CIS PENSION
ANNUITY POLICY
Pensions
Reminder of important facts
What is a Pension Annuity policy?
Your pension policy 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 Taking your pension benefits section.
Do I get tax relief on my pension
savings?
To encourage people to save for their
retirement, the Government gives income
tax relief on your pension contributions.
You should claim the 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.
Where does Royal London invest my
pension contributions?
We invest your contributions, together
with the contributions of other with-profit
policyholders, into the RLCIS OB & IB
Fund, referred to here as the with-profits
fund. The fund is managed by an
experienced fund manager and aims to
achieve steady growth by investing in a
wide range of assets such as shares,
property and government bonds.
We aim to pass on a share of the withprofits fund’s investment returns to you.
We do this by adding annual and final
bonuses to your policy.
Once added, we guarantee we will pay the
annual bonuses to you at your Chosen
Retirement Date*.
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However, please note that the addition of
bonuses depends on the fund’s
performance and there is no guarantee
that we will add future bonuses to your
policy. We will also deduct a small amount
from each bonus to cover the costs of
managing your policy.
We explain how we manage the withprofits fund in the Principles and Practices
of Financial Management (PPFM) of the
RLCIS OB & IB Fund document
available on our website
royallondongroup.co.uk/RLCIS/ or on
request. In the event of conflict between
this guide and the PPFM, the PPFM shall
prevail.
Does my policy have any guarantees?
When your policy was set up
Your Pension Annuity policy was written
to provide you with a guaranteed regular
income at your Chosen Retirement Date*
as long as you pay all your pension
contributions up to that date. This regular
income is known as your Basic Annuity.
You could also receive a lump sum, linked
to your Basic Annuity, at your Chosen
Retirement Date.
We set your Basic Annuity when you took
your policy out by making assumptions on:
1. The future investment returns we would
make by investing your pension
contributions in the with-profits fund
and;
2. The number of years we would pay
regular income to you before you died.
In recent years
We may have added annual bonuses to your
policy when investment returns were good.
If so, we guarantee to pay these bonuses to
you on your Chosen Retirement Date.
However, our investment returns in recent
years and expected future investment
returns are much lower than we assumed
when you took out your policy. Because of
this we have reduced, or even stopped,
annual bonuses for some types of policy.
Life expectancy rates have also increased
significantly since you took out your
policy. This means that pension providers,
including Royal London, have to pay
regular income to people for a longer
period.
What this means for you
The combination of lower than expected
investment returns and increased life
expectancy means that your policy could
be worth less than the Basic Annuity plus
annual bonuses.
However, if on your chosen retirement
date you use your pension pot to buy a
regular income from Royal London, we
guarantee to pay you your Basic Annuity
and any bonuses we have added.
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.
Taking your pension benefits
The Government has made a number of
changes to the way in which you can take
your pension benefits. This means that you
now have more choice than ever before in
how you can take the pension pot you
have saved. In summary, these choices are:
Option 1 – Take all your pension pot as a
single lump sum (25% is tax free).
Option 2 – Convert your pension pot into
a guaranteed income for the rest of your
life. This is called an annuity (including
the option to take up to 25% as tax free
cash).
Option 3 – Take some of your pension pot
and leave the rest invested for another
time. You can take a series of lump sum
payments or income at different times or a
mix of both (including the option to take
up to 25% as tax free cash).
Option 4 – Postpone taking your pension
pot – you can leave your pension benefits
with us until you are age 75, after which
you will be required to take your pension
benefits.
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.
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To help you understand your options and
make the right choices, the Government is
making available 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
gov.uk/pensionwise.
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 pay a lump sum 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, it will be
subject to tax at 45% if it is paid before 6
April 2016. After this date it will be taxed
as income, i.e. depending on their total
taxable income in a year, your beneficiary
may pay income tax on these payments.
Can I transfer my policy?
You can transfer your policy to another
pension provider at any time before you
take your pension benefits. We will not
charge you for doing this.
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We recommend that you speak to a
financial adviser before you transfer your
policy.
Can I stop paying my pension
contributions?
You can stop paying your pension
cotributions at any time, but this will
reduce your Basic Annuity. Any future
bonuses will also be based on this reduced
amount.
Additional information
This guide is a short reminder of the main
features of your Pension Annuity policy
and any important changes that might
affect your policy. You should refer to the
policy document we sent to you when you
took out your policy, 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.
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).
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If you would like a copy of this leaflet in large print, audio or
Braille, please call us on 0345 605 7777.
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.
MKT2625_RL 03/2015