General becomes aware of a change occurring to any external fund which it considers to be a fundamental change, you will be notified if you are affected. A fundamental change will include changes such as: a significant change to the fund aim; a significant change to the risk profile of the fund; a significant change of the asset types held by and/or the method of managing the assets of the fund; a significant change of the countries of the world in which the fund invests; failure of the external fund manager to meet its obligations. If you need to take some action, Legal & General will tell you what options are available to you and explain what Legal & General plan to do if Legal & General don t hear back from you within a specified period. 5. CLOSURE of funds Legal & General may decide that a fund will no longer be available: in the case of an internal fund if it becomes impractical to maintain a particular fund, such as if there are very few people invested in it. in the case of an external fund: if an external fund manager ceases to trade, or if an external fund manager closes their authorised

14 14 STAKEHOLDER PENSION SCHEME MEMBER S POLICY BOOKLET fund or merges it with another of their funds, or if Legal & General decides to sever its relationship with the external fund manager, or if Legal & General have concerns about how the fund s being managed, or if it becomes impractical or inappropriate to maintain a particular fund. If this happens, Legal & General will, where practical, give you at least 30 days notice in writing, except where it is impractical for Legal & General to provide such notice. In this case Legal & General will provide as much notice as is practical. You will also be given the opportunity to switch any investment you have in an affected fund into another fund, or funds, in accordance with section 3 of Application of pension contributions on page 6. If you do not specify into which other fund, or funds, you want units to be switched, they will be switched into the fund, or funds, specified by Legal & General in the notice. 6. DEFAULT INVESTMENT OPTIONS Legal & General will invest your contributions in the default investment option unless you tell us otherwise. The default investment option may change in the future. This could be due to a review by Legal & General or based on information provided to Legal & General by your employer along with their advisers. If the default investment option is going to change Legal & General will tell you whether the change will apply to your existing and future contributions or just those you make in the future. You will have the option to opt out and make your own investment decisions and Legal & General will provide you with a minimum of 60 days to do so. Any change may also apply to payments and contributions invested in the same fund(s) or lifestyle profile as the default investment options, where you did not, at the time of the contribution or payment, express a fund preference. The default investment option being changed may be a lifestyle profile. If this happens you may not notice any change to your investment immediately as you may not yet have reached the point where the lifestyle has started to move fund. 7. Valuation of funds Each fund will normally be valued on each working day and the actuary will specify the basis of calculation of the maximum and minimum unit prices applicable to that fund. Where the fund is managed by Legal & General, the basis of the valuation will be as described below. Where a fund is managed by a fund manager other than Legal & General, although the valuation of that fund will be made by that manager, the basis of the valuation will be determined by the actuary on the basis described below. i) In calculating the maximum unit price, the value of an investment linked fund will be determined by the prices at which the underlying assets held in that fund might be bought. The maximum unit price will be this value divided by the number of units in the fund, rounded up by not more than 0.1p. ii) In calculating the minimum unit price, the value of a fund will be determined by the prices at which the underlying assets held in that fund might be sold. The minimum unit price will be this value divided by the number of units in the fund, rounded down by not more than 0.1p. iii) The unit price will be no more than the maximum unit price (as in (i) on this page) and no less than the minimum unit price (as in (ii) above). The basis for determining the unit price will be set so as to enable fairness between those who remain in the fund and those who withdraw from it. In specifying the calculation basis for determining the value of a fund, due allowance is made for: income received or accrued, cash as yet uninvested, any actual, prospective or other liability for taxation or any other levy, any stamp duty or other charges (including any dilution levy as defined for the purposes of the Stakeholder Pension Scheme Regulations 2000 as amended from time to time) directly incurred in the sale or purchase of securities or property held for the purposes of the scheme, expenses, taxes, duties and other charges incurred in acquiring, managing, maintaining, valuing and disposing of assets, any reasonable adjustment considered necessary to preserve fairness between arrangements which may be linked to the fund, and the fund charges described in section Amount and deduction of management charges on page 15 and will ensure that no expense or charge is taken into account in establishing the price of unit(s) which is prohibited under the Stakeholder Pension Scheme Regulations External funds are valued based upon certain information provided by the external fund managers (under the terms of the contracts between them and the insurer). The unit prices used, for external funds, to calculate any benefits payable will be based upon the information provided by the external fund managers. The valuation of each fund is dependent upon the external fund managers meeting their obligations under these contracts. Where any benefits have been paid and Legal & General subsequently discover that the information did not accurately reflect the true value of the underlying assets on the day the benefits were calculated, no further benefits will be payable if the difference was under 0.5% of the fund price. If the difference was 0.5% or more of the fund price, compensation will be paid to you in line with any compensation received from the external fund manager. For more information about funds and their operation see A guide to how we manage our unit-linked funds which is available on request.