Group Personal Pension Plan/Group Stakeholder Pension Plan Example Illustrations

Group Personal Pension Plan/Group Stakeholder Pension Plan Example Illustrations

The Financial Conduct Authority is a financial services regulator. It requires us, Clerical Medical, to give you this important information to help you to decide whether our Group Personal Pension or Group Stakeholder Pension Plan is right for you. You should read this document carefully so that you understand what you are buying, and then keep it safe for future reference. The following example illustrations should be read with the Key Features of the Clerical Medical Group Personal Pension Plan or the Key Features of the Clerical Medical Group Stakeholder Pension Plan, as appropriate. The illustrations show the yearly pension an individual might receive based on different contribution amounts and terms to retirement should certain assumed growth rates be met. The projected pension figures assume no tax free cash is taken at retirement. Under current rules, however, up to 25% of the value of the pension pot can be taken as a tax free cash sum, in return for a smaller taxable pension. The figures also assume: the individual will retire at age 65; all monthly contributions are paid until age 65; the individual is eligible for UK tax relief and basic rate tax relief is added to the individual s net contributions; contributions increase each year at 2.5%; a Total Annual Fund Charge of 1% is deducted from the value of the plan each year; the pension is paid at the beginning of each month from age 65, for the rest of the individual s life, and, in any event, for a minimum period of 5 years; the pension remains level in payment; that both tax and pension legislation do not change; price inflation is 2.5% each year. If you are a Scottish taxpayer the tax relief you will be entitled to will be at the Scottish rate of income tax, which may be different from the rest of the UK in the future. The value of the tax benefits of a personal pension depend on your personal circumstances. Both your circumstances and tax rules may change in the future. 2

You ll receive a personalised illustration if you start a plan with us. This will be sent after your plan is set up. However, if you d like an illustration which is personal to your own circumstances before making any decision to set up the plan, then please contact your adviser or Clerical Medical. We may record and monitor calls to help us improve our service. Years to Retirement Initial Gross Monthly Contribution 100 200 300 400 40 Years Growth Rate Growth Rate Growth Rate Growth Rate Lower -1.7% Middle 1.3% Higher 4.2% Lower -1.7% Final Year Gross Contribution* 261.94 523.89 785.93 1,047.90 Middle 1.3% Higher 4.2% Lower -1.7% Middle 1.3% Higher 4.2% Lower -1.7% Middle 1.3% Higher 4.2% Projected Yearly Taxable Pension 900 2,100 5,170 1,800 4,200 10,300 2,700 6,310 15,500 3,600 8,410 20,600 30 Years Growth Rate Growth Rate Growth Rate Growth Rate -1.7% 1.3% 4.2% -1.7% 1.3% 4.2% -1.7% 1.3% 4.2% -1.7% 1.3% 4.2% Final Year Gross Contribution* 204.63 409.25 613.96 818.61 Projected Yearly Taxable Pension 779 1,580 3,260 1,550 3,170 6,520 2,330 4,760 9,780 3,110 6,350 13,000 20 Years Growth Rate Growth Rate Growth Rate Growth Rate -1.8% 1.2% 4.1% -1.8% 1.2% 4.1% -1.8% 1.2% 4.1% -1.8% 1.2% 4.1% Final Year Gross Contribution* 159.86 319.71 479.62 639.48 Projected Yearly Taxable Pension 604 1,060 1,840 1,200 2,130 3,690 1,810 3,190 5,530 2,410 4,260 7,380 10 Years Growth Rate Growth Rate Growth Rate Growth Rate -2.1% 0.8% 3.7% -2.1% 0.8% 3.7% -2.1% 0.8% 3.7% -2.1% 0.8% 3.7% Final Year Gross Contribution* 124.89 249.77 374.68 499.55 Projected Yearly Taxable Pension 352 537 791 705 1,070 1,580 1,050 1,610 2,370 1,410 2,140 3,160 *The Final Yearly Gross Contribution amounts shown have not been adjusted to take account of inflation. These show what would actually be contributed. 3

Important notes for table on page 3: These figures are for illustrative purposes only. The projected pension figures are based on a plan that invests in our Balanced Option. This Option allows for the effect of Lifestyle Switching where the investments of the plan are moved into lower risk funds as retirement approaches. We have assumed progressively lower growth rates for these lower risk funds. Please read our Investor s Guide for group pensions funds (X1713) for details of all our Options and how Lifestyle Switching works. This illustration shows, in today s prices, the final pension benefits that might be payable on retiring. This means we have allowed for price inflation of 2.5% each year to give an indication of how much the final fund value will buy. This example is based on a plan that invests in our Balanced Option and uses our assumed growth rates for the appropriate fund(s) when payments start at the beginning of each term shown. Other firms may use different growth rates for their illustrations and charges may vary. Firms generally use the same rates as each other to show how retirement funds may be converted into pension income. Price inflation reduces the worth of all savings and investments over time. The pension benefits payable could be more or less than shown. The benefits may be less than the payments made. These figures are only examples and aren t guaranteed they re not minimum or maximum amounts. What you might get back depends on a number of factors, including: how your investment grows; the actual age you choose to take your benefits; the contributions you make; the period your Plan is invested; the charges that apply; how much it costs when you retire to convert your retirement fund into pension income and; the tax treatment of your Plan. The actual charges that apply to your plan may be higher or lower than those we have assumed and will depend on the Lifestyle Option or funds you choose. To help keep track of your Plan, we ll send you a statement each year. The following tables provide information to highlight the effect that our deductions may have on a Group Personal Pension Plan and a Group Stakeholder Pension Plan. They assume that; the values are shown as at today s prices; the individual has 40 years until their selected retirement age at age 65; the plan invests in our Balanced Option; contributions increase each year by 2.5%; a Total Annual Fund Charge of 1% is deducted from the value of the plan each year. The transfer values shown are not guaranteed. 4

How much could I transfer to another pension plan? The following example figures are based on a 25 year old, initially contributing 300 gross per month until the date of transfer. The table shows the effect of our charges and any adviser charges based on the assumed investment growth at Middle Rate(s) each year as shown on page 3. All pension providers have to give you these figures to help compare the charges for their plans. Number of years since commencement Total gross contribution to date (taking inflation into account) Effect of deductions to date What the transfer value might be The Early Years 1 3,559.58 19 3,560 2 7,119.16 75 7,150 3 10,678.76 168 10,700 4 14,238.36 298 14,300 5 17,798.01 467 18,000 The Later Years 10 35,596.66 1,910 36,400 15 53,395.67 4,430 55,200 20 71,194.58 8,130 74,500 25 88,993.42 13,100 94,200 30 106,792.51 19,500 114,000 35 124,591.52 27,400 135,000 At age 65 142,390.67 35,700 150,000 The information on the reduction in investment growth can be used to compare the effect of charges with similar products. 5

What are the deductions for? Deductions are made to cover our charges, expenses, profit and any other adjustments. The bottom line of the table on the previous page shows that, over the term to the individual s retirement date (65), the effect of the total deductions could amount to 35,700 in today s prices. Putting it another way, this would have the same effect as reducing the investment growth as shown in the following table. Years to Retirement If you transfer at the end of year Charges will reduce investment growth to that date 40 years 5 From 1.4% to 0.4% 10 From 1.4% to 0.4% At age 65 From 1.3% to 0.3% 30 years 5 From 1.4% to 0.4% 10 From 1.4% to 0.4% At age 65 From 1.2% to 0.2% 20 years 5 From 1.4% to 0.4% 10 From 1.4% to 0.4% At age 65 From 1.1% to 0.1% 10 years 5 From 1.4% to 0.4% At age 65 From 0.8% to -0.2% The information provided is for illustrative purposes only. The growth rates shown above apply at that particular point in the plan lifecycle against the average growth rate. 6

www.clericalmedical.co.uk Clerical Medical is a trading name of Scottish Widows Limited. Scottish Widows Limited is registered in England and Wales No. 3196171. Registered office in the United Kingdom at 25 Gresham Street, London EC2V 7HN. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number 181655. X2656/0817