Reasons Why information
FOR ADVISER USE ONLY
Retirement Advantage Flexible Income Annuity
These paragraphs are to help you write suitability letters for your clients. The letter must be specific to each
client. These paragraphs are to help you substantiate your recommendation of the Retirement Advantage
Flexible Income Annuity and are not meant to form the entire suitability letter.
You should decide which of the statements are appropriate for each client. Retirement Advantage is not
responsible for the suitability of any statements, or for the advice you give.
If you use these paragraphs, you must ensure compliance with the appropriate regulations. We have taken
care to ensure the information is accurate, but we accept no liability for any of the statements you use.
Where a product feature is of primary importance to a client and has an upside. It is important that in
respect of your client, you consider whether a counterbalancing statement is required and if so what that
statement is. Many of the features of the plan that follow also consider the counterbalancing consideration.
It is important that tailored Client Reasons Why's are constructed and validated appropriately.
1 Objectives
Coming up for retirement
You are nearing retirement and would like to use your pension fund to buy a pension annuity that pays you
an income for the rest of your life.
Already retired
You are retired and would like to use your pension fund to buy a pension annuity that pays you a regular
income for the rest of your life.
Why buy an annuity?
An annuity is an effective way of receiving a regular income for life. As we discussed, people are living
longer these days. An annuity can give you security by paying you a guaranteed, regular income for the
rest of your life, however long that may be.
Option where a joint-life annuity has been included
If you die before your selected second annuitant, your pension annuity will pay him/her an income, for the
rest of his/her life.
2 Why I recommend the Flexible Income Annuity
Potential for growth
Unlike a conventional annuity which is linked to fixed interest rates at the time you invest, the Flexible
Income Annuity is an investment-linked annuity and linked to a wider range of investments including
shares, fixed interest and cash. This gives your fund the potential to grow. The aim is that your income
over the course of your retirement will be higher than that from a conventional annuity.
Higher starting income
The Flexible Income Annuity allows you to take a higher income at the start of your annuity if you wish
than you would get from a conventional annuity. A specified level of investment growth is then needed for
your selected income level to be maintained. Alternatively, you could take an income that is lower than
you would get from a conventional annuity. You have the freedom to make these choices.
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Greater flexibility
I explained to you that the Flexible Income Annuity also gives you greater flexibility - a choice of
investment options, a choice of starting income and the ability to change either at any time during your
retirement.
Volatile market conditions
Buying a pension annuity is a long-term investment, designed to pay you an income for the rest of your
life. You should bear in mind that the value of your Flexible Income Annuity and therefore your income can
go either up or down in the same way as other stock-market based investments.
3 Why I recommend Retirement Advantage
About Retirement Advantage
Previously known as MGM Advantage and Stonehaven, they are a well-established company that can trace
their roots back to 1852. In May 2015 they changed their name to Retirement Advantage – merging their
retirement income and equity release divisions, to help provide those who are in, at or approaching
retirement with a range of simple, secure and flexible Products to suit their needs.
Every year thousands of retirees rely on them for their income. They have almost £1.8 billion of
fundsunder management. Their latest external assessment (13.11.2014) for financial strength from
theconsultancy AKG awarded them a rating of B (strong).
You can find out more about Retirement Advantage on their website: www.retirementadvantage.com
Regulation
Retirement Advantage is authorised by the Prudential Regulation Authority and regulated by the Financial
Conduct Authority and the Prudential Regulation Authority. If the company should become unable to meet
its liabilities, you will be covered by the Financial Services Compensation Scheme.
4 Why I recommend the Retirement Advantage Flexible Income Annuity
Potential for growth
I explained to you that the Flexible Income Annuity gives you potential for growth on your income. We
discussed other annuity options which offer increased income over time, including those that are inflationlinked. We compared illustrations and you were concerned about the cost of an inflation-linked
conventional annuity which is met by reducing your income in the early years.
I explained to you that the growth potential offered by the Flexible Income Annuity could give you
significantly higher income over the long term. However, you understood the risk that your income could
fall if the fund performs less well.
Designed to fit your circumstances
With the Flexible Income Annuity, you choose the amount of income you receive to meet your
requirements from a range given to you by Retirement Advantage. You’ll then have the flexibility to
change your income throughout your retirement and automatic reviews will be carried out every three
years.
The income range - for clients recommended a lower starting income
We discussed the starting income range available to you. I recommended that in order to meet your
needs, you should select a lower starting income level of (insert £) with a required fund performance (RFP)
of (insert percentage). This means that you need your selected funds to deliver an average annual growth
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of (insert percentage) to maintain this income level. Taking a lower starting income also means that more
of your funds are left invested with the potential for growth.
You understood that if the return from the funds is lower than this or if life expectancies increase faster
than expected, your income would fall. I confirmed to you that if your income fell below a certain level
Retirement Advantage guarantees to pay you a minimum amount, which is equal to the minimum starting
income available when you took out the policy.
The income range - for clients recommended an income to match a conventional annuity
We discussed the starting income range available to you. I recommended that in order to meet your
needs, you should select an income to match a conventional annuity starting income level
of (insert £) with a required fund performance (RFP) of (insert percentage). This means that you need your
chosen funds to deliver an average annual return of (insert percentage) to maintain this income level.
You understood that if the return from the funds is lower than this or if life expectancies increase faster
than expected, your income would fall. I confirmed to you that if your income fell below a certain level
Retirement Advantage guarantees to pay you a minimum amount, which is equal to the minimum starting
income available when you took out the policy.
The income range - for clients recommended a higher starting income
We discussed the starting income range available to you. I recommended that in order to meet your
needs, you should select a higher starting income level of (insert £) with a required fund performance
(RFP) of (insert percentage). This means that you need your chosen funds to deliver an average annual
return of (insert percentage) to maintain this income level. We discussed the risks associated with this.
You understood that if the return from the funds is lower than this or if life expectancies increase faster
than expected, your income would fall. I confirmed to you that if your income fell below a certain level
Retirement Advantage guarantees to pay you a minimum amount, which is equal to the minimum starting
income available when you took out the policy.
From our discussions it is clear that you currently require a higher starting income to support your active
lifestyle. We agreed that you may be willing to change your income to a reduced level in future years when
you expect to be less active.
We discussed that you could take a higher level of income from the start of your annuity to support your
retirement until your state pension takes effect. At this point we agreed you would consider lowering the
income level paid to you by your Flexible Income Annuity.
Minimum income guarantee
I explained that with the Flexible Income Annuity, Retirement Advantage guarantees your income will
never fall below a certain amount. This amount will be equal to the minimum starting income available
when you took out your policy.
Three-year income review
You’ll receive an annual statement on your policy anniversary that will let you know if your fund
is on track to maintain your current income level. Every three years Retirement Advantage will formally
review your policy. They will look at your fund performance and lifetime bonus and calculate the income
level that will apply for the next three years.
You can ask them to change your current income level or RFP at any time. In this instance they will
calculate new minimum and maximum income levels and you can select income from within these limits.
They will calculate a new RFP based on the revised income level chosen.
I recommend you speak to me at each review to discuss whether you need to change your chosen income
level.
Option to switch to a fixed income annuity
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I explained that you can move to a fixed income basis at any time. I explained that this would happen
automatically when you reach age 90. I confirmed to you that you would not be able to switch back to an
investment-linked basis once you had switched to a fixed-income basis. I explained that you can also
move to another annuity provider if they are willing to accept your funds.
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5 Your investment choices
Tolerance for risk
I explained your investment choices to you. We discussed your attitude towards investment risk and
agreed that you were a <cautious, balanced or adventurous> investor.
Active or passive
We also talked about your attitude towards cost and potential for higher performance.
As a result, you decided you were more suited to <active, passive or a mix of active and passive>
investment funds.
Fund choice
Retirement Advantage worked with a firm of independent investment fund rating and selection experts
called Morningstar OBSR to select the range of actively-managed investment funds available to
you and have chosen Jupiter, AXA Framlington, Insight and Investec Asset Management. The MorningStar
OBSR Fund Ratings Service is widely acknowledged in the investment world as an independent mark of
quality and excellence. For the passive range, Vanguard Investments UK, Ltd will be managing the equity
and fixed-income holdings in the cautious, balanced and adventurous funds and the money market
holdings will be managed by Insight Investment.
Retirement Advantage use Square Mile Investment Consulting and Research for ongoing analysis of the
funds. Square Mile’s team of investment analysts is one of the strongest in the UK. Their focus is
investment research, meeting fund managers to understand how those managers work, how they think
and how they react to markets. Funds are constantly monitored to ensure that they continue to provide
investors with the best opportunity to meet their long term objectives, with changes made if necessary.
Over 1300 companies and businesses make use of Square Mile’s research, including financial advisers,
life assurance companies and investment fund platforms.
The core fund range – available to all financial advisers
Retirement Advantage Investec Multi-Asset Protector Fund
Fund objective
The fund aims to provide capital growth from a multi-asset portfolio and to deliver protection at
80% of the investment's highest price to date, however this is not guaranteed. The fund invests in UK
and global equities, bonds, property, commodities, cash and alternatives.
From time to time the allocation to low-risk instruments and cash will be increased.
Investment approach
The fund is wholly invested in the Investec Multi-Asset Protector Fund 2 (MAP2) managed by
Investec Asset Management.
MAP2 invests in a diversified range of asset types including equities, bonds, commodities, property and
cash. In addition the fund may be diversified across different fund managers. The objective is to generate
capital growth while at the same time aiming to provide some protection from market downturns. The
Investec fund uses a pre-defined dynamic allocation model which allocates from the multi-asset portfolio
to a cash portfolio when markets fall. This limits the amount by which the assets can reduce in value.
However, when MAP2 is largely invested in cash, although providing downside protection, there is a risk
that if markets rise the fund will miss out on some of the gains.
MAP2 also invests in a derivative contract with a single counterparty (currently Deutsche Bank) which
aims to provide protection against the risk of the fund declining below its 80% protection level. This
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protection level is 80% of the highest price achieved to date, however this is not guaranteed.
MAP2 is designed so that it has the potential to perform better than a money market fund but not as well
as a pure equity fund in an upward trending bull market. As a result, although seeking to provide capital
protection at the 80% level, the combination of lower risk assets and cash may reduce further growth
expectations and there is a risk that the fund will not provide sufficient growth to maintain the income
level selected. This will depend on market conditions and the chosen level of income.
The fund is appropriate for limiting the potential for loss in downward-moving markets but may not
generate as much long-term performance as a fund that does not include protection.
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Please note that additional costs might be incurred when the fund invests in other funds not managed by
Investec and the TER may consequently be higher.
Retirement Advantage Investec Cautious Managed Fund
Fund objective
The fund aims to provide long-term capital growth by investing conservatively in a diversified portfolio of
equities, bonds and other fixed-interest securities of high quality and marketability.
Investment approach
The fund is wholly invested in the £2.5bn Investec Cautious Managed fund managed by Investec
Asset Management.
The fund is designed to provide exposure to quality equities and bonds. By holding equities and bonds
together, the fund will typically demonstrate less volatility than a direct investment in the UK equity
market. Active management of the balance between the asset classes may also help to produce steady
capital appreciation over the longer term. However, it is not possible to eliminate risk entirely, and there
is always the possibility that you will
not make a profit or you will lose money.
The manager uses a contrarian approach for equities, targeting out of favour stocks. The fund
concentrates on the long-term potential of undervalued stocks, focusing on potential upside in the belief
that many of the negatives are already discounted in the share price.
The manager does not follow short-term trends, instead looking for good underlying fundamental values
such as company assets, cash flows and profits.
The equity component of the fund is supplemented with a selection of highly marketable funds which will
always represent at least 35% of the fund's value. The fund does not invest in high yield bonds. At all
times the fund's equity exposure will be limited to a maximum of 60% of the portfolio value.
Retirement Advantage AXA Framlington Managed Balanced Fund
Fund objective
The fund aims to achieve capital growth through investment in a broad range of securities in all
any economic sectors in all or any parts of the world which, in the Manager’s opinion, show above
average profitability, management quality and growth, balancing risk and return for investors.
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Investment approach
The fund is wholly invested in the £796m Axa Framlington Managed Balanced Fund managed by Axa
Investment Managers UK Limited.
The AXA Framlington Managed Balanced Fund aims to deliver consistent long-term returns by investing in
a broad range of securities and collectives selected from any region or economic sector in the world. The
Fund manager is looking to deliver consistent, long-term returns; avoiding unnecessary volatility is a high
priority. Fundamental research and bottom-up stock selection is at the heart of the investment process.
The Fund benefits from a blend of experience and regional specialist expertise that characterises AXA
Framlington’s investment team. While asset allocation directly reflects prevailing market and economic
conditions, the Fund has historically had weightings of around 75-85% in equities and 15-25% in bonds
and cash. The Fund is comparative benchmark-aware, not benchmark-driven.
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Retirement Advantage Jupiter Merlin Growth Portfolio
Fund objective
The objective is to achieve long-term capital growth by investing predominantly in unit trusts, OEICs,
Exchange Traded Funds and other collective investment schemes across several management groups.
The underlying funds invest in international equities, fixed-interest stocks, commodities and property,
with a core in the UK. Suitable for customers who can accept significant fluctuations in value in return for
the potential for better long-term performance (7 –
10 years).
Investment approach
The fund invests wholly in the Jupiter Merlin Growth Portfolio which is a fund of funds managed by
Jupiter. The underlying fund invests internationally in equities, fixed-interest stocks, commodities,
property, with a core in the UK.
Retirement Advantage Cautious Passive Fund
Fund objective
To achieve capital preservation with some opportunity for growth in the medium term by managing the
asset allocation of a portfolio of predominantly fixed-income and cash with some equities.
Investment approach
The Retirement Advantage Cautious Passive fund is a 'basket' of funds including equity and fixed-income
tracker funds managed by Vanguard Investments UK, Ltd and a money market fund managed by Insight
Investment. Morningstar/OBSR have constructed this risk graded portfolio on behalf of Retirement
Advantage.
The asset allocation is managed by Retirement Advantage's Investment Committee and is based on
recommendations from Morningstar/OBSR. The target equity weighting for this fund is 40% and the
actual allocation will be varied to take account of current and predicted market conditions.
Vanguard aims to offer UK investors the highest value investment products and services available. The
Vanguard Group launched its first index fund in 1976 in the US, and investors worldwide now trust it to
manage $3.3 trillion worth of their assets (as at 21 January 2014 – source - Vanguard website).
Vanguard Investments UK, Ltd was established in 2009 and is part of the Vanguard group.
Retirement Advantage Balanced Passive Fund
Fund objective
To achieve a combination of capital growth and capital preservation by managing the asset allocation of a
portfolio of predominantly equities and fixed income.
Investment approach
The Retirement Advantage Balanced Passive fund is a 'basket' of funds including equity and fixed-income
tracker funds managed by Vanguard Investments UK, Ltd and a money market fund managed by Insight
Investment. Morningstar/OBSR have constructed this risk-graded portfolio on behalf of Retirement
Advantage. The asset allocation is managed by Retirement Advantage's Investment Committee and is
based on recommendations from Morningstar/OBSR.
The target equity weighting for this fund is 60% and the actual allocation will be varied to take account of
current and predicted market conditions.
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Vanguard aims to offer UK investors the highest value investment products and services available. The
Vanguard Group launched its first index fund in 1976 in the US, and investors worldwide now trust it to
manage $3.3 trillion worth of their assets (as at 21 January 2014 – source - Vanguard website).Vanguard
Investments UK, Ltd was established in 2009 and is part of the Vanguard group.
Retirement Advantage Adventurous Passive Fund
Fund objective
To achieve long-term capital growth by managing the asset allocation of a portfolio of predominantly UK
and overseas equities.
Investment approach
The Retirement Advantage Adventurous Passive fund is a 'basket' of funds including equity and fixedincome tracker funds managed by Vanguard Investments UK Ltd and a money market fund managed by
Insight Investment. Morningstar/OBSR have constructed this risk-graded portfolio on behalf of Retirement
Advantage. The asset allocation is managed by Retirement Advantage's Investment Committee and is
based on recommendations from Morningstar/OBSR. The target equity weighting for this fund is 80% and
the actual allocation will be varied to take account of current and predicted market conditions.
Vanguard aims to offer UK investors the highest value investment products and services available. The
Vanguard Group launched its first index fund in 1976 in the US, and investors worldwide now trust it to
manage $3.3 trillion worth of their assets (as at 21 January 2014 – source - Vanguard website).
Vanguard Investments UK, Ltd was established in 2009 and is part of the Vanguard group.
The following funds are only available to advisers of Openwork Limited
Retirement Advantage Omnis Managed Cautious Fund
Fund objective
The fund aims to achieve capital growth over the medium to longer term, which is above normal cash
deposit savings rates.
Investment approach
The fund invests wholly in the IFDS Omnis Cautious Fund which seeks to achieve its objective through
investment exposure interest and other asset classes including securities listed on both UK and
international stock markets, while seeking to limit the fund's short term fluctuations in value.
Investment exposure is achieved by investing in collective investment schemes, such as unit trusts,
OEICs and closed ended schemes, and individual stocks and bonds. Through these investments the fund
will gain exposure across a range of global geographical areas and asset classes, managed by multiple
different investment managers, but with core holdings in UK bonds and equities. Foreign currency
exposure through non-UK investments may be hedged back into £-Sterling.
The fund may also invest in other transferable securities, money-market instruments, cash deposits and
any other permitted asset type deemed appropriate to meet the investment objective. Use may also be
made of stock lending, borrowing, cash holdings, derivatives for hedging and other permitted investment
techniques for efficient portfolio management.
Retirement Advantage Omnis Managed Balanced Fund
Fund objective
The fund aims to achieve capital-growth over the medium to longer term, which is in excess of normal
cash deposit savings rates.
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Investment approach
The fund invests wholly in the IFDS Omnis Balanced Fund which seeks to achieve its objective through
investment exposure interest and alternative asset classes such as funds investing in commercial property
and private equity, listed on both UK and international stock markets, while balancing the risk of short
term fluctuations in value of equity investments through holdings in diversified asset classes.
Investment exposure is achieved by investing in collective investment schemes, such as unit trusts,
OEICs and closed ended schemes, and individual stocks and bonds. Through these investments the fund
will gain exposure across a range of global geographical areas and asset classes, managed by multiple
different investment managers, but with core holdings in UK equities and bonds.
Foreign currency exposure through non-UK investments may be hedged back into £- Sterling. The fund
may also invest in other transferable securities, money-market instruments, cash deposits and any other
permitted asset type deemed appropriate to meet the investment objective. Use may also be made of
stock lending, borrowing, cash holdings, derivatives for hedging and other permitted investment
techniques for efficient portfolio management.
Retirement Advantage Omnis Managed Adventurous Fund
Fund objective
The fund aims to achieve capital growth over the medium to longer term, which is well in excess of
normal cash deposit savings rates.
Investment approach
The fund invests wholly in the IFDS Omnis Advanced Fund which seeks to achieve its objective through
investment exposure predominantly to UK and international equities while reducing the impact of shortterm fluctuations in value of equity investments through diversifying holdings in alternative asset classes
such as commercial property and private equity.
Investment exposure is achieved by investing in collective investment schemes, such as unit trusts,
OEICs and closed ended schemes, and individual stocks and bonds. Through these investments the fund
will gain exposure across a range of global geographical areas and asset classes, managed by multiple
different investment managers, but with core holdings in UK equities.
Foreign currency exposure through non-UK investments may be hedged back into £- Sterling. The fund
may also invest in other transferable securities, money-market instruments, cash deposits and any other
permitted asset type deemed appropriate to meet the investment objective.
Use may also be made of stock lending, borrowing, cash holdings, derivatives for hedging and other
permitted investment techniques for efficient portfolio management.
Retirement Advantage Omnis Multi-Manager Cautious Fund
Fund objective
The fund aims to achieve capital growth over the medium to longer term, which is above normal cash
deposit savings rates.
Investment approach
The fund invests wholly in the IFDS Omnis Threadneedle Cautious Fund, a multi-asset fund. This means
that it invests in a diverse portfolio of equities, bonds, commercial property and other investment assets.
By investing in a wide range of different investment assets, the fund managers aim to limit the risk
associated with any one type of asset.
It follows one of the oldest principles of investment, summed up by the old saying that you should not put
all your eggs in one basket. Investment exposure is achieved by investing in collective investment
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schemes, such as unit trusts, OEICs and closed ended schemes, and individual stocks and bonds.
The fund will invest almost exclusively into funds of the Threadneedle group. Through these investments
the fund will gain exposure across a range of global geographical areas and asset classes, but with core
holdings in UK equities and bonds.
Foreign currency exposure through non-UK investments may be hedged back into £- Sterling. The fund
may also invest in other transferable securities, money-market instruments, cash deposits and any other
permitted asset type deemed appropriate to meet the investment objective.
Use may also be made of stock lending, borrowing, cash holdings, and derivatives for hedging and other
permitted investment techniques for efficient portfolio management.
Retirement Advantage Omnis Multi-Manager Balanced Fund
Fund objective
The fund aims to achieve capital growth over the medium to longer term, which is in excess of normal
cash deposit savings rates.
Investment approach
The fund invests wholly in the IFDS Omnis Threadneedle Balanced Fund, a multi-asset fund. This means
that it invests in a diverse portfolio of equities, bonds, commercial property and other investment assets.
The fund seeks to achieve its objective through investment exposure to equity, fixed- interest and
alternative asset classes, such as funds investing in commercial property and private equity, listed on
both UK and international stock markets, while balancing the risk of short-term fluctuations in value of
equity investments through holdings in diversified asset classes.
Investment exposure is achieved by investing in collective investment schemes, such as unit trusts,
OEICs and closed ended schemes, and individual stocks and bonds. The fund will invest almost
exclusively into funds of the Threadneedle group.
Through these investments the fund will gain exposure across a range of global geographical areas and
asset classes, but with core holdings in UK equities and bonds. Foreign currency exposure through nonUK investments may be hedged back into £- Sterling. The fund may also invest in other transferable
securities, money-market instruments, cash deposits and any other permitted asset type deemed
appropriate to meet the investment objective.
Use may also be made of stock lending, borrowing, cash holdings, derivatives for hedging and other
permitted investment techniques for efficient portfolio management.
Retirement Advantage Omnis Multi-Manager Adventurous Fund
Fund objective
The fund aims to achieve capital growth over the medium to longer term, which is well in excess of
normal cash deposit savings rates.
Investment approach
The fund invests wholly in the IFDS Omnis Threadneedle Advanced Fund, a multi-asset fund. This means
that it invests in a diverse portfolio of equities, bonds, commercial property and other investment assets.
The fund seeks to achieve its objective through investment exposure predominantly to UK and
international equities while reducing the impact of short-term fluctuations in value through diversifying
holdings in alternative asset classes such as funds investing in commercial property and private equity.
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Investment exposure is achieved by investing in collective investment schemes, such as unit trusts,
OEICs and closed ended schemes, and individual stocks and bonds. The fund will invest almost
exclusively into funds of the Threadneedle group.
Through these investments the fund will gain exposure across a range of global geographical areas and
asset classes, but with core holdings in UK equities. Foreign currency exposure through non-UK
investments may be hedged back into £-Sterling. The fund may also invest in other transferable
securities, money-market instruments, cash deposits and any other permitted asset type deemed
appropriate to meet the investment objective.
Use may also be made of stock lending, borrowing, cash holdings, derivatives for hedging and other
permitted investment techniques for efficient portfolio management.
The following funds are only available to advisers of Sesame Bankhall
Retirement Advantage Optimum Strategic Income Fund
Fund objective
The fund aims to achieve an income with some prospect for capital growth. The fund will invest in a
managed portfolio of collective investment schemes, transferable securities (including investment trusts)
and exchange traded funds (ETFs) that invest across a broad range of fixed-income asset classes.
Retirement Advantage Optimum Enterprise Fund
Fund objective
The fund aims to achieve capital growth whilst limiting volatility. The fund will invest in a managed
portfolio of collective investment schemes, transferrable securities (including investment trusts) and
exchange traded funds (ETFs). The fund may also gain exposure to hedge funds, property and
commodities. This exposure will be indirect and achieved mainly through investment companies and
collective investment schemes. Investment may not be confined to any particular geographic or economic
sector.
Retirement Advantage Optimum Global Income Fund
Fund objective
The fund aims to achieve an income with long-term capital growth by investing in both UK and overseas
assets. The fund will invest in a managed portfolio of collective investment schemes, transferrable
securities (including investment trusts) and exchange traded funds (ETFs) both in UK and overseas
assets. The fund may also gain exposure to hedge funds, property and commodities. This exposure will
be indirect and achieved mainly through investment companies and collective investment schemes.
Investment may not be confined to any particular geographic or economic sector.
Retirement Advantage Optimum High Alpha Fund
Fund objective
The fund aims to achieve long-term capital growth. The fund will invest in a managed portfolio of collective
investment schemes, transferrable securities (including investment trusts) and exchange traded
funds (ETFs). The fund may also gain exposure to hedge funds, property and commodities. This exposure
will be indirect and achieved mainly through investment companies and collective investment schemes.
Investment may not be confined to any particular geographic or economic sector.
Optimum Investment Management Limited is a joint venture between Henderson Global
Investors Limited and Sesame Bankhall Group Limited. Optimum Investment Management
Limited provides a range of resources in relation to the funds:
www.optimum-im.co.uk
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The following funds are only available to advisers of Intrinsic Limited
Retirement Advantage Cirilium Conservative Passive Fund
Fund objective
To achieve long-term capital growth through investment markets both in the UK and overseas. The
portfolio will be conservative in that it will be broadly diversified across asset classes, but with typically a
maximum exposure of 30% to equities.
Retirement Advantage Cirilium Conservative Fund
Fund objective
To achieve long-term capital growth through investment markets both in the UK and overseas. The
portfolio will be conservative in that it will be broadly diversified across asset classes, but with typically a
maximum exposure of 30% to equities.
Retirement Advantage Cirilium Balanced Passive Fund
Fund objective
To achieve long-term capital growth through investment markets both in the UK and overseas. The
portfolio will be cautious in that it will be broadly diversified across asset classes, but with a maximum
exposure to 60% to equities.
Retirement Advantage Cirilium Balanced Fund
Fund objective
To achieve long-term capital growth through investment markets both in the UK and overseas. The
portfolio will be cautious in that it will be broadly diversified across asset classes, but with a maximum
exposure to 60% to equities.
Retirement Advantage Cirilium Moderate Passive Fund
Fund objective
To achieve long-term capital growth through investment markets both in the UK and overseas. The
portfolio will be moderate in that it will be broadly diversified across asset classes, but with a maximum
exposure of 80% to equities.
Retirement Advantage Cirilium Moderate Fund
Fund objective
To achieve long-term capital growth through investment markets both in the UK and overseas. The
portfolio will be moderate in that it will be broadly diversified across asset classes, but with a maximum
exposure of 80% to equities.
Retirement Advantage Cirilium Dynamic Passive Fund
Fund objective
To achieve long-term capital growth through investment markets both in the UK and overseas. The
portfolio will be diversified across asset classes, but with a maximum exposure of 90% to equities.
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Retirement Advantage Cirilium Dynamic Fund
Fund objective
To achieve long-term capital growth through investment markets both in the UK and overseas. The
portfolio will be diversified across asset classes, but with a maximum exposure of 90% to equities.
Further information about the Cirilium funds can be found at:
www.henderson.com/cirilium
The following funds are only available to advisers of Sanlam
Retirement Advantage Sanlam Accel Income Fund
The investment objective of the fund is to provide capital growth over the long term by investing in the
Sanlam Accel income Fund which invests in a range of collective investment schemes giving exposure to a
broad range of assets including equities, company bonds, property, cash and government bonds. Income
is reinvested to contribute to the total return of the fund.
The following funds are only available to advisers of Simply Biz
Retirement Advantage IM Verbatim Portfolio 3 Fund
The fund uses a broadly defensive investment strategy with the aim of achieving capital growth over the
medium to longer term. The fund invests predominantly in fixed income, property and cash with some
exposure to shares.
Retirement Advantage IM Verbatim Portfolio 4 Fund
The fund uses a broadly cautious investment strategy with the aim of achieving capital growth over the
medium to longer term. The fund invests predominantly in fixed income, property and cash and also has
exposure to UK and international shares.
Retirement Advantage IM Verbatim Portfolio 5 (Growth) Fund
The fund uses a broadly cautious/balanced investment strategy with the aim of achieving capital growth
over the medium to longer term. The fund invests predominantly in UK and international Shares and also
fixed income, property and cash.
Retirement Advantage IM Verbatim Portfolio 6 Fund
The fund uses a broadly balanced investment strategy with the aim of achieving capital growth over the
medium to longer term. The fund invests mostly in UK and international shares and also has exposure to
fixed income and property.
Retirement Advantage IM Verbatim Portfolio 7 Fund
The fund uses a growth investment strategy with the aim of achieving capital growth over the medium to
longer term. The fund invests almost entirely in UK and international shares and also has a small
exposure to fixed income and property.
For investors who choose more than one fund
Having worked out your attitude to risk and cost, your fund will be invested in the following funds. <add
fund descriptions as appropriate>.
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Full details of each of the funds can be found on the Retirement Advantage website at
www.retirementadvantage.com.
6 Additional information
Single-life option
I explained the different ways you could provide an income for a dependant or your spouse/civil partner if
you die before them and you understood that you would not be able to change your mind about these
benefits once the annuity has started.
You chose not to include any of these benefits because <insert reasons>.
Providing an income from your annuity after your death
We discussed whether you would like to provide an income for a dependant or your spouse/ civil partner
if you die before them and you understood that you would not be able to change your mind about these
benefits once the annuity has started.
You requested that your pension annuity provides an income for <insert name and relationship> following
your death.
We discussed three options which are available to you:
1. The joint-life option pays your spouse/civil partner/named dependant an income for life, if you die
before them.
2. The guarantee period option ensures your annuity continues to pay an income for a certain period of
time if you die within that period.
3. The value protection option allows you to pass on some or all of your remaining annuity
funds as you choose.
The joint-life option
We discussed whether you would like to provide an income for your spouse/civil partner/dependant if you
die before them, and you understood that you would not be able to change your mind about these
benefits once the annuity has started.
The joint-life option allows you to leave up to 100% of your remaining funds to your
spouse/civil partner/dependant. This means that when you die, <insert name and relationship> will be
able to use the chosen percentage of your remaining funds to carry on the Flexible Income Annuity (and
change their income level if they wish) or move the Flexible Income Annuity to a fixed-income option.
I explained that the more income you provide for <insert spouse/civil partner/dependant name> after
your death, the lower your income would be. You were happy that the joint-life option will usually provide
an income for <insert name and relationship> after your death. You agreed that you would like the value
of <insert percentage> to be provided to <insert name> after your death.
Guarantee period option
We discussed whether you would like to guarantee that annuity payments will continue if you die within a
guaranteed period. The guarantee period can be between one and ten years.
You agreed that you would like a guarantee period of <insert number> years from the start of your
annuity. You understood that this option means the income you receive will be reduced,
depending on your personal circumstances and the guarantee period you choose.
I explained to you that should you wish for a specific individual to receive any remaining payments should
you die within your guarantee period, you should complete an expression of wish form. Retirement
Advantage have discretion to decide on the recipients but will take your wishes into account.
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Guarantee period option (joint-life option)
We discussed whether you would like to provide an income for a dependant or your spouse / civil partner
if you die before them and you understood that you would not be able to change your mind about these
benefits once the annuity has started.
The guarantee period can be between one and ten years.
You agreed that you would like to take a guarantee period of <insert number> years from the start of
your annuity. You understood that this option means the income you receive will be reduced, depending
on your age, and the guarantee period you choose.
I explained to you that should you wish for a specific individual to receive any remaining payments should
you die within your guarantee period, you should complete an expression of wish form. Retirement
Advantage have discretion to decide on the recipients but will take your wishes into account.
As you also chose the joint-life option, the guarantee is paid first then the joint life income starts at the
end of the guarantee period.
Value protection
The value protection option allows you to select a fixed percentage of the purchase price of your annuity
(minus annuity payments made before the deduction of tax up to the date of death) to be returned to
your estate. You chose to have <insert percentage> of your fund to be paid in the event of your death.
Retirement Advantage have discretion to decide on the recipients but if you complete an Expression of
Wish form they will take your wishes into account.
This option is only available until you reach age 75 and the payment is tax-free under current legislation
in addition to any inheritance tax due. If you have also chosen the joint-life option, your spouse/civil
partner will receive an income based on the spouse/civil partner/dependant’s percentage of the fund
remaining (if any) after the payment of the value protection amount. You understood that the remaining
fund may not be enough to provide a spouse/civil partner/dependant’s pension if value protection has
used your entire fund.
Lifetime bonuses
The Flexible Income Annuity is an insurance contract where you benefit from your survival each month.
Retirement Advantage does this by awarding lifetime bonuses to your policy monthly in the form of units.
I explained that the level of lifetime bonus awarded is reviewed each year and could increase or
decrease dependent on Retirement Advantage’s view of life expectancies.
If Retirement Advantage believes that annuitants are living longer than they originally thought, the
lifetime bonuses will be lower. If they believe that their original expectations was correct or too cautious,
lifetime bonuses will stay the same or go up.
Lower lifetime bonuses could contribute to a lower income, whereas higher lifetime bonuses will improve
the possibility of being able to maintain or increase your income at the next three-year review.
Medical and lifestyle
We talked about your health (and that of <insert name and relationship> ((if joint-life option
was taken)) and I explained that if you have a qualifying medical condition, or you smoke, you could
qualify for a higher income. Assessment of your health and lifestyle only happens at the time you
purchase the annuity.
You’ll need to supply Retirement Advantage with details of your medical history so they can consider your
eligibility. If you do qualify for enhanced terms, you will be offered a higher income and lifetime bonuses
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than someone in good health.
Tax-free cash
We discussed your possible entitlement to take up to 25% tax-free cash as a lump sum from your
pension fund before setting up the Flexible Income Annuity.
Tax implications
I explained that you will pay tax on your annuity income in the same way as you pay tax on earned
income.
Payment frequency
We discussed the payment frequency terms that best suit your needs. You chose to be paid
(insert frequency: monthly, quarterly, half-yearly, annually) in (insert advance/ arrears).
When the ‘in arrears’ option is taken (with proportion)
You have chosen to be paid in arrears. This means you can choose to have payments made with
proportion or without proportion. I explained your options and you chose the with proportion option. This
means a final payment is made to cover the number of days between the last payment made and the
date of your death.
When the ‘in arrears’ option is taken (without proportion)
You have chosen to be paid in arrears. This means you can choose to have payments made with
proportion or without proportion. I explained your options and you chose the without proportion option.
This means no final payment is made to cover the number of days between the last payment made and
the date of your death.
Terms agreed for my advice/support
Initial fee/commission agreed
We discussed how my advice would be paid for as we set up your annuity. <Insert your agreed terms>.
We discussed how the information and support I provided you with in setting up the annuity would be
paid for <Insert your agreed terms>.
Ongoing trail commission/fee agreed
We discussed how my advice and service would be paid for on an ongoing basis to support you from the
outset and throughout the lifetime of your annuity. <Insert your agreed terms>.
We discussed that I would continue to provide information and support on an ongoing basis and this
would be paid for <Insert your agreed terms>.
Your right to change your mind – open market option
I explained that you have the right to change your mind about taking out this Flexible Income Annuity. As
you are taking the open market option (OMO), you have 30 days to cancel from the day you receive your
policy document and the annuity is set up.
It’s important to note that Retirement Advantage reserves the right to reduce the amount returned, if the
value of your investment falls during this period. In addition if Retirement Advantage has facilitated a fee
payment for my advice this will further reduce the fund that Retirement Advantage will try to return to
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the originating pension scheme. You must return any annuity payments paid to you.
Your right to change your mind – immediate vesting personal pension
I explained that you have the right to change your mind about taking out this Flexible Income Annuity. As
you are combining more than one pension fund into an Retirement Advantage pension before converting to
an annuity (known as an immediate vesting personal pension or IVPP), you have 30 days to cancel
from the day Retirement Advantage tells you they have received the first pot of monies from your existing
pension provider(s). You must return any tax-free cash and annuity payments made.
Retirement Advantage reserves the right to reduce the amount returned, if the value of your investment
falls during this period. In addition if Retirement Advantage has facilitated a fee payment for my advice
this will further reduce the fund that Retirement Advantage try to return to the originating pension
scheme.
22-106 – 12/15
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