HELPING YOU PREPARE FOR YOUR RETIREMENT

Document Info Form 54666 Job ID 57413 Size A5 Pages 16 Colour CMYK Version MARCH 2016 Operator Info 1 ALI 16/02/16 2 ALI 18/02/16 3 ...
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54666

Job ID

57413

Size

A5

Pages

16

Colour

CMYK

Version

MARCH 2016

Operator Info 1

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18/02/16

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HELPING YOU

PREPARE

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FOR YOUR

RETIREMENT

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OPERATOR CHECKED Date

HELPING YOU PREPARE FOR YOUR RETIREMENT You’re nearing your retirement, which means you can now access your pension savings and it’s time for you to consider what to do next. Whether it’s revisiting old passions or looking forward to enjoying new freedom, we’re here to help you consider your options and achieve the lifestyle you want. 2015 brought the biggest pension changes for a generation and these give you more choice than ever before. We’ll help you understand all the options that are available and how they affect your own pension. While it can seem like a lot to think about, spending a little time finding out more now could help you make the best decisions when you are ready to retire.

www.scottishwidows.co.uk/options is a great place to explore the options available to you. By using a range of case studies and interactive tools, you can begin with the retirement basics, consider what you might need to live on and how long your pension will last.

ENT

Contents

PAGE 2 YOUR RETIREMENT TIMETABLE

nsion savings old passions sider your

PAGE 4 HELP IS AT HAND

e you more re available

PAGE 5 YOUR PENSION OPTIONS

more now could .

PAGE 6 LEAVE IT FOR NOW FLEXIBLE ACCESS TO YOUR PENSION PAGE 7 A GUARANTEED INCOME FOR LIFE – ANNUITIES TAKE IT ALL IN CASH PAGE 8 WHAT DO YOU NEED TO CONSIDER? PAGE 10 PENSIONS SCAMS PAGE 11 WHAT DO I DO NEXT?

e retirement n will last.

1

Preparing for your retirement

THERE ARE

6 MONTHS BEF

• get advice or g

what to do with enclosed inform – the Governm or you can go o pensionwise

• talk to a financi

YOUR RETIREMENT TIMETABLE

you for any fina If you don’t alre you can visit w list of financial

• make sure you u

YOU CAN ACCESS YOUR PENSION NOW OR YOU CAN LEAVE IT INVESTED. WHATEVER YOU DECIDE, YOU SHOULD TAKE THE TIME TO THINK ABOUT YOUR OPTIONS NOW. The Government introduced changes to pensions in 2015 which means that you have much more freedom over what to do with your pension savings. You don’t need to take your benefits now. You can leave your pension invested so it has the potential to continue to grow, or take some or all of it now, or use it to provide an income. When you take your pension, some will be tax-free but the rest will be taxed. We’ll explain these options in more detail later on in this booklet.

visit our website options

6 MO

6 WEEKS BEFO

2

The Government’s free service will give you impartial personalised guidance.

If you’ve not alread

www.gov.uk/pensionwise

• contact us to le

www.scottishwidows.co.uk/options

remember to m

NVESTED. E

ave much more enefits now. You some or all of it ee but the rest will

dance.

Preparing for your retirement

THERE ARE KEY THINGS YOU SHOULD CONSIDER AS YOU APPROACH YOUR CURRENT RETIREMENT DATE:

6 MONTHS BEFORE RETIREMENT YOU’LL NEED TO: • make sure you aren’t giving up any valuable

• get advice or guidance before you decide

guarantees, if you’re thinking about changing your pension date.

what to do with your pension savings. We’ve enclosed information about Pension Wise – the Government’s free guidance service, or you can go online at www.gov.uk/ pensionwise

• take time to shop around – to ensure you get the best retirement for you.

• decide what’s going to work best for you –

• talk to a financial adviser, who may charge

will you keep working, or do you want some money now and take some later?

you for any financial advice they give you. If you don’t already have a financial adviser, you can visit www.unbiased.co.uk to find a list of financial advisers near you.

• think about how much income you need and

when you need it. Also include income from your State Pension and take into account the pensions you have with different providers.

• make sure you understand your options and

visit our website www.scottishwidows.co.uk/ options

• track down any lost pensions visit –

www.gov.uk/find-lost-pension for more information.

6 MONTHS

6 WEEKS

YOUR RETIREMENT TIMELINE 6 months 6 weeks

6 WEEKS BEFORE RETIREMENT YOU’LL NEED TO: If you’ve not already done so:

• contact us to let us know your decision. You can defer your pension if you think it’s best but remember to make sure you aren’t giving up any valuable guarantees.

www.scottishwidows.co.uk/options

3

Preparing for your retirement

HELP IS AT HAND There are lots of sources available to help you to make your decision.

Impartial guidance

Impartial and independent advice

Support from us

As a starting point, Pension Wise – the Government’s free guidance service – can provide you with personalised guidance about the options available to you and the tax implications of these. It also gives tips for shopping around for the best deal. Further details are enclosed with this pack or you can go online at www.gov.uk/pensionwise

For advice that will be personalised to your own circumstances, you can speak to your financial adviser. They will charge you for any financial advice they give you. If you don’t already have a financial adviser, you can visit www.unbiased.co.uk to find a list of financial advisers near you. If your policy was set up by your employer they may have an adviser who can help you.

Visit www.scottishwidows. co.uk/options for help along your path to retirement. Our 5 steps to retirement website clearly covers the basics of pension, tax and retirement as well as explaining the options available to you. It’s also full of interactive tools and case studies to help you understand your choices.

We’ve also enclosed the Money Advice Service booklet along with this pack which contains details about how to shop around and other contacts that can help.

4

£ £

Some of the options transfer your pensio When you call us, w

4

www.scottishwidows.co.uk/options

Preparing for your retirement

YOUR PENSION OPTIONS 4 OPTIONS ON HOW YOU CAN TAKE YOUR MONEY

from us

w.scottishwidows. ions for help along to retirement. ps to retirement early covers of pension, tax ment as well ing the options to you. It’s also eractive tools and es to help you d your choices.

Leave it for now. If you don’t need to take your pension savings yet, you can leave it for now, keep it invested and make a decision when you’re ready to retire, but make sure if you do this you won’t lose any valuable guarantees.

Flexible access to your pension savings. You can take a part of your total pension savings whenever you like and leave the rest invested. Normally, up to 25% of your pension savings can be taken as a tax free lump sum. The remainder will be taxed.

A tax free cash lump sum and a guaranteed income for life – an annuity.

£ £

Normally, up to 25% of your pension savings can be taken as a tax free cash lump sum. The remainder is then used to provide an income for life (your annuity), which will be taxed.

Take it all as cash. In addition to the 25% tax free cash lump sum, you can take your remaining pension savings as cash, although you will have to pay tax on this.

Some of the options explained in this booklet may not be available under your policy. You may have to transfer your pension to another policy with us, or another provider, to access the full range of options. When you call us, we can confirm if your preferred option is available.

www.scottishwidows.co.uk/options

5

LEAVE IT FOR NOW

A GUARANTEE

The aim is to allow you to take your time and access your benefits when you need them DO NOTHING NOW

• The new rules let you access pensions

• You can continue to pay into

• You should check if by leaving your

• You should consider whether

from age 55, but you don’t have to

your pension

your investment strategy remains appropriate for your retirement needs

pension for now, you’re not losing any valuable guarantees or benefits

• It will mean your pension has SEE HOW YOUR MONEY COULD GROW

DECIDE WHAT TO DO LATER

the potential to grow

You must use the value of your plan with us to take benefits by age 75 at the latest. However, you may be able to defer taking your pension by transferring to another provider before age 75. If we don’t hear from you before age 75, we’ll automatically buy an annuity for you so none of the other options mentioned in this booklet will be available. We can’t change the annuity terms once it’s been set up so it’s really important you contact us with your decision before you reach 75.

TAKE UP TO 25% TAX-FREE

LEAVE THE REST INVESTED

£ TAKE BITS WHEN YOU NEED IT

SHOP AROUND

These options may not be available under your policy Remember you should take the time to shop around Flexible-Access Drawdown The aim is to allow you more flexibility on how and when you take your income • You can normally take 25% of your • Remember what you take after your fund as a tax free cash lump sum 25% tax free cash will be subject to tax • The remainder is held in what we call a Flexible-Access Drawdown • Once you start taking income from Plan, where it will have the potential the remainder of your fund the to grow total amount you can pay into most other pensions will be £10,000 • You can then set up a regular income, each year when you’re ready (you don’t have to take any income) or you can take lump • Make sure you’ve got enough to live sums when you need them on – your money could run out if your investment performs badly or you –– or a combination of the two withdraw too much

Partial Pension Encashment (PPE)

The aim is to allow you more flexibility • With Partial Pension Encashment each time you take an amount from your pension 25% is tax free and the remainder will be taxed as income • This means the rest will continue to be invested and have potential to grow



TAKE UP TO 25% TAX-FREE

£ USE THE REST FOR A GUARANTEED INCOME

SHOP AROUND





It’s The

£ TAKE IT ALL AS CASH

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25%



TAKE 25% TAX-FREE

75% GET THE REST SUBJECT TO TAX

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• • Once you start to access your pension



in this way the total amount you can pay into most other pensions will be £10,000 each year You have to tell us each time you want to take some income

With Flexible-Access Drawdown and Partial Pension Encashment you may be subject to emergency tax, this means you could be paying much more tax initially than you originally thought. Visit our interactive tax calculator within our retirement planning website www.scottishwidows.co.uk/options for more information. 6

The you

TAKE IT ALL IN

FLEXIBLE ACCESS TO YOUR PENSION

25%

25%

• •

ANY COMBINA

You don’t have to meet your own ne

A GUARANTEED INCOME FOR LIFE – ANNUITIES

ts when you to pay into

der whether strategy iate for your

at the latest. g to another provider cally buy an annuity available. We can’t you contact us with

The aim is to provide you with certainty on the income you receive for the rest of your life • In addition, if you have certain health • You can normally take 25% of your fund conditions or lifestyle choices which as a tax free cash lump sum and use TAKE UP TO 25% may lower your life expectancy, you the rest to buy an income for life (an TAX-FREE might get up to 50% as much income* annuity) by taking an enhanced annuity • Visit our website • If you choose an annuity which has a www.scottishwidows.co.uk/ options guaranteed period or provides for a to work out what regular income you dependant’s income, your income will USE THE REST FOR A might get GUARANTEED INCOME be lower. If you want an annuity that • The amount of income you’ll get will increases over time, your starting income depend on your circumstances, such will be lower as your age and where you live

25%

£

*Source – Which? website, February 2016

SHOP AROUND

It’s important to take the time to shop around if you are considering buying an annuity. The enclosed Money Advice Service booklet gives you tips about shopping around.

TAKE IT ALL IN CASH

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TAKE IT ALL AS CASH

Full Pension Encashment (FPE) The aim is to allow you to take your entire pension as a lump sum

• The new rules mean you can access all your pension as cash

• Remember 25% is tax free, the

25% TAKE 25% TAX-FREE

75% GET THE REST SUBJECT TO TAX

remainder will be taxed as income



• You will be subject to emergency

tax if you are taking your pension in this way. This means you could be paying much more tax initially than you originally thought. It’s your



responsibility to check you’ve paid the right amount of tax with HMRC or your local tax office. Once you take your pension in this way the total amount you can pay into most other pensions will be £10,000 each year Remember, taking it all as a lump sum may leave you with no income in retirement.

Visit our interactive tax calculator within our retirement planning website www.scottishwidows.co.uk/options for more information.

Small Pots The aim is to allow small pots to be converted into cash • Up to three pots of £10,000 each can in the year of payment. The tax be taken as cash deducted may not be the right amount due, when all your income for the • By using this route you don’t restrict year is taken into account. After the the amount you pay into pensions in following 5 April, HMRC will deal with the future any additional tax or refund due. If you think you have paid too much tax, • Remember 25% is tax free, the you can ask HMRC for a tax refund. remainder will be taxed as income

ANY COMBINATION You don’t have to use just one option. You can combine these options in many different ways to meet your own needs. 7

Preparing for your retirement

WHAT DO YOU NEED TO CONSIDER? Depending on what you want to achieve, you should consider what you’ve got and how your policy works. Our website www.scottishwidows. co.uk/options is a great starting point, and these are some key things you should be considering:

you were looking for car or home insurance and you should do the same when it comes to your pension. Shopping around could mean you’ll have a better retirement income than buying an annuity or Flexible-Access Drawdown from us.

DOES MY POLICY HAVE ANY GUARANTEES THAT I COULD LOSE IF I CHANGE MY RETIREMENT DATE?

Information you’ll need to shop around:

Some pensions have valuable features which are only available at your selected retirement date. If you don’t take these benefits at your selected retirement date or change this, you could lose these forever. If you have a guaranteed annuity rate it could be extremely valuable, in some circumstances, it could almost double your income. It’s important to send us your documentation by the date specified or you may lose your guarantee. You should consider any valuable features carefully, and it’s important that you take extra care to read through your policy documentation.

WHAT IF I AM INVESTED IN WITH PROFITS? If your policy invests in a Unitised With Profits Fund and you take your retirement benefits on a date other than your selected retirement date, there may be a market value reduction applied to the policy value. If you’re unsure whether a guarantee or market value reduction could apply to your policy please check your policy documentation or contact us.

WHY IS IT IMPORTANT TO SHOP AROUND? It’s really important to shop around if you’re looking at a guaranteed income for life or FlexibleAccess Drawdown. You’d probably shop around to get the best deal if

8

Our website www.s options has more i costs, inflation and Remember to consi from a State Pensio

When you shop around you’ll need to understand the following:

HELP

• The value of your pension • Whether you’ll be taking a tax-free cash lump

Use the free gu

sum

• Your personal circumstances – are you

married, have a partner or a dependant? If you smoke or have medical conditions, that may affect your choices. • Whether you are concerned if your income will lose its value because of inflation. For more information about shopping around go to http://reference.scottishwidows.co.uk/ docs/55198.pdf

www.gov

speak to your fin charge for this), i

WILL THIS BE YOUR ONLY SOURCE OF INCOME? As you’ve now got the flexibility to take your entire pension as cash, it’s a good idea to work out what you need to live on and whether you can afford to retire, or if you want to take some benefits now and retire later. Experts appointed by the Government have calculated that the typical worker needs an income equivalent to about two thirds of their final salary to maintain their lifestyle when they retire#. As a guide, even to have a basic standard of living, a retired couple will need a minimum income of £11,362* per year. If you’re single that amount becomes £7,740* per year. Remember, these figures aren’t set in stone. Use them as a guide to help you work out what you’ll need for your own retirement. #

Source: Telegraph February 2015.

* Figures calculated using minimumincome.org.uk – as at February 2016.

www.scottishwidows.co.uk/options

www.u

or w

www.scottishw

State pension and

The State Pension i retirement income It is paid by the Gov you’re entitled to on age will depend on National Insurance

me insurance and it comes to your uld mean you’ll have an buying an annuity from us.

Preparing for your retirement

Our website www.scottishwidows.co.uk/ options has more information about living costs, inflation and working in retirement. Remember to consider what you might get from a State Pension.

shop around:

need to understand

a tax-free cash lump

HELP IS AT HAND Use the Government’s free guidance service

ces – are you r a dependant? ical conditions, that

ed if your income of inflation. hopping around hwidows.co.uk/

www.gov.uk/pensionwise speak to your financial adviser (they will charge for this), if you don’t have one go to

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ty to take your ood idea to work out whether you can to take some Experts appointed lated that the me equivalent to salary to maintain # . As a guide, even ing, a retired couple of £11,362* per year. ecomes £7,740* per aren’t set in stone. ou work out what ment.

ncome.org.uk –

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working life. You can choose to defer receiving the State Pension to a later date. There’s more information about deferring your state pension and the benefits you could be entitled to at our website www.scottishwidows.co.uk/options If you receive state assisted benefits and you start taking income or a lump sum from your pension it may affect these benefits. You should check this before you take any pension benefits.

Do you have any other private or company pensions? If you have other pensions, or if are already taking an income from a pension, you might want to consider how much they are worth before deciding what to do.

THINK ABOUT YOUR DEPENDANTS – WHAT HAPPENS WITH YOUR PENSION IF YOU DIE? You should discuss the impact of your options with Pension Wise or your Financial Adviser.

WHAT ABOUT TAX?

or we can help at

www.scottishwidows.co.uk/options

State pension and benefits The State Pension is the main source of retirement income for a lot of people in the UK. It is paid by the Government and the amount you’re entitled to once you reach State Pension age will depend on how much you have paid in National Insurance Contributions during your

Most people still need to pay tax when they retire. You can normally take up to 25% of your pension tax-free. Once you’ve had your tax-free amount, any money taken from your pension is added to any other income you get in the tax year you take it. This includes paid work, taxable income from any other pensions and your State Pension. If at the end of the tax year, you’ve either under or overpaid on tax, it’s your responsibility to sort it out with HM Revenue and Customs (HMRC). The tax treatment depends on your individual circumstances. Your circumstances and tax rules may change in the future.

www.scottishwidows.co.uk/options

9

Preparing for your retirement

PENSIONS SCAMS An increasing number of dishonest companies are targeting savers like you with pension scams, claiming that they can help you take your pension cash early. We want to alert you to these scams to make sure that you don’t become a victim.

We’d like to reassure you that Scottish Widows has processes in place to help identify where we think pension fraud is being committed; however we hope we can help by giving you more information on the subject.

Contact Pensi

If you’ve recently retired, or are approaching retirement, here are some example of scams to look out for

The Pensions Advisory Service, the Financial Conduct Authority and several other organisations have joined forces to help tackle the growing problem of pension fraud. A leaflet with more information about pension fraud, can be found at www.pension-scams.com. Remember that scams can take many forms, for example an indicator of a scam could be receiving an unexpected call, email or text offering a “free pension review”, or a company who will send couriers to your home to collect paperwork.

Because you can take all of your retirement savings at once, it’s likely that fraudsters will try to target customers who have access to large lump sums of money. There may be a significant increase in scams to steal pension money, or high pressure sales techniques to tempt customers into risky or poorly managed investments. A few examples include, tactics like cold calling, offers of free pension reviews, legal loopholes allowing you to retire early and promises of high returns. If you’re approached about an investment which seems ‘too good to be true’ you should be very cautious. You should always research investments thoroughly – don’t be rushed into any decisions. We strongly recommend you discuss any investments with a financial adviser. You can protect yourself by ensuring your Adviser is registered with the FCA. You can do this by checking the FCA register online at www.fca.org.uk

For personalised a they give you. If yo a list of financi

IF YOU’RE WORRIED THAT YOU MAY BE THE TARGET OF ATTEMPTED FRAUD

Please contact Action Fraud on 

0300 123 2040 10

www.scottishwidows.co.uk/options

On

at Scottish Widows p identify where g committed; p by giving you ject.

Preparing for your retirement

WHAT DO I DO NEXT? Contact Pension Wise, the Government’s free guidance service at www.gov.uk/pensionwise

are approaching ample of scams to

r retirement savings ers will try to target o large lump sums nificant increase in or high pressure omers into risky or few examples offers of free pension g you to retire early you’re approached ems ‘too good to be ious. You should horoughly – don’t We strongly investments with a otect yourself by stered with the king the FCA rg.uk

Get impartial and independent advice

For personalised advice speak to your financial adviser. They will charge you for any financial advice they give you. If you don’t already have a financial adviser, you can visit www.unbiased.co.uk to find a list of financial advisers near you. If your policy was set up by a group pension scheme, your employer may have an adviser who can help you.

D FRAUD Once you’ve considered your options and made a decision you need to call us to let us know what you’d like to do.

www.scottishwidows.co.uk/options

11

Preparing for your retirement

IF YOU HAVE A:

Scottish Widows or LTSB pension, please call

Halifax pension, please call

Clerical Medical pension, please call

0345 835 6644

0345 835 6645

0345 835 6646

We may record and monitor telephone calls with you in case we need to check we have carried out your instructions correctly and to help improve our quality of service.

12

www.scottishwidows.co.uk/options

edical pension, ase call

835 6646

we have carried vice.

Scottish Widows Limited. 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. 54666 03/16

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