©UFS
The MetLife Freedom Income Plan
September 2011
PRIVATE AND CONFIDENTIAL
INTERNAL USE ONLY
Income at retirement
• There are various ways of taking an income from your pension
fund, including:
– Lifetime annuity
– Enhanced/ impaired life annuity
– Investment linked annuity
– Income drawdown
• Some may only be suitable if you have a large pension fund or
other substantial assets and you are comfortable taking some
risks with your pension fund
Lifetime annuity
A lifetime annuity converts your pension fund into an income
for the rest of your life, however long you live
• Can be a fixed income or ‘escalating’ e.g. in line with inflation
• Can provide an income for you or for you and your spouse
Whilst lifetime annuity option is secure,
once the decision to purchase an
annuity is made it cannot be changed.
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Enhanced or impaired life annuity
These pay a higher-than-normal income (in comparison to a
conventional lifetime annuity) if you have a health problem
that reduces your lifetime expectancy.
Whilst generally offering more income, this is only available
to people with health problems/conditions.
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Investment linked annuity
• Similarly to a conventional annuity these provide an
income for life.
• Typically invested in a with profit fund or a choice of unitlinked funds.
• Some offer a minimum income guarantee.
Whilst the aim is to allow the income
to grow in line with investment
performance, there is a risk income
could go down as well as up.
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Income drawdown
Lets you draw an income from your pension fund while leaving it
invested. There are two kinds:
•
Capped drawdown, where there are limits on the income you can
take each year; and
•
Flexible drawdown, where there are no limits, provided you can show
you have other income of a certain level called the minimum income
requirement.
Whilst more flexible, income drawdown plans are usually exposed to
investment risk.
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A new option – MetLife Freedom Income Plan
•
Provides a guaranteed income for a fixed term of your choosing.
•
Provides a Guaranteed Maturity Amount (GMA) at the end of the
term.
•
Allows you to leave the plan early under certain circumstances.
•
It’s not a lifetime commitment, so you don’t have to give up control of
your pension fund – allows you to ‘test drive’ your retirement.
•
At the end of selected term you can review your circumstances and
select the solution that best suits you.
•
Both income and GMA are guaranteed and not exposed to investment
risk.
Because annuity rates are not fixed, the rates available at the end of your
selected term will impact the income you will receive in the future.
Freedom Income Plan – how it works
1. You select a term
that suits your
needs.
2. You select a level
of income to suit
your needs.
Terms run from as little
as three years to 25
years
Income can be fixed or
increase annually, up
to 8.5% p.a.
Income and GMA are linked - higher the income the
lower the GMA and vice versa.
Both income and GMA are fixed and known at
outset.
Both income and GMA are free from investment
risk.
3. You know from
outset your
Guaranteed
Maturity Amount
(GMA).
4. At the end of your
selected term you
are able to review
your circumstances
and select a
retirement solution
that best suits your
needs.
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Freedom Income Plan
What if my circumstances change?
Whilst the term is fixed, the Freedom Clause gives you the
power to leave early if:
•
Due to illness you qualify for enhanced terms on a lifetime annuity, or
•
Your dependant dies (if dependant’s benefit selected at outset)
Year 8, qualify for enhanced annuity,
use Freedom Clause to leave plan early
Year 1
Year 2
Year 3
Start of 10 year plan
Year 4
Year 5
Year 6
Year 7
Year 8
Year88
Year
Year 9
Year 10
Original plan end date
Note: Amount received may produce a higher or lower income under enhanced / impaired annuity than under FIP, depending upon options
selected. Please see ‘risks’ for further details on how the Freedom Clause works.
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Freedom Income Plan – looking after your family
The Freedom Income Plan offers valuable death benefit options, so you
can ensure your family are taken care of if something should happen to
you.
Value Protection (0% - 100%)
A lump sum equal to the purchase
price less income taken can be paid.
or
Guaranteed Period (up to 20 years)
A lump sum equal to the current value
of the remaining guaranteed income
can be paid out.
You can also include Dependant’s Benefits
Dependant’s Benefits (0% - 100%)
Pays income until the end of the term, and Guaranteed Maturity Amount (GMA) if
dependant survives to maturity.
Comparison with other choices at retirement
Freedom
Income Plan
Fixed lifetime
annuity
Drawdown
Flexibility



Control



No investment
performance risk



Keep options open



Transfer out available



Choice of Lump Sum
Death Benefits



Freedom Income Plan – why choose it?
Gives you the flexibility to choose a plan term and income level that suits your
personal financial circumstances
–
if you want to top up your income while working part time or waiting to receive
other pension income such as the state pension, or
–
if you just want to take your tax free cash and not take an income immediately
Enables you to keep your pension in your control and to preserve its value
with a Guaranteed Maturity Amount agreed at the start of the plan
Allows you to keep your options open for longer rather than locking into a
lifetime annuity as soon as you want to take an income/ take tax free cash
Allows you to keep your options open without taking the risk of going into
income drawdown as soon as you want to take an income/ take tax free cash
Allows you to leave the plan early should you qualify for terms on enhanced
annuity, or you dependant dies (if dependant benefits selected at outset)
Offers valuable death benefit options
Who is it suitable for?
• You don’t want to make a final retirement decision
today, but would rather keep your options open.
• You want income now and defer your retirement
decision
• You think you may be eligible for an enhanced
annuity later in life and want to defer purchasing an
annuity now.
• You want to ensure your family are taken care if you
should die during the plan term.
• You don’t want the uncertainty of investment
performance risk affecting your income or future
maturity amount
Why MetLife?
• One of the world’s leading insurance
companies
– Over 140 years of experience
– Operating in over 60 countries
– Over 90 million customers worldwide
– Over 66,300 worldwide employees, with
300 staff based in the UK and Ireland.
– Provide financial products and services to
®
over 90 of the top 100 Fortune 500 companies.
– $4.2 trillion of life insurance in force (as at 31.12.10)
*FORTUNE 500®, May 2010. FORTUNE 500® is a registered trademark of FORTUNE® magazine,
a division of Time, Inc.
How secure is the Freedom Income Plan?
The MetLife Freedom Income Plan is covered by the Financial
Services Compensation Scheme (FSCS), which provides cover
up to a maximum of 90% of the total amount due to you at that
time. Further information on how the scheme works can be found
in the Freedom Income Plan Key Features Document, or direct
from the FSCS.
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Risk factors
• Future income – whilst the maturity amount is guaranteed at the end of the selected term, the income you can buy from
it at this time will not be. Annuity rates could be higher or lower in the future compared to what they are now. So, the
income available at maturity could be higher or lower than the amount a lifetime annuity would provide if bought now.
• Income levels – the amount of income taken from the MetLife Freedom Income Plan each year is subject to
Government limits. These limits are calculated regularly. As a result, we may have to restrict income to this level in the
future. If this should happen, any excess income, plus interest, will be added to the Guaranteed Maturity Amount.
• Income rates – if your pension funds are received after the expiry date of the Guaranteed Illustration Period, the
purchase rates on the date of receipt of your pension fund will apply. Your benefits could be lower than those shown in
your original illustration.
• Inflation – if your income remains at the same level throughout the selected term, it may not keep up with the level of
inflation.
• Death benefits - if no death benefits are selected and you die during the term of the plan, no benefits will be paid to your
beneficiaries.
• Freedom Clause – if you choose to exercise the Freedom Clause, and have selected 100% Value Protection, we will
calculate your transfer value based on current market conditions, principally interest rates, and a reasonable deduction
for our administrative costs.
If 100% Value Protection is not selected, we may take medical evidence, and this may reduce the amount available
under the Freedom Clause. This may mean you would get less income from an enhanced annuity than expected.
• Change in situation – you will not be able to change the level of income or any other benefits once payments have
started. Other than exercising the Freedom Clause, you will not be able to transfer out of the Plan during its term.
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Important Information
This presentation has been provided to recipients for information only and has not been approved as a financial promotion.
Notwithstanding the foregoing, this presentation is only being provided to professional financial advisers.
This presentation does not constitute an offer or inducement to purchase or subscribe for securities in a product or fund. The information in
this presentation may not be complete and may be changed, modified or amended at any time and is not intended to, and does not,
constitute any representations and warranties of MetLife Europe Limited. The information contained in this presentation is intended to
provide general information only and does not take into account individual objectives, financial situation or needs.
Please remember, if a guarantee option is not selected the value of investments can fall as well as rise. An investor may not get back the
amount invested. Past performance is no guide to future performance. Investments in MetLife products are not like a bank or building
society which accrue interest.
All reasonable care has been taken in relation to the preparation and collation of this presentation. Except for statutory liability which may
not be excluded, no member of MetLife accepts responsibility for any loss or damage resulting from the use of or reliance on this
presentation by any person. The information is taken from sources which are believed to be accurate but no member of MetLife accepts
any liability of any kind to any person who relies on the information contained in it.
The copyright of this presentation and any documents supplied with it and the information contained therein is vested in MetLife. They
should not be copied, reproduced or redistributed without prior consent.
MetLife Europe Limited (trading as MetLife) is authorised by the Central Bank of Ireland and subject to limited regulation by the Financial
Services Authority. Details about the extent of our regulation by the Financial Services Authority are available from us on request.
Registered address: Riverside One, Sir John Rogerson's Quay, Dublin 2, Ireland. Registration number 415123. UK branch address: One
Canada Square, Canary Wharf, London E14 5AA. Branch registration number BR008866. Web Site: http://www.metlife.co.uk
1198 / 1 / 0912F
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