Value Protection Death Benefit Guide. This is intended for Advisers and Financial Intermediaries only and has not been approved for customer use

Transcription

1 Value Protection Death Benefit Guide This is intended for Advisers and Financial Intermediaries only and has not been approved for customer use 1

2 Value Protection Benefit Built in as standard to all Primetime Retirement Fixed Term Drawdown Plans Our Fixed Term Drawdown Plan comes with Value Protection benefit as standard, which provides greater flexibility and protection of your accumulated Pension fund on death than traditional lifetime annuities. On death the plan benefits can be designated to the surviving spouse, or other eligible beneficiaries with the remaining income and maturity values paid out in line with the original policy terms. Alternatively a lump sum payment can be requested which represents the full market value of the underlying plan investments on the date of payment. We believe that Value Protection should be discussed with all clients considering a Lifetime Annuity as the Value Protection benefits provided by our fixed term plans could prove significantly better and more tax efficient for their beneficiaries on death, if that is a consideration of the client. With a Primetime Retirement Fixed Term Drawdown Plan, the client automatically benefits from this feature along with the security of a fixed income (if selected) and a known maturity lump sum at the end of the plan term. Value Protection Benefit 2

3 Primetime Fixed Term Drawdown Plan versus Lifetime Annuity 100,000 pension fund, invested in two different ways. Joint Life Lifetime Annuity 100% Spouse s Pension Dies after five years Dies nine years later 100, ,000 annual income Added to other income, taxed at marginal rate 73 5,000 annual 71 income 80 Tax free No further payments to beneficiaries 6 Year Fixed Term Drawdown Plan Value Protection added Dies after five years Dies nine years later 100, ,000 annual income Added to other income, taxed at marginal rate ,000 cash lump sum Tax free or Income Tax free 80 Any residual fund can be passed to beneficiaries Illustrative figures to demonstrate different tax treatments of plan types clients should base decisions on obtaining current Lifetime Annuity rates and a personalised illustration for the Primetime Fixed Term Drawdown Plan 3

4 What are the options and tax treatment? The Primetime Retirement Fixed Term Drawdown Plan allows benefits to be designated to a surviving spouse or other eligible beneficiaries on death of the policyholder. Alternatively a lump sum payment can be requested which represents the full market value of the underlying plan investments on the date of payment. Plan designated to beneficiaries and continues The rules relating to tax rates applicable on death have changed since the introduction of pension freedoms: If the client dies prior to age 75, any beneficiary can take the entire pension fund as a tax free lump sum or as a tax free income (through the purchase of an annuity or income drawdown). If the client dies after age 75, any beneficiary has three options: Plan designated to beneficiaries and continues Take a lump sum Purchase an alternative retirement income product Under all options, the beneficiary will pay income tax at their marginal rate Take a lump sum Purchase an alternative retirement income product 4

5 Tax treatment of DC pension schemes on death How benefit is paid Who it is paid to How it is taxed Yes or pension? Pension Any beneficiary No tax charge Under 75 at age at death? No or pension? Pension Any beneficiary Their marginal rate of tax 5

6 Why choose Primetime Retirement? Changes in Personal Circumstances Lifetime annuities do not cater for the fact that retirement is an incredibly significant period in our lives that can sometimes be a catalyst for change. Once a lifetime annuity is purchased, it cannot be stopped or changed to suit new needs. For example, if a client was to invest their entire pension fund into a lifetime annuity and then became seriously or critically ill, they would not be able to access their whole pension fund in order to make their remaining time as comfortable as possible, or to pay for care. Why Choose Primetime Retirement? Some retirement income plans do not include any death benefits with their policies and others do not include them as standard, so if your client doesn t opt in to a death benefit plan, they could lose all of their remaining fund upon death. At Primetime Retirement, we include Value Protection with ALL of our Fixed Term Drawdown Plans as standard, so this means that on death the plan benefits can be designated to the surviving spouse (or other eligible beneficiaries) or alternatively a lump sum payment can be requested which represents the full market value of the underlying plan investments on the date of payment.- giving clients the ultimate peace of mind in knowing that their beneficiary is provided for. Value Protection Benefit 6

7 ADDRESS Primetime Retirement, Baines House, 4 Midgery Court, Fulwood, Preston, PR2 9ZH PHONE info@primetimeretirement.co.uk WEBSITE Primetime Retirement Limited is authorised and regulated by the Financial Conduct Authority. FCA Number Registered address: Primetime Retirement Limited, Baines House, 4 Midgery Court, Fulwood, Preston PR2 9ZH. CPT73.2 (05/18)