Key features of the
Guaranteed Pension Annuity
For customers
The Financial Conduct Authority is a financial services regulator. It requires us, Aegon, to give you this important information to help you to decide whether our Guaranteed Pension Annuity is right for you. You should read this booklet carefully so that you understand what you’re buying, and then keep it safe for future reference.
It’s important that you read this booklet, as it gives you the main points
about your Guaranteed Pension Annuity.
You should read it along with your illustration.
This booklet describes the features of both of our annuities – the Guaranteed
Pension Annuity (GPA) and the Guaranteed Pension Annuity (with tax-free
cash) (GPAC). Any mention of tax-free cash in this booklet only relates to you
if you’re applying for the GPAC – this will be shown on your illustration.
We talk about pension funds in this booklet – this means the money that
we receive from your current pension company or companies so we can set
up the annuity for you.
This guide refers to our product terms at July 2015.
03 Important information 03 Its aims
03 Your commitment 03 Risks
04 Questions and answers
04 What’s is a Guaranteed Pension Annuity? 04 How flexible is it?
05 What will my tax-free cash be? 05 What will my income be?
05 What choices will I have about how I get my income?
05 What are the charges?
06 If I want to go ahead with this application, what should I do?
06 Can I change my mind and cancel my application?
06 What happens if I don’t cancel? 06 What happens if I do cancel?
06 If I want to consider other pension options, what should I do?
06 What about tax?
07 What happens to my income when I die?
08 Other information
08 How to complain
08 Benefits we may give to your adviser 08 Terms and conditions
08 Time limits 08 Communication 08 Client categorisation 08 Law 08 Compensation
Contents
There are a few important things you need to remember when reading this booklet:
n When we talk about a guarantee or guarantees, we mean the promises we make that the product or feature
will deliver you a certain benefit.
n It’s important to know that any guarantee is based on the ability of the issuing insurance company – in
this case Scottish Equitable plc – to pay it. If, for example, that company no longer existed, then the guarantee(s) would be affected. Aegon is a brand name of Scottish Equitable plc.
n To use the pension fund(s) you’ve built up to buy the annuity.
n To exchange any such pension fund(s) for a set level of income for you and/or your family.
n To tell us if your circumstances change to reduce delays. For example, if you’re no longer resident in the
UK it may take us longer to contact you by mail.
For GPAC plans:
n To make a final decision to wholly transfer your current pension fund(s) to us.
n To decide when you set up the plan whether to take any tax-free cash. You can’t take this at a later stage.
n Annuity rates may change by the time you buy your annuity.
n We won’t know your final income until we receive the money from your current pension company or companies n The real value of your income will reduce over time:
– with inflation – if tax rules change
n Your income will stop when you die unless you’ve chosen an income for your family or a guarantee period. n Once your annuity’s set up, and your cancellation period has expired, you can’t change your mind about it
or cash it in.
For GPAC plans:
n If you’re currently in a plan that allows you to take more than 25% of your fund as tax-free cash you may lose
this entitlement by transferring your pension fund to us. For more information please speak to a financial adviser.
n To provide you with a guaranteed level of income to last your lifetime.
n To provide a member of your family, after you die, with a guaranteed level of income, if you choose that
option. In this booklet, ‘family’ means: – spouse or civil partner
– someone who is financially dependent or interdependent on you.
n To provide you with a tax-free cash amount if you choose to take one from your GPAC.
03
Important Information
Its aim
Your commitment
What’s a Guaranteed Pension Annuity?
It’s a plan designed to pay you an income for the rest of your life and, if you’ve chosen the GPAC, any initial tax-free cash.
To set up this plan you ask your current pension company or companies to send us the money from any pension plans you currently have with them. In addition, the GPAC may be most suitable for someone who has a number of different pension plans that they want to combine into one annuity and one tax-free cash amount.
You may be able to receive a better income if you provide additional information regarding your lifestyle and medical condition. For more information, speak to a financial adviser.
For GPA plans only
Your previous company will pay you any tax-free cash.
If your pension plan isn’t with us, we’ll set up your annuity once we’ve received the pension fund from your current pension company or companies. If we’re expecting more than one pension fund, we’ll start paying you an income from each one as soon as we get it so your payments aren’t delayed. We’ll set up the income from each pension fund with the same start date as the first one.
For GPAC plans only
We’ll set up an Aegon Personal Pension plan to pay you any tax-free cash.
Where more than one transfer payment is to be paid to the plan, each transfer payment we receive will be held until we receive the last expected transfer payment (no investment growth or interest will be added to any transfer payment while it is so held).
Once we’ve received the transfer payment(s), we’ll pay you any tax-free cash and convert the remaining pension fund(s) into an annuity that will provide you with an income.
How flexible is it?
n You can take out this plan from age 55. You
may be able to take it out before age 55 if you’re in ill-health or have a low protected pension age. A financial adviser will tell you if this applies to you.
n You can choose the basis of your income and
how it will be paid. You can find details of the choices in these sections:
– ‘What will my income be?’
– ‘What choices will I have about how I get my income?’
– ‘What happens to my income when I die?’
n You can choose to have your income remain at
the same level or increase automatically. You can choose:
– a fixed percentage increase up to 5% each year
– to link your increase to the Retail Prices Index (the RPI figure used each year will be the one published by the Office for National Statistics, for the calendar month three months before the month in which the annuity is to increase)
– to link your increases to the Retail Prices Index with a maximum yearly increase of either 2.5%, 3%, or 5%.
n Once you’ve started to receive your income you
can’t cash in your plan, change it to another annuity provider or temporarily stop payments.
n You can’t take out this plan using a transfer
payment from an overseas pension scheme or a pension fund that’s subject to bankruptcy or divorce where the net annuity is to be split.
For GPA plans
n You can choose to set this up as a lifetime
annuity or, if your pension fund is from a company pension scheme, as a scheme pension.
For GPAC plans
n Your plan will be set up as a lifetime annuity. n You can choose to receive some of your pension
fund as tax-free cash.
n Your plan can accept a pension credit transfer
from a divorce settlement.
What will my tax-free cash be?
For GPAC plans only
You can normally take up to 25% of the total pension fund as tax-free cash. In some circumstances your tax-free cash may be more or less than this. A financial adviser will be able to give you more details.
What will my income be?
n Your personal illustration gives you an example
of what you could receive, but the final amount of your income will depend on:
– the size of the pension fund(s) you’re using to buy the annuity
– annuity rates at the time you buy the annuity
– your age and the address of your main permanent residence (for more information please refer to your personal illustration)
– how often your income is paid and the options you choose
– whether you take your income in advance or arrears
– For GPAC plans only – how much tax-free cash you take
n You can choose to have an income paid to your
family when you die in exchange for a smaller income for yourself.
n Your income will continue for your lifetime,
however, you can choose to guarantee the income for a fixed period of 5 or 10 years. This means that, if you die within this period, your payments will continue to be paid to your estate for the remainder of the guaranteed period.
n For GPA plans only– not all of the options
explained in this booklet will be available to you. The options you can choose depend on the type of pension plan that the money to buy the annuity is coming from.
Once you’ve chosen the options you want and your income has started, it’s guaranteed to be paid for the rest of your life, no matter how long you live.
What choices will I have about how I get
my income?
We’ll pay your income direct into your UK bank or building society account by BACS payment. You can choose for your income to be paid:
n every month
n every three months n every six months n once a year
Your income can be paid in advance or in arrears. If you want your income to be paid into an overseas bank account, please contact us.
For GPA plans
You can choose the start date of your annuity to be any date in the 12 months before the date we receive all the information to set up your annuity. If you choose a start date in the past, we’ll reduce your payments slightly to cover the cost of the backdated payments.
For GPAC plans
Your annuity will start on the day we receive the last transfer.
What are the charges?
n We don’t take any charges direct from this plan as these are included in the rates we set for your income.
n For GPAC plans, we don’t charge for setting up the personal pension part of this plan.
04 05
05
Questions and answers
If I want to go ahead with this
application, what should I do?
Let either your financial adviser or us know which options you want and complete the application form. You or your financial adviser should then send the form back to us and we’ll contact your previous pension companies direct to arrange for them to send us the money. You might also need to complete some forms from your previous pension company.
Can I change my mind and cancel my
application?
Yes, you can think over your options and cancel your annuity application.
If you don’t cancel your annuity, it’ll be set up. Once the annuity has been set up, you can only cancel if you’re still within the 30 day cancellation period. The cancellation period starts from whichever is sooner:
n 30-days, from the date we send out your first
personal illustration, or
n when you accept your final quote, or n when the final quote expires
The final quote confirms the actual payment you’ll receive, which may be different to the payments shown in the illustration.
If you’ve changed your mind and want to cancel,
you must write to us within the cancellation period telling us you don’t want the annuity – see ‘How to contact us’ section.
What happens if I don’t cancel?
If you don’t cancel, the annuity will be set up.
For GPAC cases
If you send us your completed application form before the end of the cancellation period, we’ll pay any tax-free cash (if applicable) and start your retirement income payments once you’ve received the funds and all the paperwork we need from your previous pension company.
For GPA cases
We’ll start your income payments from each fund as soon as we receive each one.
What happens if I do cancel?
If you cancel your policy and your payments haven’t started we won’t pay you any income or tax-free cash. If we’ve started your payments and have paid you any tax-free cash (if applicable), you’ll need to refund that money to us.
We’ll also return the pension fund to your previous pension company. If your previous pension company won’t accept the returned funds, you’ll have to arrange for the money to be sent to another pension company. This money has to go to a pension
company – we can’t return it to you.
If I want to consider other pension
options, what should I do?
Contact a financial adviser, us or any other
company you choose for alternative quotes. Please remember we can’t give you financial advice.
What about tax?
n Your income will be treated as pension income
and may be taxable.
n If you’re a taxpayer, we’ll pay your income after
tax has been deducted. Initially, we’ll pay your income net of the current emergency tax rate until HM Revenue & Customs confirms your tax code.
n If payments continue after you die they may be
subject to inheritance tax if they are paid for a remaining guarantee period and are paid to your estate.
n If the total value of all your pension funds
amounts to more than your available lifetime allowance then you may have to pay tax on the excess, unless you have enhanced protection. Please see a financial adviser for more details about how your income will be taxed. The standard lifetime allowance for the tax year 2015/16 is £1.25 million. This limit doesn’t include any state retirement pension, state pension credit or dependant’s pension you may be entitled to. This information is based on our understanding of current taxation law and HM Revenue & Customs practice, which may change.
07
Questions and answers
What happens to my income when I die?
Your income will end when you die unless you choose for it to continue, for example:
n If you choose an income for your family, they’ll
start receiving an income if you die before them.
n If you choose to guarantee the annuity for a
fixed period of 5 or 10 years, any remaining income payments will continue to be paid to your estate if you die within this period.
If you choose both options and then die within the guarantee period, we will pay out the income in one of two ways:
n We pay the balance of your payments due
under the guarantee period to your estate then start paying your family’s income. This is known as without overlap.
n We start paying the balance of the payments due
under the guarantee period to your estate and also start paying the income due to your family immediately. This is known as with overlap. If you choose to have a dependent’s pension paid it wouldn’t be tested against your available lifetime allowance and there would be no tax charge (although if you die at age 75 or over the pension income would be taxable when received by the dependents).
Scheme pensions (For GPA plans only)
If you choose to set the GPA up as a scheme pension, there are some options that we’re unable to offer:
n We don’t accept increases to the income over 5%. n We can’t reduce or stop the income on ill-health.
n We don’t accept ad hoc increases to escalation, or allow reductions to the escalation rate. n We don’t reduce the income for a bridging pension.
How to complain
We hope you never have to complain, but if you do, the first step is to write to us. If you’re not satisfied with our response, you can then raise the issue with:
The Financial Ombudsman Service Exchange Tower London E14 9SR 0800 0 234 567 or 0300 123 9 123 financial-ombudsman.org.uk [email protected] Referring the matter to the Ombudsman won’t affect your right to take legal action later on. If you’d like a copy of our complaints procedure, please ask us, or you can download it at
aegon.co.uk/support
Benefits we may give to your adviser
We may give benefits to your adviser, designed to help them give you an improved service. These benefits may include marketing and promotional support, technical services and training, seminars, travel and accommodation expenses, gifts and hospitality.
Your adviser will give you details of any such benefits they receive from us.
Terms and conditions
This booklet gives you a summary of the Aegon Guaranteed Pension Annuity and Guaranteed Pension Annuity (with tax-free cash). It doesn’t include all the definitions, exclusions, terms and conditions. You can find these in our policy conditions booklet. You’ll receive a copy of this once we get your completed application form, but if you’d like a copy now, please ask a financial adviser or contact us direct.
We have the right to change some of the terms and conditions. If this happens, we’ll write to you and explain the changes.
Time limits
We’ll tell you about any time limits that may apply and that aren’t covered here or in the illustration, for example underwriting decisions or requirements that may have time limits. You must let us know of any changes to your circumstances or any other details you’ve given us.
Communication
Our contract with you is in English and all future communication about it will be in English.
Client categorisation
Aegon categorises all of our clients as ‘Retail clients’ under the Financial Conduct Authority rules for all services and transactions. This helps us to make sure that you receive appropriate disclosure documents from us and that you are made aware of everything you need to know in a timely fashion.
Law
If, when the contract starts, you live in the UK, then your plan will be set up and governed by the law of the part of the UK where you live. Otherwise Scots law will apply.
Compensation
Your annuity with us is covered by the Financial Services Compensation Scheme. You may be entitled to compensation from the scheme if we can’t meet our obligations (for example, if we were to become insolvent or unable to meet the claims against us). This depends on the type of business and the circumstances of the claim. Insurance business of this type is generally covered for 100% of the value of the claim, without limit. You can get more information about
compensation arrangements from the Financial Services Compensation Scheme by calling 0800 678 1100 or visiting fscs.org.uk
@aegonuk
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How to contact us
If you have any general questions, you can phone, email or write to us. Write to us at: Aegon, Edinburgh Park, Edinburgh EH12 9SE
Call us on: 03456 01 52 73, Monday to Friday, 8.30am to 5.30pm Email us at [email protected]
We may monitor calls for security purposes, to help improve our service and to resolve any complaints.
We can only give you information about the products and services we offer. If you have any doubts over whether this plan is suitable for you, you should seek advice from a financial adviser.
If you’d like a large print, Braille or audio CD version of this leaflet, please call 03456 10 00 10.
Aegon is a brand name of Scottish Equitable plc. Scottish Equitable plc, registered office: Edinburgh Park, Edinburgh EH12 9SE. Registered in Scotland (No. 144517). Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number 165548. An Aegon company. www.aegon.co.uk © 2015 Aegon UK plc