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www.citrus4benefits.co.uk
Citrus4Benefits Ltd is authorised and regulated by the Financial Services Authority
Presentation to Alzheimer Scotland pension members - pension plan improvements
Presented by: Howard Finch
August 2011
We will cover the following
Our role and who we are
Why you need to save for retirement
The new pension plan
How you join and what you need to complete and return
Questions
Our role and who we are
Alzheimer Scotland (AS) appointed Citrus4Benefits Ltd as employee benefit advisers in April 2011
We advise AS on how best to manage and develop the benefit arrangements
We act as the Company adviser and do not provide individuals with advice
We are an Independent and fee-based employee benefit adviser
We will cover the following
Our role and who we are
Why you need to save for retirement
The new pension plan
How you join and what you need to complete and return
Questions
Why you need to save for your retirement
The State Scheme - recent changes to reduce the burden on the state
Earliest retirement age is now 55
State pension age for women is moving to age 65 by November 2018
State pension age will be increasing to age 66 by April 2020
Government removed the default retirement age of 65 from April 2011
Compulsory pensions being introduced from 2012 (NEST)
Why you need to save for your retirement
The retirement cliff edge
Item Detail
Salary at retirement £18,000
Standard Income Tax code (2011/12) 747L
Weekly net take home pay, after tax and National Insurance (excludes any pension contributions)
£280.81
Pension Credit (weekly) (including full Basic State Pension)
£137.35
Percentage reduction of take home pay 52%** NB: Means tested income support and additional State Pension may be payable in addition, depending on your personal circumstances.
This assumes you have no other pension benefits
We will cover the following
Our role and who we are
Why you need to save for retirement
The new pension plan
How you join and what you need to complete and return
Questions
What is a Group Personal Pension?
A collection of individual personal pension contracts established under a group umbrella
Is set up by the Employer, but the plan belongs to the employee
Plan is flexible and can accept regular and single contributions and transfers
Employee takes plan with them if they leave employer but employer contribution will cease
Employee is responsible for investment decisions and ensuring it will provide them with sufficient income in retirement
Group Personal Pension Scheme – How it works
Fund after Investment Growth?
Pension Contributions
Employer Contributions
Employee Contributions (80%)
Working Years
Tax Free Lump Sum: 25% of your pension fund
Regular Pension for Life:Using remaining 75% of fund
Retirement
Tax Relief (20%)
Group Personal Pension Plan
The New Scheme – 1 September 2011
Standard Life is still pension provider
Lower annual management charges so any contributions you make work harder
Employer and employee contributions to the new plan will start from September’s salary
Existing Plan
The last employer and employee contributions to this plan will be made from your August salary
You can transfer your existing funds to the new Plan
Comparison of Personal Pension Plans
Existing Plan New Plan
Type GPP No change
Contributions Employer contribution 10%Employee contribution – min 3%
No change
Investment manager Standard Life No change
Default investment fund Balanced Managed Lifestyle Cautious Managed Profile II
Scheme charges 1.0% annual management charge
0.5% on regular contributions0.8% on transfers for 6years, then 0.5%
Leaver charges 1.0% annual management charge (AMC)
1.0% AMC1.3% for transfers, the 1.0% after 6 years
Internet access Limited functionality New updated access
Group Personal Pension - Contributions
Example – Employee earning £18,000 pa with 3% cont
Monthly Gross Salary £1,500
Employee contributions of 3% £ 45
Employer contribution of 10% £ 150
Total contribution £ 195
Employee only pays £36 from take home pay (£45 less tax 20%)
Standard Life add back £9 to make the employee contribution £45
Current Investments - review
Current default fund - Balanced Managed Profile with lifestyle – only 40% of members use it
A further 35 different funds being used
Some members have chosen external fund managers that incur additional charges of up to 0.85%
Some members have chosen funds with very high volatility and risk
Many members still have funds in With Profits Funds
Pension W/P Pension Millennium W/P
With Profits Funds
Balanced attitude to risk – volatility rating 3
Considered outdated with restrictive growth potential over longer term
Providers will not offer W/P for new plans
Cannot add ‘lifestyling’ to W/P funds
Members with W/P need to consider alternative for new plan
Standard Life may apply a market value adjuster ( -) and terminal bonus (+) on transfer
Group Personal Pension Plan
What investment options do I have?
Employee input
Full control (ability to choose from a
long-list of external funds)
Hands-on(ability to choose from a
short-list of Standard Life funds)
Hands-off (‘default’ fund)
Most employees
New default investment fund
Standard Life Cautious Balanced Profile II
Aims to provide long term growth whilst investing in a diversified portfolio of assets that will include equities, fixed interest and property
Volatility rating 3 (same as W/P funds) – lower volatility than balanced managed (rating 5)
Lifestyling automatically changes the funds you invest in as you near retirement (10 years)
Changes emphasis from growth funds to safer investments to reduce risk & volatility
This is simply an option ~ you can still choose your own investments instead
Group Personal Pension
Cautious Managed Fund: % split as at 30 June 2011
Structured to mitigate key risks
Max 60% equity
Minimum 50% Sterling
Diverse asset classes
11 Active managers
Lifestyle option
Group Personal Pension
Cautious Managed Fund: Performance to 30 June 2011
Past performance is not a guide to the future. The value of your investment can go down as well as up Source: Standard Life Investments (Fund) and Morningstar (Sector)
Group Personal Pension
Cautious Managed Fund: Performance to 30 June 2011
Past performance is not a guide to the future. The value of your investment can go down as well as up Source: Standard Life Investments (Fund) and Morningstar (Sector)
Group Personal Pension
Cautious Managed II Profile (4CAU)
Years to retirement Months
% o
f in
vest
men
ts
0%
20%
40%
60%
80%
100%
10 9 8 7 6 5 4 3 2 1 3
Standard Life Managed Cash Pension Fund
Standard Life Protection Pension Fund
Standard Life Cautious Managed Pension Fund
Additional shortlist of funds
Standard Life Balanced Managed Profile II (existing default)
Aims to provide long term growth whilst investing in a diversified portfolio of assets. Mainly invests in equities
Volatility rating 5 – higher volatility Cautious Managed
Includes lifestyling
This is simply an option ~ you can still choose your own investments instead
Full Control:
Choose your own investments instead from 190 Standard Life and external funds
We will cover the following
Our role and who we are
Why you need to save for retirement
The new pension plan
How you join and what you need to complete and return
Questions
Letter from AS with information on changes
Reply Slip – NEEDS TO BE COMPLETED TO JOIN
Pension pack from Standard Life (including generic illustration)
Details on on-line services
Pre-paid envelope
What you need to complete:
Reply Slip and return to HR ASAP and no later than Friday 2nd September
What you have in your joining pack
Letter with info from Citrus4Benefits
2 Illustrations ~ from SL to compare old/new plans
Transfer application form (pre-populated)
Pre-paid envelope
What you need to complete:
Transfer form and returned to HR in sealed envelope by 23rd September
What you have in your transfer pack
You will have 2 separate pension plans with Standard Life
The old plan funds will remain on 1.0% AMC
Regular premiums will go into new plan on 0.5% AMC basis
You will get two annual statements
What happens if you don’t transfer?
Once joined and contributions started:
More info from Standard Life and policy docs (you should keep safe)
A user name & password to use on-line services
An annual benefit statement from Standard Life
For transfers:
Confirmation Standard Life have received forms
Notice of cooling off period ~ 30 days
After 30 days, confirmation transfer has been completed
What else will I get?
Group Personal Pension Scheme
Online access for Scheme members
Registration process:
Go to www.standardlife.co.ukFollow online instructions
Forgotten password / USERID:
You can reset this – go to the employeezone homepage
Any questions call: 0845 60 60 092
See hand out for further details
Group Personal Pension Scheme
Online access for Scheme members
We will cover the following
Our role and who we are
Why you need to save for retirement
The new pension plan
How you join and what you need to complete and return
Questions
This presentation is issued by Citrus4Benefits and is solely for the use of Alzheimer Scotland and is not for general public distribution. The contents of this presentation are based upon sources of information believed to be reliable and directors and employees of Citrus4Benefits do not accept any liability or responsibility in respect of the information or any recommendations expressed herein which, moreover, are subject to change without notice. Past performance should not be seen as an indication of future performance. The value of investments and the income from them can go down as well as up and an investor may not get back the amount invested and may be affected by fluctuations in markets and exchange rates. Citrus4Benefits is the trading name for Citrus4Benefits Limited. A company Registered in England No.7032687
Registered Office: Whinfield House, Exton, Exeter EX3 0PZ Citrus4Benefits is authorised and regulated by the Financial Services Authority, no: 515037.
