Key Features of
With-Profits Bond
The Financial Conduct Authority is a financial services regulator. It requires us, Clerical Medical, to give you this important information to
help you decide whether our With-Profits Bond is right for you. You should read this document carefully so that you understand what you
are buying and then keep it safe for future reference. These key features should be read with the enclosed illustration.
Its aims
• Investment growth could be lower than the growth
shown in your personal illustration.
• Our charges could increase.
• To provide growth over the medium to long term from a
• A high regular income withdrawal rate could reduce the
mix of assets including stockmarket investments.
capital value of your bond below the value of your cash
investment amount.
• To provide a regular income if you choose.
• To allow you to withdraw part or all of your investment
• You have a right to cancel your additional investment
when you want.
within 30 days of receiving your documents. If you do
cancel and the value of the additional investment has
fallen, you will get back less than you invested.
Your commitment
• Tax rules may change in the future.
• You agree to invest an additional lump sum to an existing
• As you are investing in the With-Profits Fund:
With-Profits Bond. The minimum additional investment
you can make is £1,000 by cheque.
• What you receive will be affected by a deduction
that we are currently making to support the
guarantees on policies of other groups of investors,
for example because investment returns are below
guaranteed levels.
• You accept that your additional investment is a medium to
long-term investment, ideally held for five years or more.
Risks
• We may apply a market value reduction (MVR) if
you take money out of the fund. Please see the
section ‘How does the With-Profits Fund work?’
for more details.
• The value of an investment and any income from it
can go up and down as a result of market and currency
movements. You may get back less than you invested.
• The ultimate value of a with-profits investment depends
on future bonuses which cannot be guaranteed.
• Your circumstances may change, forcing you to cash in
your bond early. If you do this in the first five years there
will be an early encashment charge and you might not
get all your money back. The earlier you cash in the bond
the less likely you are to receive the best return.
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With-profits Bond KFD for top ups
Clerical Medical SW
X1226
A4 Portrait
CMYK
210
2
Savings & Investments
297
07
17
16-Jun-2017
5
5
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Questions and answers
What is the With-Profits Bond?
• Clerical Medical’s With-Profits Bond is a unitised, single
premium, whole of life assurance plan issued as 100
identical policies.
• You must be at least 18 years old to apply for a
With-Profits Bond and the maximum age at entry is 90.
How does the With-Profits
Fund work?
• We share out the performance of our With-Profits Fund
(the ‘profits’) to its investors, through a system of bonuses.
In this way, all of the investors share in the fortunes of the
fund. This does not mean that all investors get the same
return. It depends, amongst other things, on the particular
terms of their policies. There are two types of bonus:
• A regular bonus (sometimes called ‘bonus interest’),
which increases your investment’s value over time. We
decide the rate once a year, but we can change it midyear if investment conditions change significantly. We
add it to your investment by increasing the value of the
units you have in the With-Profits Fund (the unit price)
throughout the coming year.
• A possible final bonus (sometimes called ‘terminal
bonus’), which we may add on death or when you take
money out of the With-Profits Fund (including regular
‘income’ withdrawals). We normally review this twice
a year, but we may need to change it at short notice if
investment conditions change significantly.
The calculation and payment of any bonus on an investment
in a With-Profits Fund will be decided by Clerical Medical.
The bonuses depend on the investment performance which
Clerical Medical achieves, adjusted to smooth through some
of the peaks and troughs of stockmarket investment.
The regular bonus rate and the final bonus are declared net
of any administration expenses and other costs.
The ultimate value of a with-profits policy depends on the
level of future bonuses which cannot be guaranteed.
• As you are investing in the With-Profits Fund, please
note that:
• What you receive will be affected by a deduction that
we are currently making to support the guarantees
on policies of other groups of investors, for example
because investment returns are below guaranteed
levels. This is an example of how different groups of
with-profits investors collectively share in the fortunes
of the whole With-Profits Fund.
• If you take money out of the With-Profits Fund, we
may make a reduction called a market value reduction
(MVR) and pay out less than the value of your units.
We will only do this if the value of your units meant
your investment would be worth more than your fair
share of the With-Profits Fund. We do not apply the
MVR in the following circumstances:
–– when there is a death claim
–– when you have requested regular income
withdrawals, provided that the request was received
before the publication or notification to financial
advisers of an MVR (this includes publication on
our website), and provided that the amount of
withdrawals in any twelve months is not more than
7.5% per year of the amount invested in the fund.
• We recommend that you read our ‘With-profits
summary’ which gives more information about how
we run the fund, including the market value reduction
and how we aim to ensure that policyholders’ interests
are dealt with fairly.
What might I get back?
Your personal illustration
• Inside this key features document you will find
information and a personal illustration on your WithProfits Bond. This will give you details of the charges for
your bond.
• These key features together with your illustration will
answer some of your questions and help you find out
more from your financial adviser.
• Only you, as legal owner of the bond, can receive
payments from it.
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Can I encash part of my
investment?
You can make one-off encashments at any time. Any
amount up to a maximum of 7.5% per bond year (including
regular income withdrawals) of the amount invested in any
individual policy, can be taken free of any early encashment
charge. If you cash in more than 7.5% per bond year, in the
first five years, we will make an early encashment charge. We
will not make an early encashment charge on a death claim.
You can choose whether the amount you withdraw increases
each year, or is fixed. The options you can choose from are:
• A fixed amount each year – the amount paid will not change
unless you give us new instructions.
• A fixed amount increasing each year with inflation as
measured by the Retail Prices Index (RPI). We will calculate
the annual increase on each anniversary of your first regular
income withdrawal and the new level of payments will start
from this date. If the amount paid in subsequent years is
more than the maximum of 7.5% per year of the amount
invested in any individual policy, an early encashment
If you do not use your full penalty-free encashment allowance
charge and/or an MVR may apply. The RPI increase will be
each bond year, you can carry the unused amount forward
based on the difference in the RPI figures published two and
to subsequent years. For example, if no income withdrawals
fourteen months before the withdrawal anniversary.
or encashments are taken in the first year, up to 15% of
the amount invested in any individual policy can be taken
in the second year. Unless you tell us differently, we will
always manage any one-off encashments to ensure that the
minimum early encashment charge is made, if one applies.
Encashments may also be subject to an MVR. Any unused
amount of the 7.5% per year MVR allowance does not carry
forward to subsequent years.
• The minimum encashment is £240.
• The minimum amount that can remain in your bond
is £1,000.
Can I take regular income
withdrawals from my bond?
You can arrange to take income withdrawals, up to a
maximum of 7.5% per year of the amount invested in
any individual policy, free of any early encashment charge.
The income will be paid directly into your bank account.
The minimum amount you can withdraw is £240 per year
and this can be divided into regular payments either:
• A percentage each year of your total cash investment
amount – the amount paid will not change unless you
make an additional investment or give us new instructions.
Regular income withdrawals are made by encashing units.
Income withdrawals are treated as a withdrawal of capital for
tax purposes. You should be aware of the tax implications.
Your financial adviser can give you further details.
Can I change funds?
No, it is not possible to switch to any other Clerical Medical fund
in this bond.
Is there any life cover?
In the event of a death claim the amount payable will be 101%
(or 100% if you are 80 or over when the bond is taken out) of
the value of the units allocated together with any final bonus.
We will not make an early encashment charge on a death claim.
On a joint life first death basis, the reference age applies to the
oldest life assured, and on a joint life last death basis, to the
youngest life.
• monthly
All bonds with more than one life assured will be set up on
• quarterly
a joint life last death basis unless you tell us that you require
• every four months
joint life first death at the time the application is submitted.
• every six months
• once a year.
We can make the payments on any day of the month from
the 1st to the 28th. Please note that it may take up to seven
working days, from the date you choose, for the payment to
reach your account.
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policies (taking into account previous amounts taken from
the bond and chargeable event gains), then you may
have to pay income tax on that ‘profit’.
How much will the advice I
receive cost?
• Encashing complete policies may mean a lower tax
• If you’ve received advice your financial adviser will tell
liability than making a withdrawal equally across all
policies, however, the amount of early withdrawal charge
which might apply at encashment could be higher.
you this cost.
• If you didn’t receive advice before investing, the above
bullet doesn’t apply.
• Any one-off withdrawals from the bond made by
• From 31 December 2012, we’ll no longer be paying
cancelling units across policies are treated as a return
of capital and special tax rules apply. A tax charge may
arise where the amounts withdrawn exceed your 5% tax
deferred withdrawal allowance.
commission to your financial adviser for additional
investments. As the commission charge is already
included in the product charges, we’ve increased the
allocation rate for your additional investment. This is
• Your 5% tax deferred withdrawal allowance is 5% per
shown on your personal illustration. Any commission
policy year of the amount that you have invested in
each individual policy. This 5% withdrawal allowance is
cumulative. Any unused allowance can be carried forward
to future years, subject to the total cumulative 5%
allowance amount not exceeding 100% of the amount
you have paid into your bond.
arrangements for existing investments aren’t affected.
How will I know how my bond
is doing?
• We will send you a statement every year to show how
• Large withdrawals from your bond can result in
your bond is doing.
an excessive and artificially high tax liability, it is
recommended that you speak to your financial adviser or
tax office before taking any withdrawals in excess of the
5% allowable allowance.
• You can check the progress of your fund on our website:
www.clericalmedical.co.uk/funds Or you can contact
our customer service desk on 0345 030 6243.
• Certain Personal allowances and Tax credits may also be
Further information
reduced if a chargeable event occurs and a chargeable
event gain arises.
Plans written under trust
Can I change my mind?
Special considerations apply to plans written under trust.
After we accept your application you will receive a notice of
Your financial adviser will be pleased to advise you further.
your right to cancel your additional investment. You will then
have 30 days in which you can change your mind. If you do
decide to change your mind, you will need to sign and return
Clerical Medical taxation
the cancellation notice that will be sent with the documents.
Clerical Medical will be liable to tax on the income and gains
(See ‘How to contact us’.) Please note that if you exercise
arising from the investment of the underlying assets of the
your right to cancel, and the value of the additional
With-Profits Fund. This is allowed for in the bonuses.
investment falls, you will get back less than you invested.
Personal tax
• The proceeds of your bond are payable free of any
personal liability to income tax at basic rate, or to capital
gains tax. However, there may be an income tax charge
at the difference between the basic rate and higher
or additional rate of income tax if you’re a higher or
additional rate tax payer when the gain arises or if the
gain results in you becoming a higher or additional rate
tax payer.
• There is no liability to the UK basic rate of tax because
growth on the underlying investments is taxed via
Corporation Tax, at a rate deemed equivalent to the UK
basic rate of income tax. It is not possible to claim back
any of the UK basic rate tax treated as paid on a gain.
• If you cash in the whole of your bond or individual
policies and there has been an overall ‘profit’ on those
Conflict of interest policy
In accordance with FCA regulations, Clerical Medical, which
is a member of the Lloyds Banking Group, has established
and implemented a Conflicts Policy. The Conflicts Policy sets
out how we must seek to identify and manage all material
conflicts of interest. Such conflicts of interest can occur in
our day to day business activities, for example, where one
of our clients could make a gain at the direct expense of
another client, or we might be faced with an opportunity to
make a gain but this would be to the direct disadvantage of
one or more of our clients.
Depending on the exact nature of the conflict of interest
involved, we may take certain actions in accordance with the
Conflicts Policy to lessen the potential impact of the conflict.
Such actions may include putting in place controls between
the opposing sides of the conflict, which may control or
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prevent the exchange of information, and / or involve the
solvency position. For the Scottish Widows Insurance Group,
appropriate management of staff activities and segregation
including its three main insurance companies, the report
of duties. In instances where such controls would not be
covers key aspects of our:
enough to eliminate the potential material risk of damage
• business and performance
to clients from specific conflicts, we’ll disclose the general
• system of governance
nature and / or source of those conflicts of interest to you
• risk profile
before we take on the relevant business.
• valuation for solvency purposes
The Conflicts Policy may be revised and updated from time
• capital management.
to time according to FCA regulations. If you’d like more
information on the Conflicts Policy, or on any specific conflict
of interest that you think might affect you, please contact us.
How to contact us
• Remember your financial adviser will normally be your
first point of contact.
Important note
• If you have questions, or you wish to close or cancel your
All features described in this document are those current
policy, you can telephone us, send a fax, e-mail us or you
can write to us:
at the time of publication and may be changed in the
future. The information is based upon our understanding
and application of current legislation and HM Revenue &
Monday to Friday 8.30am to 6pm.
Customs practice. These can, of course, also change.
We may record your call for quality and training
Law
• The laws applicable to the contract are the Laws of
England and Wales.
• The policy provisions for the With-Profits Bond and any
further communications will be supplied in English.
Financial Services Compensation
Scheme (FSCS)
Your bond with Clerical Medical is fully covered by the
Financial Services Compensation Scheme. More information
about compensation arrangements is available from the
Financial Services Compensation Scheme, who can be
contacted on 0800 678 1100 or 0207 741 4100 or via
their website at www.fscs.org.uk
Call us on 0345 030 6243 during the following times:
purposes.
Fax number: 0345 601 1761
Website: www.clericalmedical.co.uk
Email: [email protected]
Administration address:
Clerical Medical
PO Box 28121
15 Dalkeith Road
Edinburgh
EH16 9AS
Complaints
• Our aim is to provide you with the highest standard
of service. If you have a concern, please call us on
0345 030 6243 and we will be happy to help.
• A copy of our published complaints procedure is available
on request.
• Complaints we cannot settle may be referred to the
Financial Ombudsman Service at Exchange Tower,
London E14 9SR. Telephone: 0800 023 4567.
Solvency II Returns
• Making a complaint will not prejudice your right to take
legal action.
Our Solvency and Financial Condition Report (SFCR) and
associated solvency reporting templates can be found via our
Clerical Medical is a trading name of Scottish Widows
website at: http://www.scottishwidows.co.uk/about_us/
Limited. Scottish Widows Limited is entered on the
financial_information/solvency-2-returns.html The SFCR is
Financial Conduct Authority’s Register and its register
produced annually to help you understand the management
number is 181655.
www.clericalmedical.co.uk
Clerical Medical is a trading name of Scottish Widows Limited. Scottish Widows Limited is registered in England and Wales No. 3196171.
Registered office in the United Kingdom at 25 Gresham Street, London EC2V 7HN. Authorised by the Prudential Regulation Authority
and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number 181655.
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and performance of our business, and the strength of our
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