Key Features. CanRetire. Flexible Drawdown Plan

Transcription

1 Key Features CanRetire Flexible Drawdown Plan

2 The CanRetire Flexible Drawdown Plan The Financial Conduct Authority is a financial services regulator. It requires us, Canada Life to give you this important information to help you to decide whether the CanRetire FDP 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 FDP for future reference. The FDP is a Flexi-Access Drawdown Plan designed for individuals who have taken some of their pension savings as a tax free lump sum and want to draw an income from their retirement fund in a tax efficient manner while maintaining control of the way it is invested. The FDP is a draw down plan only and cannot accommodate member / employer contributions or hold uncrystallised pension savings. The FDP will allow your savings to be invested in a range of funds in a tax efficient way. At any time you can make withdrawals, either on a regular basis or whenever you need a single lump sum. 2 CanRetire Flexible Drawdown Plan Key Features

3 Its aims To transfer your accumulated pension savings into a drawdown plan that allows you to control and manage your retirement fund in a tax-efficient manner. To give you access to your savings either in the form of regular withdrawals or by withdrawing single lump sums when you wish. To allow your pension savings to continue growing in a tax efficient way. To allow you to move your savings from one fund to another. To give you flexibility and choice over when and how you take your pension benefits. You do not need to take all your savings in one go. 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 FDP. To give up all rights in any pension schemes that you are transferring to us. To generally invest for the longer term whilst allowing for withdrawals to be taken in the shorter term. To review your FDP regularly so you avoid unintentionally running out of funds. Risk factors The value of your savings can go down as well as up and you may not get back the full amount you invested. Past performance of the funds is not a guide for how the funds you have chosen will perform in the future. What you get back is not guaranteed. For example, it may be less than the amount shown in your Personal Example. This could be the case if: investment growth is lower, you make more withdrawals than shown in your Personal Example, our charges increase. If you decide to withdraw amounts from the FDP that are greater than the growth in your chosen funds, the value of your FDP will go down and there may be less than the amount you invested. This could leave you without an income or with a reduced income in the future. Please refer to the Critical yield calculations in your Personal Example to see what investment growth rates are required to maintain your chosen income levels. 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. If you choose to use your FDP to buy a lifetime annuity or an income lasting for a specific period, the income will depend on rates at that time. If these are lower than current rates, then your income will be less than shown in your Personal Example. By delaying buying an annuity there is no guarantee that the cost of converting your fund into an annuity will be more favorable in the future. The amount of income you withdraw will be added to your taxable income which could mean you paying a higher rate of income tax. If the UK Government changes the way your FDP is taxed, this may affect how much you get back from your investment 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 payment. Please read Can I change my mind? section at the end of this document. CanRetire Flexible Drawdown Plan Key Features 3

4 Questions and answers Do I need advice? We do not provide financial advice. To help you decide if the FDP 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: Before you make any decisions we recommend you take advantage of Pension wise, offering free and impartial government guidance about your pension options. For a face to face or telephone appointment log on to Please note this does not replace the need for professional advice and Canada Life does not accept applications for the Flexible Drawdown Plan where professional advice has not been taken. What is the Flexible Drawdown Plan? The Flexible Drawdown Plan is a personal pension plan available to anyone aged over 55 who has taken some or all of their Pension Commencement Lump Sum (PCLS) and is looking for a tax-efficient vehicle for their remaining crystallised retirement funds (see definition of PCLS and crystallised funds on page 5). The Flexible Drawdown Plan is a Flexi-Access Drawdown plan meaning you have flexible access to your money. There is a wide range of individual funds and portfolios of funds available and you can invest in up to 10 different funds or portfolios with each investment. You can: make a full withdrawal. make partial withdrawals. transfer to an alternative drawdown plan (either with Canada Life or another provider). buy a Lifetime Annuity (Canada Life offer Lifetime Annuities but we recommend searching the market for the best rate at the time of your purchase). There are different tax implications for all of the above options and we recommend you discuss these with your professional adviser before making any decision. How much do I need to transfer to the Flexible Drawdown Plan? You need a minimum transfer of 10,000. This amount excludes any PCLS and initial adviser charge you agree to pay. Is the Flexible Drawdown Plan suitable for me? The Flexible Drawdown Plan may be a suitable option if you: do not want to commit your savings to providing a lifetime annuity at this point in time. if you have accessed some or all of your tax free cash but do not necessarily need income. want to avoid paying higher rate tax by withdrawing your savings gradually. are prepared to take investment risk in exchange for additional flexibility. You should speak with your professional adviser about the suitability of the FDP as they will have a detailed knowledge of your personal circumstances. Can I apply for this plan? Yes, if you re aged 55 or over and a UK tax resident. Is there a limit to how much I can save into a Flexible Drawdown 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 1m for tax year 2017/18. 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% on any cash lump sum and 25% on any pension income. The charge is lower if taken as an income because you ll also pay income tax on your pension. A further lifetime allowance check is made at age 75 on funds remaining in a drawdown arrangement and funds which have not yet been crystallised. You should consult with a professional adviser to see how this could affect you. 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. 4 CanRetire Flexible Drawdown Plan Key Features

5 What is a Flexi-Access Drawdown pension? This is the term given to drawdown plans (including the FDP) taken out after 6 April These plans allow you to withdraw as little or as much as you want from your savings whilst keeping remaining savings invested for growth. What is meant by 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 FDP). What is meant by PCLS or Pension Commencement Lump Sum? This is the amount HM Revenue and Customs allow you to take tax free this is normally 25% of your uncrystallised pension savings. You can take a PCLS when you move your pension savings into an income-generating product, such as a Flexi-Access Drawdown plan or an annuity. For example, if you have 50,000 in your pension plan and want to move it into a drawdown plan, you can choose to take up to 12,500 (25% of 50,000) as a PCLS and the remaining 37,500 will go into your new drawdown FDP. Can I or my employer make contributions to the Flexible Drawdown Plan? No. Neither you or your employer can make contributions to the FDP or any Flexi-Access Drawdown. This is because a drawdown arrangement only holds crystallised funds where you have already taken benefits, even if it is only the PCLS. Where and how will my money be invested? Where you are transferring money from other pension schemes, we treat these payments as separate elements within your FDP. 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 fund or funds. 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 investment-choices/fund-centre 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 money 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 retain in the FDP? 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 Flexible Drawdown Plan? You can transfer funds from any UK registered pension plan into the FDP. 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 Flexible Drawdown Plan. For example, this FDP may have higher charges or greater investment risks than your existing pension and if you transfer, you may get back less than if you d stayed in your existing scheme. If you re unsure whether this FDP is suitable for you please seek professional advice. CanRetire Flexible Drawdown Plan Key Features 5

6 Questions and answers Can I transfer my Flexible Drawdown Plan money to another plan? Yes, you can use the value of your FDP to purchase another retirement income plan, such as a lifetime annuity, fixed term annuity or another providers drawdown plan at any time. Please note if you decide to 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. You can transfer your draw down plan to another provider. You may also be able to transfer part of your fund if you have more than one arrangement - please speak with your adviser if you want to pursue this option. You cannot transfer part of an arrangement. Any transfer payments will be made by cheque or direct transfer. What choices do I have when I come to withdraw my savings? When you transfer your funds to us, you may take up to 25% of the transfer as a tax free pension commencement lump sum (providing the funds are uncrystallised). You must elect to do this at the time of the transfer to the FDP as the option will not be available later. Withdraw all your savings at any time (this may have an impact on the amount of tax you have to pay so you should consult with a professional adviser before making such a decision). Withdraw part of your savings from a single fund or proportionately across all of your funds. Arrange for your withdrawals to be paid at regular intervals, for example, monthly, quarterly or yearly. How are my pension savings and withdrawals taxed? 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. Withdrawals, other than your pension commencement lump sum are subject to income tax, which will be deducted using the PAYE (Pay As You Earn) system. The tax treatment on withdrawals applies to all pension providers. 6 CanRetire Flexible Drawdown Plan Key Features Withdrawals will be added to any other income you received in that tax year, which begins on 6 April and ends on the following 5 April. This means if you take large withdrawals you could be pushed into a higher tax bracket as a result. When you first take a taxable income or lump sum from a pension, or where HMRC have not provided Canada Life with a valid tax code, we are required to deduct income tax using either an emergency tax code or tax code provided on your valid P45. This could mean you initially overpay tax. The amount of tax that you will pay will depend on your total income from all sources and your personal allowance. Any references to taxation are based on our understanding of current legislation and HM Revenue & Customs practice, which can change. What happens to my savings if I die? Your savings can be passed on to your spouse/civil partner, dependant or 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. You can amend your preferences at any time. Its important you keep your preferences up to date. 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 death occurs at age 75 or after, the death benefits paid to your beneficiaries will be taxed at their marginal rate of tax. 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 Flexi-Access Drawdown, tax free, if your death occurred before age 75. withdraw the savings from the Flexi-Access Drawdown, taxed at their marginal rate, if your death occurred aged 75 or after. on the death of your beneficiary, they have the option to pass on any remaining savings to a 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 will send you a statement each year showing the current value of each of the investments in your FDP. We strongly recommend that you discuss your FDP regularly with your professional adviser so you can review your investment choices. This will help you to keep track of whether your FDP is on course to provide you with the level of income that you need in the future. You can also ring our customer services team on who will provide you with the value of your FDP.

7 What is PAYE? PAYE is the same system employers use to deduct tax from salary. HMRC inform pension providers of the Income Tax they should deduct by supplying a tax code for that individual. What are the charges for the Flexible Drawdown Plan? The charges for your FDP will depend on the size of your savings pot and the investment choices you make. The charges we apply cover: Managing the Flexible Drawdown 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 FDP. this charge is taken by deducting units to the value of the charge from your FDP. the greater the amount you have invested, the lower the overall 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 this FDP. Adviser charges can include: Initial adviser charge taken at the outset of your FDP. 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 FDP has been set up. details of the charges that will apply to your FDP 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 give you details about the cost of providing advice. Adviser charges may be paid before any funds are allocated to your FDP (net of any PCLS) or after your FDP has been set-up. You may also agree to pay your adviser a fee directly or ask Canada Life to facilitate payment. Details of the charges applying to your Flexible Drawdown Plan are shown in your Personal Example. Can I change my mind? Yes. When you apply, you ll have the right to cancel your FDP. 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 FDP being issued, your FDP 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 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. Transfer values will be returned (where possible) to the ceding pension scheme. Any charges we have taken up to the point we receive your notice to cancel the FDP 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 FDP. Any adviser charges we have taken from your FDP and paid to your professional adviser, up to the point we receive your notice to cancel the FDP, 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 FDP 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 Flexible Drawdown 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. Where you have chosen to invest in funds managed by any of our external fund partners, your investment will be held within our pension fund, not directly in the external fund. This means that if one of the fund partners was unable to meet its obligations, you would not be able to seek compensation directly from them. If this happens, we are able to act on behalf of our policyholders but our rights to seek compensation from an external fund manager are not as comprehensive as those of an individual who invested directly. 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 FTP will be subject to and governed by the laws of England and Wales. Solvency And Financial Condition Report Our Solvency and Financial Condition Report is available on our website at Terms and conditions This document is a guide to the Key Features of the Flexible Drawdown Plan. You can read the full terms and conditions in the Flexible Drawdown 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 May 2017 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/2