Flexible Income Annuity
Key Features
This is an important document and you should
read it before deciding whether to buy your
pension annuity from us
Purpose of this document
This Key Features booklet gives you a
summary of our Flexible Income Annuity. It
will help you decide whether you want to
buy your pension annuity from us.
Please read the Key Features booklet with:
•your personal illustration – which shows
the amount of income you may get from
us (based on the information you have
provided).
•information including fund fact sheets for
the investment funds you would like to
invest in.
•the Policy Terms and Conditions booklet.
The Flexible Income Annuity is an investment-linked annuity. This means we invest your
pension in the stock market and other financial investments. Your income level could be
maintained or grow if the markets increase in line with the performance levels we set (we
call this ‘required fund performance’).
However, if your required fund performance isn’t achieved, then your income will reduce
accordingly.
The Financial Conduct Authority is a financial services regulator. It requires us, Retirement
Advantage, to give you this important information to help you decide whether our Flexible
Income Annuity 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.
2
Aims, your commitment
and risks
Flexible Income Annuity
Key Features
Its aims
Your commitment
Our Flexible Income Annuity aims to:
•You buy the Flexible Income Annuity
with some or all of the money from your
pension fund.
•pay you a regular income for the rest of
your life.
•give you flexibility to change your income
levels according to your lifestyle needs.
•You choose an income between the
minimum and maximum we set.
•give your retirement income the potential
to grow over time.
•At the outset you choose whether to
include death benefits for your spouse,
civil partner or dependant (see Q18).
•let you decide your investment strategy
and give you the flexibility to change
investment funds within our range of
funds.
•Once the annuity starts, you will be
committed to receiving an income for the
rest of your life.
•give you a minimum income guarantee,
so you know that your income will never
drop below a certain level.
•give you options to provide for another
person (a second annuitant) after your
death (see Q18).
•enable you to benefit from your
continuing survival, because your fund
receives monthly lifetime bonuses (see
Q8).
Risks
•Once you have bought your annuity, you
will not be able to cash it in, get any lump
sum from it or use it as security for any
form of borrowing. This is the same for all
annuities.
•This is an investment-linked product, which
means we invest your pension in the stock
market and other financial investments.
•Your income level will normally stay the
same if markets increase in line with the
performance level we calculate — we call
this the ‘required fund performance’ (see
Q13).
•If your required fund performance isn’t
achieved, then your income will reduce
accordingly. However, your income will
never be below your minimum income
guarantee (see Q11).
•Taking higher income reduces the potential
for future income increases, and raises the
likelihood that income will fall.
•Our assumptions about the life expectancy
of people with flexible income annuities
may change and this may affect your
income (see Q13).
•The annuity will stop paying out when you
die, unless you have chosen death benefits
(see Q18).
•If your income doesn’t increase at the same
rate as inflation, its spending power will
reduce. However, your income will never
be below your minimum income guarantee
(see Q11).
3
What is the Flexible Income Annuity
from Retirement Advantage?
The Flexible Income Annuity pays you a
regular income for life, allowing you:
• to
choose the income that suits you
within the income ranges we offer.
• the
opportunity for investment growth
while your policy continues to be
invested in the funds we offer, and
• a
minimum income guarantee – a
minimum that we guarantee to pay you.
We have designed it for customers who:
• want
the freedom to choose the level
of income they wish to receive at key
stages of their retirement, and
• are
willing to accept some investment
risk in return for potentially highergrowing income.
You may receive a better rate if you
provide us with details of your health,
lifestyle and demographic (see Q21 in the
Questions and answers section).
The Flexible Income Annuity could be right
for you if you accept that:
• your
income limits may change at each
income review (see Q12),
• your
income could go down as well as up
(see Q12).
How much do I need to invest?
To buy our Flexible Income Annuity you
need a pension fund of at least £10,000
after you have taken any tax-free cash,
and after we have taken or paid any
adviser charge or implementation fee (see
Q23-24).
4
Questions and answers
Flexible Income Annuity
Key Features
Q1
Q2
We describe it in more detail in the
policy document and in this section. In
summary, it works as follows:
To qualify, your pension fund must be
worth at least £10,000 after you have
taken any tax-free cash and after we
have taken or paid any adviser charge or
implementation fee.
How does the Flexible Income Annuity
work?
choose a fund or funds you would
like us to invest your pension invested
in from our fund range (see Q14).
• You
choose if and how you would like
to leave money in the event of your
death (see Q18).
• You
choose your starting income from
within the range we set (see Q6).
We calculate the investment fund
performance needed to maintain your
income. This will depend on the choices
you make as described above as well as
your personal circumstances (see Q13).
At any time you are free to:
• change
your income levels within the
range that applies to your annuity at
that time, or
• switch
investment funds within the
range available at that time,
There is no upper limit on your
pension fund. However, we will look at
investments of more than £2 million
individually and, if agreed, different
terms may apply.
You must be between 55 and 85 years
old to buy a Flexible Income Annuity.
Q3
How do I buy the Flexible Income
Annuity?
You buy the Flexible Income Annuity by
either:
Questions and answers
• You
How do I qualify for the Flexible
Income Annuity?
•transferring your entitlement under a
registered pension scheme(s) to the
Retirement Advantage Immediate
Vesting Personal Pension and then
buying the Flexible Income Annuity
so that you can take your pension
benefits, or
unless the annuity has moved to a fixed- •using the open market option with
income basis (see Q16).
your entitlement under a registered
pension scheme. The open market
You will receive annual statements
option allows you to buy your annuity
telling you how your fund is performing
from a provider of your choice - not
and whether we have credited any
necessarily the company where you’ve
lifetime bonuses to your annuity.
saved your pension funds.
Every three years we will review your
You may transfer entitlements from
income and compare the current fund
more than one pension scheme to
value to the fund value that would be
needed to maintain your existing income the Retirement Advantage Immediate
Vesting Personal Pension.
level at your chosen required fund
performance.
You can use the open market option
only with your entitlement under one
At age 90 your policy will convert to a
pension scheme (this is an HM Revenue
fixed-income annuity (see Q7).
and Customs rule).
You can invest money from any
registered pension scheme.
5
Questions and answers
Examples of suitable pension schemes are:
•personal pension plans
•stakeholder schemes
•retirement annuity contracts
•freestanding additional voluntary
contribution plans
Q5
Do I pay tax on my income?
Yes. You pay tax on your annuity income
in the same way as you pay tax on earned
income, normally through the PAYE system.
•money purchase occupational pension
schemes, but only if you are using the open
market option, not if the trustees are buying
What level of income can I expect
a scheme pension
to receive?
•additional voluntary contribution schemes,
but only if the scheme provides money
You can choose the level of income you
purchase benefits and you are using the
would like to start with from the minimum
open market option.
and maximum income range we set. We
calculate this range by setting a ‘benchmark
income figure’. This is equivalent to 100% of
a defined annuity rate. To set the defined
annuity rate, we use the average of the top
Can I take tax-free cash when I buy this
three market annuity rates for healthy lives
annuity?
or, if you qualify for an enhanced income,
Retirement Advantage’s own enhanced rates.
You can normally take up to 25% tax-free
cash (or pension commencement lump sum) We allow for:
from your pension fund before converting
•the value of investments in your policy.
it to an annuity. You need to apply for your
•your personal circumstances and that of
tax-free cash at the same time as you buy
any dependants.
your annuity.
If you are using your open market option and •the death benefits you have chosen .
buying your annuity with a pension fund from •your state of health.
another provider, you will receive this taxThe minimum level of income will be 50%
free cash from your current pension provider.
of the benchmark figure and the maximum
If you decide to transfer your pension fund
will be 120%. On your illustration we will
to the Retirement Advantage Immediate
show you the income range available and
Vesting Personal Pension before buying an
the required fund performance needed to
annuity, we will then pay you your tax-free
maintain your selected income level in future.
cash and use the rest of your pension fund
If you choose a higher starting income, this
to buy our Flexible Income Annuity. This
will leave a smaller fund invested so there will
will be reduced by any adviser charge or
be less potential for income growth.
implementation fee paid to any intermediary
If you choose a lower starting income, this
(see Q23 and 24).
will leave more of your money invested
so there will be more potential for income
You may, for example, decide to take taxgrowth.
free cash in this way if you have more than
one pension fund and wish to combine them If you ask us for a change in income level
before buying your annuity.
(called an ‘on request’ review – see Q9), we
Q6
Q4
If your fund is from an income drawdown
pension, you cannot take a tax-free cash sum
as this is only allowed when you start to take
your pension benefits.
6
will calculate a revised benchmark and new
minimum and maximum amounts. Similarly
we will calculate a revised benchmark at a
mandatory three-year review. We calculate
these benchmarks with reference to annuity
rates in a way that is consistent with our
initial benchmark calculation for you.
Flexible Income Annuity
Key Features
Q7
Q8
Your future income will depend on:
One of the ways annuities work is by
pooling policyholders’ life expectancy.
What will happen to my income as I get
older?
•the amount of income you have already
taken.
•the amount of any lifetime bonuses (see
Q8)
•our latest assumptions about life
expectancy.
•the level of our charges and those of
fund managers.
•the level of any ongoing and one-off
fees you agree with your adviser.
Normally, there won’t be any changes to
your income in the first three years unless
you decide to change to a different level
of income.
When you reach your 90th birthday, we
will automatically move your annuity to
a fixed-income basis. We will do this by
using terms set at that time. The annuity
will include any death benefits (see Q18)
you originally selected, for example,
spouse or civil partner benefits, and
will not be any lower than the minimum
income guarantee (see Q11).
Value protection (a type of death benefit
which ends at age 75, explained in Q18)
will not be available if you move to a
fixed-income option.
The fixed-income annuity will be payable
for the rest of your life and will not
reduce.
Remember that you will also have the
option of transferring the annuity to
another provider up to and including your
90th birthday, if they are prepared to
accept it. You should be aware that some
providers may not accept these funds –
you will have to shop around.
As an annuity, the Flexible Income
Annuity is an insurance contract where
you stand to benefit from your continuing
survival. Each month we add extra units
to your policy as a lifetime bonus.
The level of lifetime bonus also depends
on the death benefits you have chosen.
This is because the cost of providing
those benefits we meet by reducing the
lifetime bonus rate.
We review lifetime bonuses each year,
and in future they could be higher or
lower than we estimate in your illustration.
If we believe that policyholders are
living longer than we originally thought,
the lifetime bonuses will be lower. If we
believe our original expectation was
correct or too cautious, lifetime bonuses
will stay the same or go up.
Questions & answers
•the performance of your chosen
investment funds.
What are lifetime bonuses?
Lower lifetime bonuses could lead to a
lower income, whereas higher lifetime
bonuses may enable us to maintain or
increase your income at the next threeyear review (see Q12).
When you convert to a fixed income
(see Q7 and Q16) lifetime bonuses will
no longer apply. Instead, we will take into
account the lifetime bonus rates that
apply at the time of conversion when we
calculate the fixed income. You will not be
affected by future lifetime bonus reviews.
Q9
Can I change my income levels?
At any time after we have made the first
payment (provided you have not changed
to the fixed-income option), you have
the flexibility to change both your level
of income and the funds your annuity
invests in. However, before you do we
recommend you seek financial advice.
7
Questions and answers
If you do request a change in income
level, we will calculate new minimum and
maximum amounts. Within this new range
you can choose a new income level (see Q6).
Every month we will calculate a benchmark
income in the same way as we would at an
income review (see Q6), using your current
fund value.
We will calculate a new required fund
performance percentage based on the
revised income level you choose (see Q13).
If the investment value of your annuity has
fallen so that 120% of the benchmark level is
lower than the MIG, the MIG will then apply
for the duration of the annuity.
Your income can never go below the
minimum income guarantee (see Q11).
Q10
Why would I choose a different
income level?
There are many reasons why you might
choose a different income level.
Your income will then no longer depend on
investment performance.
Q12
Will Retirement Advantage ever change
my income levels?
We will automatically review your income on
For example, you may decide you need more every third anniversary of your policy. We
calculate your new income level using your
income for a few years, and are happy to
required fund performance (RFP) percentage
accept that your income may reduce later
as a result. Equally, you may decide you can (see Q13) and the latest information we
afford to take less income now but would like have about life expectancy. If our view of
life expectancy remains unchanged and the
more later, for example, if you plan to work
part-time, or you have a spouse/civil partner actual performance of your policy is:
who is still working.
•higher than your RFP, your income will
increase.
Q11
What is the minimum income guarantee?
The minimum income guarantee (MIG)
ensures your income will never fall below a
certain level. The proposed MIG amount is
shown in your illustration.
The MIG that applies to your annuity will
be shown on your policy schedule. This will
remain your MIG for your lifetime and your
income will never reduce below this amount.
If you choose a joint-life benefit and you
die before your second annuitant, we will
calculate their MIG in the same proportion
as their chosen benefit. For example, if you
choose 75% spouse benefit, their MIG will be
75% of yours.
There is an exception to this if you choose
both the value protection option and the
joint-life option (see Q18). We will make any
payment under the value protection option
first, and our MIG calculation will allow for
the resulting reduction in fund as well as the
percentage you have chosen.
8
•the same as your RFP, your income will
remain the same.
•lower than your RFP, your income will go
down.
Changes to life expectancy will affect our
income calculation – life expectancy could
decrease (which would lead to higher
income), or it could increase (which would
lead to lower income).
You can ask us to change your income level
or RFP at any time (see Q9) until we change
your annuity to a fixed-income basis (see
Q16).
Q13
What is the required fund performance?
The required fund performance (RFP) figure
is a guide to the investment performance
needed to pay you income in line with
the income level you choose. It takes into
account our charges and any fees you have
asked us to pay your intermediary.
Flexible Income Annuity
Key Features
Your RFP may change if you switch funds,
the percentage invested in each of your
chosen funds has changed, or our charges
have changed since the last review.
The RFP may also change if you ask us
to make other fee payments to your
intermediary. When you tell us what you
have agreed with your intermediary we
will tell you the effect on the RFP.
There are two situations when, even if the
actual investment performance equals the
RFP, the income level could reduce at the
next review.
How will my pension pot be
invested?
At the outset, you choose funds you
would like your pension pot invested in
from the range we offer for the Flexible
Income Annuity. You can also alter your
fund choices (within that same range) at
any time.
The fund (or funds) you choose should
fit well with your attitude to risk. With
the Flexible Income Annuity you can
decide how much risk you wish to take
by choosing from cautious, balanced or
adventurous funds. Generally, higher-risk
investments such as our adventurous
funds provide the potential for higher
returns but also increase the risk of lower
returns, which might lead to lower income
levels in future.
If you choose the maximum income and
want this level of income to be kept up
in future, using the more adventurous
funds is more likely to make this happen.
1. When our opinion changes on how long However, you would then need to accept
Flexible Income Annuity policyholders are the greater risk of a fall in your income. If
this does not fit well with your attitude to
living. If we think policyholders are living
risk, you should consider choosing a lower
longer, this will reduce future lifetime
level of income and more cautious funds.
bonuses. If the RFP remains unchanged,
this will result in a reduced income.
Your financial adviser can help you do
2. When units are sold to produce income this.
at a time when unit prices are falling.
There may be times when we move an
This would mean selling a higher number investment to another fund selected
of units to produce regular income
by Retirement Advantage (for
and pay our monthly charges. So the
example if a fund closes or is regularly
investment performance has to be higher underperforming, compared to its
to compensate.
objective). We will keep you informed if
this happens.
The reverse of these two situations is
also true. So if we believe Flexible Income You can see up-to-date information on
Annuity policyholders are not living as
the funds on our website:
long as we originally predicted or fewer
www.retirementadvantage.com.
units are sold because investment returns
are better, the income level could increase
at the next review — even though the
actual investment performance is the
same as the RFP.
Questions and answers
The impact of any ongoing fee on RFP
takes account of the size of the fee
relative to your fund value. If you have
agreed to pay a regular fixed amount (or
‘flat fee’) rather than a percentage of the
value, the impact on RFP will change over
time depending on the size of your fund.
Thus if your chosen investments do better
than the RFP, the impact of the flat fee
reduces so the RFP would also reduce. In
a similar way, poor performance increases
the flat fee’s impact compared to the size
of fund, so the RFP would increase.
Q14
9
Questions and answers
Q15
What happens if the investment funds
I choose don’t provide the returns I
expected?
With any investment there is potential for
negative investment returns. In addition,
cash-based funds also have limited
growth potential. Each year we will send
you a statement so that you can keep an
eye on the performance of your selected
funds.
Q17
Can I move my annuity to another
provider?
It may be possible to transfer your lifetime
annuity to another lifetime annuity if
legislation and HMRC rules allow and the
other arrangement is willing to accept the
transfer. Transfer to anything other than a
lifetime annuity will not be permitted.
If you decide to transfer, you’ll be
required to provide information about
your health and we will then offer you a
transfer value.
We also monitor your income and fund
performance every month. We will
contact you if your fund is significantly
We will calculate the transfer value to
underperforming or if you are
approaching the point when your MIG will fairly represent the future benefits you
would have received from your policy.
be applied (see Q11).
This takes into account our view of your
We won’t change your income level
future life expectancy. We will also take
unless you ask us to (except in the
an administration charge for processing
circumstances described in Q11) but we
the transfer. We will tell you the transfer
will always recommend you seek financial value before you decide to proceed.
advice in this situation.
The transfer value may be lower than
As your income is linked to fund
the fund value of your policy, particularly
performance, lower than required
if your health or the health of your
investment returns could lead to reduced dependants has declined. Any reduction
income after your next income review.
will also allow for any lifetime bonuses
But your income will never be lower than we have given, because we based these
your minimum income guarantee (see
on the assumption that you would not
Q11).
transfer the policy.
We recommend that you speak to your
If you transfer out within five years of
intermediary at each review.
the start date, we will make a charge
to recover our costs in setting up your
policy. This charge will be 2.5% of your
plan’s value within one year of the start
date, decreasing by 0.5% each year
What if I no longer want to accept the
afterwards. If an intermediary helped set
risk that my income could fall?
up your policy on a commission basis,
the decreasing charge will be twice
If your retirement income needs to
change, you are free to switch to a fixed- those rates. We will also take from your
income basis. A fixed-income annuity will plan’s value any additional commission
provide a guaranteed fixed income for the we paid the intermediary if he or she
exchanged ongoing commission for initial
rest of your life.
commission.
Once you have a fixed-income annuity,
you cannot move back to an investment- Finally we take a £250 charge for
calculating the transfer value. We may
linked annuity.
increase the level of this charge in line
with the increase in the retail prices index
from 1 January 2014 to the 1st day of the
January before your transfer request.
Q16
10
Flexible Income Annuity
Key Features
We will explain this at the time of transfer.
You should be aware that some providers
may not accept the funds from your
annuity – you may have to shop around.
2) The guarantee period option
Q18
If you die before the guarantee period
ends, we will pay a fixed income until the
end of the guarantee period.
Can my annuity provide an income
for my dependant if I die?
Yes. There are three ways of protecting
your investment in the event of your
death. If you want to choose one of them,
you must do so when you first buy your
Flexible Income Annuity.
1) The joint-life option
You can choose to take your annuity
with a joint-life option. This means that
on your death, up to 100% of your fund
(depending on the percentage you
choose) is available for the other person
(your second annuitant) to:
a) continue to invest in our Flexible
Income Annuity, in which case your RFP
(see Q13) will apply to their portion of
the fund – unless they choose a different
income level. Lifetime bonuses will
continue to apply (see Q8), or
b) move to the Flexible Income Annuity
fixed-income option (see Q16)
You can only choose a joint-life option
in favour of the named second annuitant
at the time you buy the Flexible Income
Annuity.
The income payable to your dependant
on your death may be taxable at a rate
set by HMRC for such payments. If you
die before age 75 any income payments
made to your dependant will be taxfree. If you die from age 75 onwards
any income payments made to your
dependant will be taxed at their marginal
rate of income tax.
So for example, if you choose to
guarantee your income for 10 years,
but die three years after taking out this
annuity, we will continue to pay the
income for the remaining seven years.
We will have discretion to decide who will
receive payment of the fixed income for
the rest of the guarantee period. However,
although the final decision is ours, you
may tell us your wishes by nominating
one or more people to receive payment.
The income payable to beneficiary(s) on
your death may be taxable at a rate set
by HMRC for such payments. If you die
before age 75 the income payments will
be made to beneficiary(s) tax-free until
the end of the guarantee period. If you
die from age 75 onwards the income
payments made to beneficiary(s) will be
taxed at their marginal rate of income tax.
Questions and answers
You must use any transfer to buy a
lifetime annuity which must be within HM
Revenue and Customs rules.
This option allows you to ensure that we
pay an income for a guaranteed length of
time, even if you die before the guarantee
period ends. You can choose to have a
guarantee period of between one and 10
years from the policy start date.
The fixed-income payments to the end of
the guarantee period will be 100% of the
benchmark income figure as described in
Q6, calculated at the latest of:
•the start date
•the last income review, and
•when you last requested an income
change.
If you have chosen the joint-life option,
we pay the guarantee first. The joint-life
income starts when the guarantee period
ends.
If your income is the fixed-income option,
when you die we will pay the fixed income
for the rest of the guarantee period.
11
Questions and answers
Q19
If a policy is still within a guarantee period
the spouse will not have the option to
transfer out or convert to a fixed income
When will you pay my income?
until the guarantee period has ended
and will be in relation to the value of the
You can choose to receive your income
spouse benefits only.
monthly, quarterly, half-yearly or yearly.
3) Value protection
You can also choose to receive your
This option allows you to protect a
percentage of your purchase price if
you die before age 75. You can choose a
percentage up to 100%.
If you die before age 75, we will make
a payment equal to your chosen
percentage of purchase price less any
annuity payments we have already made
to you.
income in advance or in arrears. If you
choose in advance, we’ll pay you at the
start of each period. If you choose in
arrears, we will pay you the following
month, quarter, half year or year,
depending on the date your annuity
started.
For payments in arrears you will need to
decide if you want your payments made
with or without proportion:
The lump sum may be taxable at a rate
With proportion – a final payment is
set by HMRC for such payments. The
value protection payment will be paid tax- made to cover the number of days
between the last payment we made and
free to your beneficiary.
when you die.
We will make the remaining payment
Without proportion – no final payment
as a lump sum and we will decide who
is made to cover the number of days
receives it. However, although the final
between the last payment we made and
decision is ours, you may tell us your
when you die.
wishes by nominating one or more
individuals to receive the payment.
Q20
So if you have also chosen the joint-life
option, the other person (your second
How will you pay my income?
annuitant) will receive an income based
on their percentage of any fund remaining
We’ll pay your income straight into a UK
after we have paid the value protection
bank or building society account in your
amount (see Q7).
own name.
Your remaining fund may not be enough
We can’t pay your income into a business
to provide a second annuitant’s pension
account or an account in somebody else’s
if value protection has used up all your
name. We can’t pay you until we have
fund.
received all the documents we requested
Value protection is not available if:
when you applied for the Flexible Income
•you have selected a guarantee period.
Annuity.
•your annuity moves to a fixed-income
basis.
•you have reached age 75.
12
Flexible Income Annuity
Key Features
Q21
Can my policy be based around my
individual circumstances?
If you qualify for an enhanced rate, this
will increase the lifetime bonuses we pay.
This means that the same required fund
performance can sustain a higher income.
We make a small increase in charge for
paying an enhanced income.
Q24
What is an implementation fee?
Implementation fees are charges where
you’ve not received financial advice, but
are paying your intermediary a fee for
implementing the policy (this is known as
being ‘non-advised’).
Q22
How will my intermediary be paid?
If the product does not pay your
intermediary a commission, we can pay
your intermediary an implementation fee.
This fee will be separate from our charges
and agreed between you and your
intermediary.
When you buy your annuity through an
intermediary, they will give you financial
advice or information only. If they give
you financial advice, you’ll need to agree
a fee for it — this is called an adviser
charge.
If we receive instructions from you to pay
an implementation fee, we will do so from
the fund we receive from the transferring
scheme(s) before setting up your annuity.
This will reduce the amount available to
buy your annuity.
If you receive only information from your
intermediary, you’ll need to agree to pay
either:
You may also agree a regular ongoing
fee. There may be other ‘one-off’ fees that
you’ll need to agree with your adviser.
These fees will be paid for by deducting
units from your annuity, which will affect
the level of future income you receive.
•a fee – called an implementation fee, or
•commission – we pay this to your
intermediary for arranging the annuity.
Q23
What are adviser charges?
Adviser charges are charges for financial
advice you have received (this is known
as being ‘advised’).
You can pay for the advice relating to
the annuity through an initial charge from
the fund we receive from the transferring
scheme(s) before setting up your annuity.
This will reduce the amount available to
buy your annuity.
Questions and answers
Yes, if you provide us with some
information about your health, lifestyle
and demographic you may be entitled to
receive an enhanced income. You may
need to complete a health questionnaire
as part of your application.
You may also agree a regular ongoing
fee. There may be other ‘one-off’ fees that
you’ll need to agree with your adviser.
These fees will be paid for by deducting
units from your annuity, which will affect
the level of future income you receive.
Q25
What is commission?
If your intermediary has not given you
advice, you may have a commissionpaying product. This means your
intermediary will receive a payment from
us for arranging this annuity. The amount
of commission will be shown on your
illustration.
13
Questions and answers
Q26
Q27
Policy charge
We will make a charge for providing your
annuity by making a monthly deduction of
units from your fund. This charge covers
our administration costs and the cost of
providing the minimum income guarantee.
If you have a commission-paying product,
it also covers the cost of this payment to
your intermediary.
You have the right to cancel within 30
days of your contract being set up.
What are your charges?
We calculate the charge each month as
a percentage of the investment so it will
vary according to the fund’s value. Your
annual policy charge at the start date is
shown on your personal illustration.
The charge may change in the future if:
•you amend your income level
•you change your investment funds, or
•the proportion of the total policy value
held in each of your chosen funds
has changed due to the different
performance of the funds you selected.
We also reserve the right to change our
charges in line with the policy terms and
conditions.
Fund charges
There are different annual management
charges depending on the fund(s) you
choose for investment. These charges are
reflected in the unit prices of each fund.
If we have negotiated a rebate on the
standard fund management charge, we
will normally make an extra allocation of
units each month.
The annual management charges for your
chosen funds are shown in our document
‘Flexible Income Annuity Investment Fund
objective and charges’ available from our
website: www.retirementadvantage.com.
14
What if I change my mind?
Immediate vesting personal pension
If 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 we tell you we have received the
first pot of money from your existing
pension provider(s). We will write to
you and provide a notice about your
right to cancel. You need only return this
cancellation notice if you wish to cancel
your annuity with us.
Once we have received all the funds for
your annuity, the annuity will begin and
we will send you a Policy Document and
Schedule.
Open market option
If you are using your open market option
to move a pension fund with another
provider to Retirement Advantage, we
will send you a Policy Document and
Schedule. We will also send you a notice
of your right to cancel once your annuity
with us begins. You have 30 days to
cancel from the day you receive this.
In both cases
If you decide to cancel your policy, you
must return the cancellation notice within
30 days. You must also return any money
received, including any tax-free cash
payments.
Cancellation notices should be returned
to:
Retirement Advantage
Customer Centre
MGM House
Heene Road
Worthing
West Sussex
BN11 3AT
Flexible Income Annuity
Key Features
On cancellation, we will try to return your
pension fund (less any adviser charge
or implementation fee paid to your
intermediary) to your original pension
provider. We will calculate the fund’s
value on the date we receive the notice. If
the value has fallen, we will pay the lower
amount.
What if I die while my money is still in
the Retirement Advantage Immediate
Vesting Personal Pension?
If any money is due but we have not
received it from the transferring scheme,
we will ask the scheme to keep the money
and pay benefits as if you were still a
member of that scheme.
If we have received money and are
holding it in the Retirement Advantage
Immediate Vesting Personal Pension, we
will set up the Flexible Income Annuity as
originally requested. If your application
specified dependants’ benefits, we will
pay them accordingly (see Q18). If you
did not specify any dependants’ benefits,
no benefits will be payable.
Questions and answers
Please bear in mind that the original
pension provider may refuse to accept
the repayment on the terms that
previously applied to you, or they may
not even accept the repayment at all.
If so, you will be responsible for finding
another provider who will accept the
transfer of the pension fund. If we do not
receive new instructions or we cannot act
on them, we will set up a Flexible Income
Annuity as originally instructed.
Q28
15
Further information
What to do if you’re unhappy
Your client category
We hope you will be delighted with our
service. But if we fall short, we want to
know.
Our regulator, the Financial Conduct
Authority, asks us to classify our clients
based on their familiarity with financial
services.
Please contact our Customer Centre
using the details shown in the ‘Contact us’ You are a ‘retail client’ which means you
section on page 19.
get the highest level of protection by
getting the clearest explanation of what
If you are not satisfied with the outcome, you’re buying and more detail about the
you can contact the
risks.
Financial Ombudsman Service
Conflict of interest
Address
Financial Ombudsman Service
Exchange Tower
London E14 9SR
Retirement Advantage has built a
reputation for conducting business in
an honest manner. That’s why we have
a policy to deal with any conflicts of
interest.
Tel 0800 023 4567
Web www.financialombudsman.org.uk
These are free services. Using them will
not affect your legal rights or your right
to take legal action.
Terms and conditions
This Key Features document gives you a
summary of the plan.
Full terms and conditions are set out in
the Policy Document. For a copy, please
contact our Customer Centre or ask your
intermediary.
If we need to make any changes to the
terms and conditions of your Flexible
Income Annuity, we’ll write to you.
Law
Your annuity policy is subject to the law
of England, which will be used to resolve
any dispute.
Language
All information and communications
about this plan will be in English.
16
You can request a copy by calling
0800 032 7690
The legal contract
The Flexible Income Annuity is a contract
of insurance between you and us, formed
by:
•your signed application
•the Policy Terms and Conditions, and
•the Policy Schedule.
Proof
Before we pay any money to you (or
any other person entitled to receive
benefits from us) we must have proof
of entitlement. This may include proof
of identity, address and age, and
evidence that you (or your dependant if
appropriate) are still alive. We may use
electronic means (this may include credit
reference agencies) to obtain this proof. If
we do not have enough proof of identity
and entitlement, we may be unable to
make payments.
Flexible Income Annuity
Key Features
Compensation
We’re covered by the Financial Services
Compensation Scheme (FSCS). The FSCS
can pay compensation to our customers
if Retirement Advantage is unable to
meet its liabilities. The FSCS cannot pay
compensation in any other circumstances.
Specifically the FSCS does not cover
investment loses.
Address
Financial Services
Compensation Scheme
10th Floor
Beaufort House
15 St Botolph House
London EC3A 7QU
Further information
For details of the compensation levels that
may apply to annuities (which are classified
as long-term insurance business) please
contact:
Tel 0800 678 1100 or 020 7741 4100
Fax 0207 892 7301
Email [email protected]
What if one of our fund managers
defaults?
If a Retirement Advantage fund invests in
an external fund, there is an investment
risk and a risk that the fund manager could
default (be unable to meet its debts). In
these circumstances, neither Retirement
Advantage nor our customers could claim
compensation from the FSCS for any loss.
The information in this document is based on our understanding as at June 2016, of
current taxation, legislation and HM Revenue and Customs practice. All of these are
liable to change without notice. The impact of taxation (and any tax reliefs) depends
on individual circumstances.
17
About us
Previously known as MGM Advantage and Stonehaven, we are a well-established company
that can trace its roots back to 1852. In 2015 we changed our name to Retirement
Advantage – merging our retirement income and equity release divisions, to help us 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 us for their income. And with more than £1.9 billion
of funds under our management, and a heritage dating back over 150 years. You can trust us
to keep your money safe and secure.
As a company that specialises in retirement, we believe that we know the needs of our
customers better. Our award-winning expertise has allowed us to create products that can
help you live well in retirement, using the money in your pension and/or the value of your
property. You can find out more about us on our website at www.retirementadvantage.com.
Retirement Advantage is a trading name of MGM Advantage Life Limited.
Retirement Advantage is authorised by the Prudential Regulation Authority and regulated
by the Financial Conduct Authority and the Prudential Regulation Authority, registration
number 598800.
You can check these details at
www.fca.org.uk/register, or by calling 0800 111 6768.
18
Contact us
Flexible Income Annuity
Key Features
How to contact us
Email us
Here are our contact details in case you
[email protected]
have any questions or want to tell us about
Phone
any changes to your personal details:
0800 032 7690
Address
8am to 6pm Monday to Friday
Retirement Advantage
Customer Centre
You can download all of our documents
MGM House
from our website:
www.retirementadvantage.com
Heene Road
Worthing
Braille, large-print and audio formats are
West Sussex
available on request.
BN11 3AT
All calls may be monitored or recorded
Web
to help with staff training and quality
www.retirementadvantage.com
control.
19
Telephone calls may be recorded for training and quality monitoring purposes. Retirement Advantage™ is a trading name of
MGM Advantage Life Limited. Registered no. 08395855. Authorised by the Prudential Regulation Authority and regulated
by the Financial Conduct Authority and the Prudential Regulation Authority. Retirement Advantage™ and the Retirement
Advantage™ logo are trademarks of MGM Advantage Holdings Limited. Registered in England and Wales. Registered office
MGM House, Heene Road, Worthing, West Sussex, BN11 3AT.
22-940 06/16