Pensions UPDATE OF IMPORTANT FACTS ABOUT YOUR INDIVIDUAL PERSONAL PENSION
We ve changed the name of the CIS Individual Personal Pension Scheme to the Royal London Individual Personal Pension Scheme (No3) as part of the rebrand to Royal London. There have been no changes to the terms of your plan. What is an Individual Personal Pension plan? Your pension plan is a tax-efficient way of building up a pension pot to provide you with pension benefits in your retirement. The options available to you are included in the What choices will I have when I come to take my pension benefits? section. Do I get tax relief on my pension contributions? To encourage people to save for their retirement, the Government gives basic rate income tax relief on your pension contributions. Basic rate taxpayers For basic rate taxpayers this means that if, for example, you pay 80 a month into your Individual Personal Pension plan, we would collect an additional payment of 20 from the Government and pay this into your plan. You would then have 100 a month being invested in your plan. Higher and additional rate taxpayers Higher rate and additional rate taxpayers also qualify for basic rate income tax relief. If you are a higher rate or additional rate taxpayer, and you pay the same 80 a month into your Individual Personal Pension plan, we would collect the same 2 additional payment of 20 from the Government and pay this into your plan. You may then be able to claim further tax relief through your Self Assessment tax return if you complete one, or by asking H.M. Revenue and Customs to adjust your PAYE (Pay As You Earn) tax code if you don t. Are there any limits on the amount I can save to my pension? There is no limit to the contributions that can be paid into your pension schemes each year. There is however, a limit to the contributions on which you are eligible for tax relief. The limit is the greater of: - 3,600 and - 100% of your earnings. In addition to this limit there are further restrictions on the amount of contributions you can pay into your pension each year. Annual Allowance If contributions to all your pension schemes exceed a limit known as the annual allowance, you may have to pay a tax charge on the amount over the annual allowance. The contributions include any made by someone else on your behalf, such as by your employer. If you have accessed pensions savings from another pension plan under the flexibilities introduced on 6 April 2015, you will be subject to a lower limit known as the Money Purchase Annual Allowance. Lifetime Allowance There is a maximum pension pot you can build up in all pension schemes over your lifetime without having to pay a tax charge. This is called the lifetime allowance.
You can find more information on hmrc.gov.uk and if you think you have exceeded these limits we strongly recommend you seek advice from a regulated financial adviser. Where can I invest my pension contributions? You can invest your pension contributions in a range of Royal London funds managed by our own fund managers, or in a selection of other funds managed by expert and leading fund managers. Different levels of risk apply to different funds. We recommend that you choose a fund, or combination of funds, that suits your goals and your own attitude to risk. A general principle is that potential return rises with an increase in risk. Each fund is split into units and each contribution you make buys you a certain number of units in the funds of your choice. The value of your plan at any time is the number of units you have in each fund multiplied by the current unit price. The value of your plan can go up and down, reflecting daily changes in the value of the investments held in each fund. It s a good idea to regularly review your investment choice (at least annually). We publish the unit prices on our website royallondongroup.co.uk/rlcis, along with a Fund Guide that includes more information (including charges) on the funds we offer. You can switch the money you ve already saved in your pension pot to different funds and you can also direct future pension contributions to different funds. What is the RLCIS With-Profits Pension Fund? The RLCIS With-Profits Pension Fund, referred to here as the with-profits fund, operates slightly differently to our other funds. The value of the investments in this fund will still fluctuate, reflecting daily price changes in the underlying assets; however, we smooth our investment returns to protect against extreme changes in investment markets. By smoothing we mean we hold back some of the profit made when investment returns are good, so that we can increase returns at a later date if investment returns are lower, giving a more stable return. We do not profit from managing this fund in this way all money in the fund goes back to the policyholders. We explain how we manage the withprofits fund in the Principles and Practices of Financial Management (PPFM) of the RLCIS With-Profits Pension Fund document, available on our website royallondon.com. Please click on About Royal London then Corporate Governance then PPFM. You may also see this fund referred to in your statement or on the Royal London website as the Royal London With-Profits Pension Fund. What is a Market Value Reduction? In certain circumstances it may be necessary to reduce the plan value available to those who are taking money out of the with-profits fund. We would do this by applying a Market Value Reduction (MVR). It is most likely that we ll need to apply an MVR when a large amount of 3
money is being taken out of the withprofits fund at a time when investment values have been particularly depressed. We would only use an MVR in order to maintain a fair level of return to everyone still invested in the with-profits fund. If we didn t apply one, the extra amount given to someone leaving the fund would have to come from other investors who might, therefore, receive less than their fair share. An MVR will not be applied in the event of a death claim or at retirement. How flexible is my Individual Personal Pension plan? You can take up to two contribution holidays in any 12-month period. You can also increase, decrease, stop and restart your pension contributions at any time. However, any contributions you do make must be at least 75 per month. You can make lump sum payments into your plan at any time. You can change where your funds are invested at any time by switching your funds and you can also invest in any number or combination of the funds available. If your employer is contributing into your plan, and you change jobs, you may be able to continue paying into your plan. When can I take my pension benefits? Pension benefits can be taken from age 55. We will write to you in the months leading up to your Chosen Retirement Date* to inform you of your retirement options, unless you contact us to request an earlier retirement date. What choices will I have when I come to take my pension benefits? You can access your pension pot at any time after age 55 even if you re still working. You can choose any of the following options: You can use your pension pot to provide a lifelong, regular income (also known as a lifetime annuity) with a guarantee that the income will be paid for as long as you live. A quarter of your pension pot can usually be taken as a tax-free lump sum and any other payments will be taxed as earned income. You can take all of your pension pot in one go as a single lump sum. A quarter of your pension pot can usually be taken tax-free and the rest will be taxed as earned income. You can leave your pension pot invested and take it more flexibly. You could take it as a number of lump sums. A quarter of each lump sum is normally paid tax-free with the rest taxed as earned income. Alternatively, you could take it as a flexible income where a quarter of the whole pot is taken tax-free with all future payments taxed as earned income in the tax year in which they are taken. At any time you can use any remaining pension pot to provide a lifelong, regular income. You don t have to take your pension pot when you reach retirement. You can choose to keep it where it is and then take it at a time that best suits you. Delaying taking your money may give your pension pot a chance to grow but it could also go down in value too. 4
Not all the above options may be available to you under your Individual Personal Pension and you may need to move to a new pension plan to get the option that you want. You cannot normally take advantage of these options until you have reached age 55. However, if you are unable to work because of poor health then you may be able to take your benefits earlier. As you approach your chosen retirement date we will send you a detailed pack with all your options and with details of what you need to do. To help you understand your options and make the right choices, the Government provides a free and impartial guidance service - Pension Wise. We strongly recommend that you use this service to help you understand your options and make the right decision. You can access Pension Wise online by visiting pensionwise.gov.uk or by calling them on 0800 138 3944. This service will not provide advice or recommend specific products or providers. If you feel you need advice, we recommend you talk to a financial adviser. If you do not have a financial adviser, you can get details of local financial advisers by visiting unbiased.co.uk. Advisers may charge for providing such advice and should confirm any cost to you beforehand. What happens if I die before I take my pension benefits? If you die before you take your pension benefits, we will return the value of your pension pot to your beneficiaries. If you die before the age of 75, it will normally be paid tax free. If you die after the age of 75, pension benefits paid to an individual will be taxed as income at the recipient s marginal rate. If the pension benefits are paid to a trust or company, tax at 45% will be deducted before payment is made. If you purchased separate life cover with your pension, and this cover is in force when you die, then we will pay an additional lump sum benefit. What happens if I am in ill-health? If you took out the Payment Cover for Sickness option with your pension plan, and are still paying for this cover, please contact us if you are unable to work for any significant period. We may be able to pay your pension contributions for you. If you are unsure whether you have payment for sickness cover, please contact us on 0345 605 7777. If you retire early due to ill health, we may be able to make special arrangements for when and how you access your pension pot. Can I transfer my plan? You can transfer your plan to another pension provider at any time before you take your pension benefits. We will not charge you for doing this. We recommend that you speak to a financial adviser before you transfer your plan. 5
Additional information This guide is a short reminder of the main features of your Individual Personal Pension plan and any important changes that might affect your plan. You should refer to the policy document we sent to you when you took out your plan, together with any contract endorsements, for more detailed information. In the event of conflict between this guide and the policy document, the policy document will prevail. If you need more information contact our Customer Contact Centre 0345 605 7777 Monday to Friday 8am to 8pm and Saturday and Bank holidays 8am to 5pm. or visit royallondongroup.co.uk/rlcis Notes *Throughout this document, whenever we refer to Chosen Retirement Date, this is the date that you originally stated you would like to retire and is the date shown on your annual statement (unless subsequently changed). If you would like a copy of this leaflet in large print, audio or Braille, please call us on 0345 605 7777. Lines open Monday to Friday 8am-8pm and Saturday 8am-5pm. Royal London Churchgate House, 56 Oxford Street, Manchester, M1 6EU royallondon.com The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL. MKT2624_RL 03/2018