RETIREMENT ACCOUNT
ADVISER TECHNICAL GUIDE
This information is for UK financial adviser use only
and should not be distributed to or relied upon by any other person.
Retirement Account
PAGE 4
PAGE 19
RETIREMENT ACCOUNT – OVERVIEW
ADVISER REMUNERATION
PAGE 6
PAGE 23
INVESTMENT OPTIONS
PAGE 10
CHANGE TO ADVISER
REMUNERATION BASIS
PAYMENTS – RETIREMENT PLANNING
PAGE 24
PAGE 12
CONTROL ACCOUNT(S)
PENSION ENCASHMENTS –
RETIREMENT PLANNING
TRADING
PAGE 13
PAGE 27
PAYMENTS – RETIREMENT INCOME
DEATH BENEFITS
PAGE 14
PAGE 28
INCOME DRAWDOWN –
RETIREMENT INCOME
COOLING OFF
PAGE 26
PAGE 29
PAGE 15
ONLINE FUNCTIONALITY
CHARGES
PAGE 30
GLOSSARY
SERVICE CHARGE
INVESTMENT CHARGE(S)
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Retirement Account
Retirement
Account
2
Retirement Account
Retirement
Account
CHOOSING RETIREMENT ACCOUNT
RETIREMENT ACCOUNT CAN HELP YOU MEET YOUR CLIENTS’ NEEDS
TO AND THROUGH RETIREMENT, WITH INVESTMENT SOLUTIONS
FOR BOTH PENSION SAVERS AND INCOME DRAWDOWN.
Retirement has changed – it doesn’t
necessarily mean stopping work, and can
bring the opportunity to do new things.
Rules around pensions have also changed
and now that clients have greater freedom
and flexibility with their retirement
savings, they need a pension product
that lets them make the most of this.
Retirement Account allows clients to –
Retirement Account could be the right
choice for a broad range of people,
backed by the strength and reassurance
that comes with investing with
Scottish Widows.
• manage a gradual transition into
retirement if they decide to wind
down from full employment
• save while receiving favourable tax
treatment,
• invest to suit their goals,
• have control over the way they
access their benefits, including
income drawdown, and
all within one pension product, helping to
give your clients the retirement they want.
This guide should be read in conjunction
with other Retirement Account literature.
If you have any further questions, please
speak to your Scottish Widows Account
Manager or, alternatively, visit our
website www.scottishwidows.co.uk/ra
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Retirement Account
RETIREMENT ACCOUNT – OVERVIEW
RETIREMENT ACCOUNT – SINGLE PLAN
RETIREMENT PLANNING
RETIREMENT INCOME
Scottish Widows
Pension Funds
Fixed Term
Cash Deposits
Discretionary Fund
Management
Commercial
Property
Governed Investment
Strategies and
Premier Governed
Investment
Strategies*
Solution
Funds
Fund
Supermarket
Share
Dealing
Portfolio
Management Service
CONTROL ACCOUNT
CONTROL ACCOUNT
*Governed Investment Strategies and Premier Governed investment Strategies
are available for Retirement Planning only.
• Up to six payers are allowed on a Retirement
Account:
PRODUCT FLEXIBILITY
Retirement Account is designed to support clients
throughout saving for their retirement AND while
taking benefits.
–– One customer.
–– Two employers.
–– Three others.
• It has two distinct elements –
• Basic rate tax relief is applied immediately to
your clients’ payments to the Retirement Planning
element including any payments made on their
behalf by other individuals. Higher or additional rate
taxpayers can claim additional tax relief via their
self-assessment tax return. Transfer payments and
payments made by an employer won’t receive basic
rate tax relief. Tax rules can change.
–– Retirement Planning (RP) – holds pension
savings pre-retirement and
–– Retirement Income (RI) – holds pension
savings post-retirement AND allows clients
to take income drawdown.
• It’s easy to designate amounts from the Retirement
Planning element to the Retirement Income element.
• Each element has its own Control Account which
is used to administer the Retirement Account – for
example, certain charges and expenses are taken
from the Control Account(s).
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Retirement Account
INVESTMENT CHOICE
ENTRY AGES
• The investment range includes:
• There is no minimum age for Retirement Planning.
• Retirement Income can generally be accessed from
age 55, unless the client is in serious ill-health or has
a protected pension age.
–– Scottish Widows Pension Funds.
–– Governed Investment Strategies and Premier
Governed Investment Strategies (using
Scottish Widows Pension Funds) – for Retirement
Planning only.
–– Access to a wide range of funds via a Fund
Supermarket.
• The maximum age at entry for Retirement Planning
is 74 and 98 for Retirement Income. This must be
at least one full year before your client’s chosen
retirement age.
–– Any Fixed Term Cash Deposits we make
available.
RETIREMENT AGES
Your client must choose a retirement age at the
beginning of the Retirement Account, although this can
be changed at any time.
–– A panel of Discretionary Fund Managers (DFM).
–– Share Dealing.
–– Commercial Property
• The minimum retirement age is normally 55.
–– Portfolio Management Service.
• The maximum retirement age your client can
choose is 75 for Retirement Planning and 99 for
Retirement Income.
There’s no requirement for a minimum investment in
Scottish Widows Pension Funds.
Please note: Scottish Widows annuities are only
available to buy up to age 75, however, it may be
possible to purchase an annuity after this by
transferring to another provider.
INCOME DRAWDOWN SOLUTIONS
Income drawdown has become an increasingly popular
retirement option as an alternative to the purchase of an
annuity. It offers clients potential advantages in terms of
value, flexibility and the ability to pass pension savings
on after death, but also carries a number of risks. The
selection of an income drawdown solution requires care,
diligence and guidance. All of this creates an excellent
growth opportunity for your business, and we believe
Scottish Widows is ideally placed to help you provide
retirement income solutions for your drawdown clients.
Pensions are a long-term investment. The retirement
benefits clients receive from their pension plan will
depend on a number of factors including the value of
their plan when they decide to take their benefits which
isn’t guaranteed and can go down as well as up. The
value of the plan could fall below the amount(s) paid in.
The value of the tax benefits of a Retirement Account
depend on a client’s circumstances. Tax rules and
circumstances can change in the future.
CLEAR, PREDICTABLE CHARGES
• A simple, unbundled charging structure that
separates the different types of charges, so clients
can see exactly what they’re paying.
• Comprehensive remuneration options designed to suit
your business model and allow choice and flexibility.
UP-TO-DATE INFORMATION
• Our online service offers you access to illustrations
and applications, as well as daily valuations and the
ability to buy, sell and switch most investments. Your
clients can also view their Retirement Account online.
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Retirement Account
INVESTMENT OPTIONS
TO AND THROUGH RETIREMENT, WE WANT TO ENSURE THAT YOUR CLIENTS HAVE THE INVESTMENT
CHOICES THEY NEED – RETIREMENT ACCOUNT OFFERS A WIDE RANGE OF ASSET CLASSES TO INVEST IN.
Retirement Account
Retirement Planning
Premier Governed
Investment
Strategies
Governed
Investment
Strategies
Retirement Income
Scottish Widows
Pension Funds
Fund
Supermarket
Fixed Term Cash
Deposit
Discretionary
Fund Management
Share Dealing
Portfolio Management Service
Simple personal pension
Personal pension with extended choice
Personal pension with self investment
6
Commercial
Property
Retirement Account
SCOTTISH WIDOWS PENSION FUNDS
• O
ver 100 funds covering a wide range of asset classes, geographical locations, sectors and
management styles.
• No minimum investment required.
• Currently no charge for switching between our Pension Funds.
• Clients can also choose from a range of Governed Investment Strategies, which gradually move the
Retirement Account into lower risk investments as clients approach their selected retirement date.
At five years from this date, the chosen strategy will automatically adjust so that the Account is
invested in one of three ways, depending on whether clients want to purchase an annuity, keep
their funds invested (including income drawdown), or take a cash lump sum.
• In addition, we offer Premier Governed Investment Strategies which are slightly more expensive but
aim to provide better potential returns for broadly the same level of volatility.
• Governed Investment Strategies and Premier Governed Investment Strategies are available
for Retirement Planning only.
For more details, please see –
• The Retirement Account Scottish Widows Pension Fund Charges (45422)
• Governed Investment Strategy Adviser Guide (49970)
• Premier Lifestyling Options Guide (55117)
FIXED TERM CASH DEPOSIT (SUBJECT TO AVAILABILITY)
• A
ims to provide an alternative to cash funds and may be suitable for those who are risk-averse or
wish to avoid short term market volatility.
• Allows clients to benefit from competitive terms negotiated with deposit-takers.
• Each Fixed Term Cash Deposit will be available for investment during its Offer Period,
at a fixed level of interest, payable at the end of the term.
For more details, please see the Retirement Account Fixed Term Cash Deposit Guide (48856)
FUND SUPERMARKET
• O
ffers a range of funds from a variety of fund management groups, with different fund services, sizes
and costs.
• Access to approximately 2,600 funds.
• There’s the potential to benefit from lower charges on some funds than if they were to be bought direct.
• No initial charge.
For more details, please see –
• the Retirement Account Fund Supermarket List and Charges (19145)
• Fund Supermarket Investor’s Guide (48432)
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Retirement Account
DISCRETIONARY FUND MANAGEMENT
• The Retirement Account offers access to a panel of Discretionary Fund Managers, who will construct
an investment portfolio specific to your client’s requirements from a range of permitted investments
–– Brewin Dolphin Securities
–– Brooks Macdonald
–– Cazenove Capital Management
–– Charles Stanley
–– Tilney Investment Management
–– Investec Wealth & Investment
–– Quilter Cheviot
–– Rathbone Investment Management.
• More than one manager can be selected if required.
• Investments are made via a privately managed fund.
For more details, please see the Discretionary Fund Managers Guide to services and charges (25361)
SHARE DEALING
• The share dealing facility allows your clients to invest in securities traded on an HM Revenue &
Customs recognised stock exchange.
• These include –
–– Company shares and bonds
–– Government, public and local authority bonds
–– Exchange traded funds listed on the London Stock Exchange, or on the official list of a competent
authority in another European Economic Area state
–– Investment trusts including Real Estate Investment Trusts.
For more details, please see the Retirement Account Share Dealing Guide (47937)
INCOME DRAWDOWN SOLUTIONS
Income drawdown has become an increasingly popular retirement option as an alternative to the
purchase of an annuity. It offers clients potential advantages in terms of value, flexibility and the ability
to pass pension savings on after death, but also carries a number of risks. The selection of an income
drawdown solution requires care, diligence and guidance.
All of this creates an excellent growth opportunity for your business, and we believe Scottish Widows is
ideally placed to help you provide retirement income solutions for your drawdown clients.
For more details, please see –
• Income Drawdown Investment Solutions (55376)
• Investing for Income Drawdown (55378)
• Scottish Widows Cautious Managed and Defensive Managed Pension Funds (55384)
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Retirement Account
COMMERCIAL PROPERTY
–– Clients can invest in their existing business premises or other property, subject to our approval.
–– UK Commercial Property can be purchased in full by either the Retirement Planning or Retirement
Income element, subject to a minimum property value of £100,000. (It’s not possible to use a
combination of Retirement Planning and Retirement Income, but a Commercial Property held
within Retirement Planning can be designated in part or in full to Retirement Income).
–– Only one Commercial Property can he held within a Retirement Account at any one time.
–– It can be purchased at any time before your client’s 65th birthday, provided there are at least
10 years until their chosen retirement date at the date of purchase. We will not normally allow a
purchase after age 65.
–– We have appointed Curtis Banks to supervise the purchase process and provide ongoing
property administration.
–– Up to 50% of the total value of the Retirement Account can be borrowed to facilitate a property
purchase, subject to the mortgage not exceeding 75% of the value of the property to be bought.
Lenders may impose their own limits.
–– The Commercial Property Investment will consist of up to three components – the property, the
mortgage (if applicable) and the property cash account. You will be able to see a consolidated
valuation of these online.
–– The property cash account will receive any rental payments which the property generates, and
will be used to fund any mortgage payments and other costs in relation to the property – in all
cases, it must hold a minimum balance.
–– Investments in Commercial Property will be made via a privately managed fund.
For more details, please see the Retirement Account Commercial Property Administration Guide (22926)
PORTFOLIO MANAGEMENT SERVICE
The Portfolio Management Service enables advisers to construct and store investment portfolios made up
from Scottish Widows funds and the Fund Supermarket funds, with scheduled rebalancing if required.
For more details, please see the Advisers’ Guide to the Portfolio Management Service (24917)
The range of investments available can change.
Where investments are held on deposit, such as a Control Account or Fixed Term Cash Deposit, there is a
possibility that the provider(s) of those deposits may fail to meet their obligations. However, we believe there is
only a small risk that some or all of the value of that investment would be lost.
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Retirement Account
PAYMENTS – RETIREMENT PLANNING
MINIMUM PAYMENTS (AFTER TAX RELIEF HAS BEEN ADDED)–NEW RETIREMENT ACCOUNTS
Payment Frequency
Monthly
Yearly
Minimum Payment
(Gross)
£200
£2,400
Single
Transfer
£10,000 £10,000
• Each minimum applies to the total payments
from all payers who are making payments at the
same time. Please see page 4 for the number of
payers allowed.
• Where a single payment and transfer payment are
being made at the same time the minimum payment
is a total of £10,000. Each payment must be at
least £2,000.
• If there is more than one payer, each payer
must pay a minimum of £10 per month, £120 per
year, or £2,000 for single payments and transfers.
For example, if three monthly payments are being
made in respect of one client, each payer must pay at
least £10 and the total of all three payments must be
at least £200.
For example, if a client wants to make a single
payment and transfer £9,000 from another pension
policy, the minimum single payment would be
£2,000. However, if the transfer payment was less,
e.g. £5,000, then the minimum single payment
would need to be £5,000.
If the minimum for one payment type is met, a client need only meet the additional payment amount for other payment
types. For example, if there is a transfer of £10,000, the client need only pay a regular payment of £50 per month.
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Retirement Account
ADDITIONAL PAYMENTS (AFTER TAX RELIEF HAS BEEN ADDED) TO EXISTING
RETIREMENT ACCOUNTS
Payment Frequency
Monthly
Yearly
Single
Transfer
Minimum Payment
(Gross)
£50
£600
£2,000
£2,000
Clients can ask us to automatically increase their payments each year –there is no minimum limit for automatic increases
to monthly or yearly payments.
MAXIMUM PAYMENTS
There is no maximum limit on the amount that can be
invested in a Retirement Account. However, limits do
apply to the amount of tax relief that your client can
receive on payments into the Retirement Planning
element. This is the greater of 100% of their relevant UK
earnings or £3,600 (gross) each year.
If your client has taken a pension encashment
(Uncrystallised Funds Pension Lump Sum) from any
pension, or income from Flexible Access Drawdown,
they will be subject to the Money Purchase Annual
Allowance. This means that your client will only be
entitled to obtain tax relief on contributions to all
money purchase pensions up to £10,000, after which
they will be subject to a tax charge.
We will refund payments made by a client, or by another
individual on behalf of a client, which do not qualify for
tax relief.
A Lifetime Allowance, set by the Government, will apply
to the total value of pension benefits that your clients
can receive from all of their pension arrangements.
You should ensure that your clients do not exceed their
Annual Allowance for pension payments in any one year.
(The annual allowance is reduced for higher earners –
this is called the Tapered Annual Allowance).
Tax charges may apply if the Government’s Annual
Allowance, Tapered Annual Allowance, Money Purchase
Annual Allowance or Lifetime Allowance is exceeded.
Please note that tax rules can change and that the value
of the tax advantages of a Retirement Account will
depend on your client’s circumstances. Your client’s
circumstances and tax rules may change in the future.
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Retirement Account
PENSION ENCASHMENTS – RETIREMENT PLANNING
PAYMENT OF PENSION ENCASHMENTS
Your client can take one or more pension encashments
(Uncrystallised Funds Pension Lump Sums) from the
Retirement Planning element of their Account, subject
to the following conditions:
Payments are made from the Retirement
Planning Control Account(s) via BACs.
You will need to ensure there is sufficient
balance in each relevant Control Account or
no payment will be made. Please see ‘Control
Account(s)’ on page 24 for details.
• normally they must be age 55 or over, and
• they must have sufficient Lifetime Allowance.
Your clients cannot take pension encashments
if they have:
TAX
• either primary or enhanced protection with
protected lump sum rights greater than £375,000, or
For all pension encashments, 25% of the value will be
tax-free. The remainder of the value will be taxable as
income in the tax year of payment. We will deduct tax
using your client’s PAYE tax code (or the PAYE Emergency
Tax Code if HMRC has not told us your client’s tax code).
• a lifetime allowance enhancement factor and the
available portion of their lump sum allowance is less
than 25% of the proposed encashment.
It isn’t possible to give up primary protection but
your clients can contact HMRC about giving up
enhanced protection.
The tax deducted may not be the right amount due,
when all of your client’s income for the year is taken
into account. After the following 5 April, HMRC will
deal with any additional tax or refund due.
PENSION ENCASHMENT OPTIONS
There are two options for taking pension encashments:
If your client thinks they have paid too much tax,
they can ask HMRC for a tax refund.
Partial Pension Encashment – where part of
the value of the Retirement Planning element
is taken as a cash lump sum;
Full Pension Encashment – where the full
value of the Retirement Planning element
is taken as a cash lump sum.
25% of each encashment will be tax-free (regardless of
whether your client has protected tax-free cash) and the
remainder taxable. Following a full pension encashment
we will close your client’s Retirement Account if there is
no remaining value.
Partial pension encashments must be at least £5,000.
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Retirement Account
PAYMENTS – RETIREMENT INCOME
MOVING AMOUNTS INTO RETIREMENT
INCOME
The £30,000 fund can be made up of:
• Funds built up in Retirement Planning, before
being moved across to Retirement Income.
Amounts can be moved into Retirement Income by:
• Funds transferred, or single premium contributions
into Retirement Planning, for partial or full
immediate vesting to Retirement Income.
• Designating funds from the Retirement Planning
element(s) of a Retirement Account.
• Making a drawdown to drawdown transfer from
some existing income drawdown arrangements.
For drawdown to drawdown transfers, the minimum
payment to Retirement Income is £22,500.
Single contributions and transfer payments into
Retirement Planning can also be immediately vested
to Retirement Income
ADDITIONAL PAYMENTS OR
DESIGNATIONS TO EXISTING
RETIREMENT ACCOUNTS
MINIMUM PAYMENTS – NEW
RETIREMENT ACCOUNTS AND
FIRST DESIGNATION
The minimum additional payment into the Retirement
Income element is £2,000 (before any tax-free lump
sum). This allows your client to phase their money into
Retirement Income. Even if they end up with a lower
remaining balance in the Retirement Planning element,
they can move the balance into Retirement Income.
The minimum initial payment from Retirement Planning
to Retirement Income is £10,000, provided that there
is at least £30,000 in the Retirement Planning element
before monies are designated to Retirement Income
(before any tax-free lump sum).
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Retirement Account
INCOME DRAWDOWN – RETIREMENT INCOME
TAX-FREE LUMP SUM
CAPPED DRAWDOWN
For designations and immediate vesting, clients can
normally choose to take up to 25% of the value as a taxfree lump sum. A higher amount may be available if your
client has a protected tax-free cash entitlement.
• Maximum yearly income limit of 150% of the basis
amount determined by reference to Government
Actuary’s Department (GAD) tables.
• Income limits applicable for three years (or one year
after age 75), or until a review is triggered if earlier.
Certain events, such as an additional designation or
an annuity purchase, will trigger a recalculation of
the basis amount.
CONTROL ACCOUNT
Where funds are being designated, there must be
sufficient in the Control Account to cover the tax-free
lump sum and any Initial Adviser Charge.
FLEXIBLE ACCESS DRAWDOWN
If there isn’t enough, and your client hasn’t provided us
with a disinvestment instruction, and they are invested
in Scottish Widows Pension Funds, then we’ll disinvest
proportionately from those funds to cover the tax-free
lump sum and any Initial Adviser Charge.
• There is no restriction on the amount that your
client can withdraw as income each year, up to the
full value of the Retirement Income element of
their Account.
• Income can be set up either as a percentage of fund
value or as a fixed monetary amount.
• If income is based on a percentage of the fund value,
the monetary amount quoted will only be valid until
the next anniversary of the date the Income element
of the Account was set up. At this point it will be
recalculated on the Retirement Income fund value
at that time, so the amount could change.
• If the Retirement Income element of your client’s
Retirement Account reduces to zero (and there is
no remaining value in Retirement Planning and no
regular contributions are being paid), we will close
the Account.
(Your client should also let us know which assets should
be re-registered from Retirement Planning to Retirement
Income to cover the balance of the designation amount
(75%)).
MINIMUM WITHDRAWAL
• No minimum limit – tax-free cash can be taken
and a zero income selected.
• You can ask us to change your client’s level of
income at any time.
INCOME WITHDRAWAL BASIS
The value of the Retirement Income element of the
Account will change:
• Retirement Income elements set up before 6 April 2015
will be on a ‘Capped Drawdown’ basis and Retirement
Income elements set up on or after 6 April 2015 will be
on a ‘Flexible Access Drawdown’ basis.
• each time an amount is moved into the Retirement
Income element
• when an amount is used to buy an annuity
• when income is taken
• as the value of investments rise and fall
• when charges are deducted.
• If your client is on Capped Drawdown, they can stay
on this basis or choose to switch to Flexible Access
Drawdown, but will not be able to switch back to
Capped Drawdown at a later date.
PAYMENT OF INCOME
• If your client asks to take an income higher than the
maximum allowed under Capped Drawdown, they
will switch to a Flexible Access Drawdown basis, but
will not be able to switch back to Capped Drawdown
at a later date.
• Income can be paid on a monthly, quarterly,
half-yearly or yearly basis. Ad hoc payments
can also be made. The frequency and amount of
income payments can be varied at any time.
• Payments are made from the Retirement Income
Control Account(s) via BACS, net of tax using PAYE.
• There must be sufficient balance in each relevant
Control Account or sufficient units in Scottish Widows
Pension Funds to cover the income payments due.
If not, a partial payment or no payment will be made.
See ‘Control Account(s)’ section on page 24 for
more details.
• Transfers in on a Capped Drawdown basis can stay
on Capped Drawdown.
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Retirement Account
CHARGES
RETIREMENT ACCOUNT HAS BEEN DESIGNED WITH A TRANSPARENT CHARGING STRUCTURE.
WE HAVE BROKEN THE OVERALL CHARGES DOWN INTO THEIR COMPONENT PARTS,
SO YOU SHOULD ALWAYS HAVE A CLEAR PICTURE OF THE COSTS.
Charges
under
Retirement
Planning
Charges
under
Retirement
Income
There are three types of charge which
will apply to the Retirement Account:
Investment Charges
Service Charge
Adviser Remuneration
MONTHLY CHARGING DATE
There is a Monthly Charging Date on which we will deduct charges from the Control Account(s).
The first charging date will be one month after the ‘Start Date’ of the Retirement Account. The Start Date is:
• For single or transfer payments – the date the payment is received.
• For regular payments (Retirement Planning only) – the date we process all the relevant paperwork.
Where more than one type of payment is being made, for example a single payment and a regular payment at the same
time, the Start Date will be the earliest of the dates described above.
There is no change to the Monthly Charging Date on designating existing assets.
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Retirement Account
SERVICE CHARGE
SERVICE CHARGE
Scottish Widows will deduct a Service Charge from the Retirement Account for setting up and managing your client’s
Retirement Account.
The charge is calculated as a percentage of the total value of all assets (Retirement Planning and Retirement Income) and
the percentage can reduce as this value increases and increase if the value reduces*. Please see the table for more details.
The Service Charge will be split proportionally between each Control Account, and will be deducted on the Monthly
Charging Date.
The first Service Charge will be deducted one month after the Retirement Account Start Date.
Service Charge rate table
The table directly below shows the standard rates that apply for new Retirement Account applications.
Total value of
Retirement Account
£0k - <£30k
Service Charge
(per year)
0.90% 0.40% 0.30% 0.25% 0.20% 0.1 0%
£30k - <£50k
£50k - <£250k
£250 - £500k
£500 - £1m
£1m and above
If the total value of a client’s Retirement Account moves from one tier to another, so will the rate of the Service Charge.
For example, if the value of a Retirement Account increases from £29,000 to £31,000, the rate of the Service Charge will
decrease from 0.90% to 0.40%. However, if the value of the Retirement Account decreases from £510,000 to £490,000,
the rate of the Service Charge will increase from 0.20% to 0.25%.
*Please note, mortgage amounts in respect of Commercial Property are excluded from the calculations to determine the
Service Charge.
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Retirement Account
INVESTMENT CHARGE(S)
Investment charge(s) depend on the type of investment(s) chosen, and can include charges made by fund managers,
Discretionary Fund Managers, the share dealing provider, and the Property Management Charge. Other charges and
expenses can apply – for example, professional fees and certain third party administration costs.
SCOTTISH WIDOWS PENSION FUNDS
• There’s no initial charge under the Scottish Widows Pension Funds.
• A Fund Management Charge, which comprises –– the annual management charge (including any external fund management charge and any multimanager fund management charge) and,
–– if applicable, an allowance (which can change on a regular basis) for any other expenses such as
trustees’ fees, auditor’s fees and regulator’s fees)
is taken directly from the funds selected. The annual management charge is allowed for in the fund pricing.
For more details, please see –
• The Retirement Account Scottish Widows Pension Fund Charges (45422)
• Governed Investment Strategy Adviser Guide (49970)
• GIS – Sales Aid (24280)
• Premier GIS - Sales Aid (24280b)
• Premier Lifestyling Options Guide (55117)
FIXED TERM CASH DEPOSIT (SUBJECT TO AVAILABILITY)
For more details of the type and value of charges that can apply, please see the Retirement Account
Fixed Term Cash Deposit Guide (48856)
FUND SUPERMARKET
• No initial charges apply to the selection of funds available.
• A Fund Management Charge, which comprises –– the annual management charge (including any external fund management charge and any multimanager fund management charge) and,
–– if applicable, an allowance (which can change on a regular basis) for any other expenses such as
trustees’ fees, auditor’s fees and regulator’s fees)
is taken directly from the funds selected. The annual management charge is allowed for in the fund pricing.
• There is also a Fund Supermarket Platform Charge, which is deducted monthly by cancelling units
or shares and is based on the total value your client’s Account holds in those funds. If the Account
is invested in more than one Supermarket fund, this Charge will be deducted from the fund in which
your client has the highest value at the charge date.
• There’s the potential to benefit from lower charges on some funds than if they were to be bought direct.
Please refer to the Retirement Account Fund Supermarket List and Charges (19145) for the charges
that apply to funds currently available
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Retirement Account
DISCRETIONARY FUND MANAGEMENT
• Charges will be taken by the Discretionary Fund Manager from the sums and assets they hold – this
will be allowed for in the valuation of your client’s DFM portfolio.
For details of the type and value of charges that can apply, please see the Discretionary Fund
Managers Guide to services and charges (25361)
SHARE DEALING
• Please refer to the Retirement Account Share Dealing Guide (47937) for details of the type and
value of the charges that can apply
COMMERCIAL PROPERTY
• Scottish Widows will deduct a percentage-based Property Management Charge from the relevant
Control Account(s) on the Monthly Charging Date following the purchase of the property. It is based
on the gross value of the property and covers certain purchase and ongoing administration costs.
The following scale applies –
Property Value
£0k - <£100k
Property
Management
Charge (per year)
1.25% 0.80% 0.60% 0.45%
Property Value
Property
Management
Charge (per year)
£100k - <£150k £150k - <£200k £200k - <£250k
£250k - <£300k £300k - <£500k £500k - <£750k
£750k +
0.35% 0.25% 0.1 5% 0.1 0%
• Other charges and expenses will apply in relation to buying, selling and administering Commercial
Property, such as legal expenses, surveyor charges and the cost of valuations.
• We will have the property valued immediately prior to purchase, and normally each year after that.
We can require the property to be formally revalued at any time.
For more details, please see the Retirement Account Commercial Property Administration Guide (22926)
The range of investments available and investment charges can change.
A personal illustration will provide an indication of the investment charges that can apply to your client’s
Retirement Account.
Scottish Widows will not normally make any charge for changing investments, whether switching between
investment funds, or moving between different asset classes. Costs may, however, be incurred in the sale or
purchase of certain investments.
18
Retirement Account
ADVISER REMUNERATION
Adviser remuneration is intended to cover the cost of
any advice and/or services that you provide to your
client in relation to their Retirement Account. In line
with the Retail Distribution Review, whether we deduct
Adviser Charges or Commission will depend on when
your client’s Retirement Account was set up and whether
advice was given. Each of the two Retirement Account
elements (Retirement Planning and Retirement Income) is
independent and can be set-up on a different basis (e.g.
Retirement Planning could be on a Commission basis
and Retirement Income on Adviser Charges). Please see
page 23 for details on changing the remuneration basis.
• Where the illustration shows multiple payers of the
same contribution type, any Initial Adviser Charge
will be apportioned across that contribution type
(please see page 20, example 2).
ADVISER CHARGE(S)
These can be added, removed or changed at any time
during the term of the Account.
If any of these contributions are not received, we will
not facilitate payment for that part of the Initial Charge.
• For payments designated to Retirement Income,
any Initial Adviser Charge(s) are deducted from
the designated amount after the payment of any
tax-free lump sum.
Ongoing Adviser Charge(s)
Adviser Charge(s) can be paid when you have given
your client either ‘independent’ or ‘restricted’ advice,
and must be agreed between you and your client.
Percentage of Account
• This is taken as a percentage of the total value of
all the assets held within an element of your client’s
Retirement Account (different percentages can apply
to each element).
Illustrations will be required for any new Adviser
Charge(s) or increases to existing Adviser Charge(s)
so that your client can see the impact on their projected
Retirement Account value.
• It can be deducted monthly or yearly in arrears.
• It will be deducted on the charging date, for the
lifetime of the Account.
Once we have received your client’s signed consent to
the Adviser Charge(s) on the appropriate form, we can
facilitate the payment.
Adviser Charge options
Fixed Monetary Amount
• This can be set up for a fixed number of payments
or for the lifetime of the Account.
• Initial Adviser Charge
• It can be paid monthly or yearly in arrears.
• Ongoing Adviser Charge(s) (at element level)
• It is possible to have multiple Fixed Monetary
Amount charges on the same element (for example,
you can have £5 per month for the lifetime of the
Account plus £100 per year for the first five years).
–– Percentage of Account
–– Fixed Monetary Amount
• One-off Adviser Charge
• If multiple yearly charges exist, each charge can have
its own ‘anniversary’ when the charge is deducted.
Initial Adviser Charge
• For single contributions and transfer payments,
the charge is deducted immediately from
contributions made to the Retirement Account.
One-off (Ad hoc) Adviser Charge
You might agree a One-off Adviser Charge with your
client for additional advice that falls outside the
services that you have already agreed in respect of the
Retirement Account. You should request an illustration
from us so that your client can see the impact of the
additional charge and they must sign and return the
consent form.
• For regular contributions, the charge will be taken
either monthly or yearly, to match the contribution
frequency. We will spread the Initial Adviser
Charge by paying you up to 50% of each regular
contribution, until the charge is paid in full. This
limit allows us to deduct any Fixed Monetary Amount
Ongoing Adviser Charges, from the Control Account(s),
that you may have agreed with your client at the same
time (please see page 20, example 1).
19
Retirement Account
ADVISER CHARGE EXAMPLES
Example 1 – Regular contributions with an Initial Adviser Charge and a Fixed Monetary Amount Ongoing
Adviser Charge
You set up a Retirement Account for your client with a £500 per month gross (£400 per month net) regular premium.
You agree to an Initial Adviser Charge of £1,100 for setting up the Retirement Account and a £20 per month Fixed
Monetary Amount Ongoing Adviser Charge for ongoing services.
£500 per month is paid into your client’s Control Account, £250 of which is deducted and paid to you as an Initial
Adviser Charge. The remaining £250 is invested according to your client’s investment instructions.
At the end of the month, on the charging date, £20 will be deducted from the Control Account to pay you the first Fixed
Monetary Amount Ongoing Adviser Charge.
Each following month, £250 will be deducted from the regular payment(s) until the Initial Adviser Charge is paid in
full. An additional £20 will also be deducted from the Control Account on each monthly charging date to cover the
Fixed Monetary Amount Ongoing Adviser Charge.
Month
Amount
paid in by
client
Tax relief
Total
paid in
Initial Adviser Charge
amount paid to adviser
Fixed Monetary Amount
Ongoing Adviser Charge
paid to adviser
1
£400
£100
£500
£250
£20
2
£400
£100
£500
£250
£20
3
£400
£100
£500
£250
£20
4
£400
£100
£500
£250
£20
5
£400
£100
£500
£100
£20
6
£400
£100
£500
–
£20
7
£400
£100
£500
–
£20
8
£400
£100
£500
–
£20
9
£400
£100
£500
–
£20
10
£400
£100
£500
–
£20
Example 2 – Initial Adviser Charge where there are multiple payers of the same contribution type
John is setting-up and paying a single contribution of £8,000 and a regular contribution of £200 per month into his
new Retirement Account.
His employer has also agreed to pay a £4,000 single contribution, and his wife another £4,000 single contribution
into the same Retirement Account at the same time.
John agreed with his adviser to pay an Initial Adviser Charge of £2,000, split £1,000 from the regular contributions
and £1,000 from the singles.
We will therefore apportion £1,000 of the Initial Adviser Charge across the three single premiums, taking £500 from
John’s single contribution, £250 from his employer’s contribution and £250 from his wife’s contribution.
20
Retirement Account
Example 3 – Drawdown transfer with Initial Adviser Charge and Ongoing Adviser Charges (Percentage of Account
and Fixed Monetary Amount)
You transfer your client’s existing drawdown plan with a value of £150,000 into a new Retirement Account.
You agree to take an Initial Adviser Charge of £3,000 for the initial advice. For ongoing services you also agree to take
a £50 per month Fixed Monetary Amount Ongoing Adviser Charge for 24 months, and a 0.5% (per year) Percentage of
Account Ongoing Adviser Charge to be paid monthly for the lifetime of the Account.
£150,000 is transferred into the Retirement Income Control Account.
£3,000 is deducted from the Retirement Income Control Account and paid to you as an Initial Adviser Charge.
£147,000 is invested according to your client’s investment instructions.
Assuming the value remains the same, a Percentage of Account Ongoing Adviser Charge of £61.25 (£147,000 x
0.5%/12) and a Fixed Monetary Amount Ongoing Adviser Charge of £50 are deducted from the Control Account
and paid to you at the first Monthly Charging Date.
The Percentage of Account Ongoing Adviser Charge will continue to be deducted from the Control Account and paid to you
for the lifetime of the Account. The Fixed Monetary Amount Ongoing Adviser Charge of £50 will stop after 24 months.
COMMISSION
Commission can be paid when you have provided a service to your client but have not given them advice.
Please note that our personalised correspondence will refer to Commission as an ‘Adviser Payment Charge’. However, the
term ‘Adviser Payment Charge’ is also used in the policy provisions, schedules, and endorsements to cover both Adviser
Charges and Commission.
Commission options
OR
Scaled Commission
Fund Based Commission
Commission details
Scaled Commission –
regular payments to
Retirement Planning
Scaled Commission – single
and transfer payments to
Retirement Planning and
payments to Retirement
Income
Fund-based Commission
Commission limits
0–50% (in steps of 0.01%)
of the regular payments made
in the first year
0–8% (in steps of 0.01%)
0–1% pa paid monthly
or yearly
Claw-back Term
Between 1 and 5 years
(in whole years), chosen
by adviser
Between 1 and 5 years
(in whole years), chosen
by adviser
Not applicable
21
Retirement Account
Scaled Commission
COMMISSION EXAMPLES
This is paid to you immediately and then recovered each
month from your client’s Retirement Account, over an
agreed period known as the Claw-back Term (please see
example 2, on page 22).
Example 1 – Scaled Commission
A client wants to make regular payments of £1,000
a month.
Claw-back Term for Scaled Commission
The client agrees to the adviser receiving £6,000
Commission for the services they’ve provided in
setting up the Retirement Account (equivalent to
50% of first year’s payments). The adviser chooses a
Claw-back Term of four years (48 months).
• The Claw-back Term can be any number of whole
years between one and five. This will be reduced
where the term to the chosen retirement age is
less than five years, subject to a minimum term of
one year.
£1,000 is placed in the Retirement Planning
Control Account each month awaiting investment
instructions.
• Claw-back will be triggered in the following
circumstances:
–– Any transfer to another pension provider before
the end of the Claw-back Term.
£6,000 is paid to the adviser by Scottish Widows on
commencement.
–– Any transfer to another Scottish Widows pension
policy before the end of the Claw-back Term.
The deduction to cover the Commission payment will
be £6,000/4/12 = £125.00 per month.
–– Any reduction in regular payments to the client’s
Retirement Planning element of the Retirement
Account during the Claw-back Term.
£125.00 per month starts to be deducted from the
Retirement Planning Control Account with effect from
the next Charging Date for four years.
–– Any pension benefits being taken before the end
of the Claw-back Term.
Example 2 – Claw-back
–– Designation (either full or partial) of funds to
Retirement Income. This triggers claw-back on the
Retirement Planning element, if the designation
takes place within the Claw-back Term.
A client wants to take pension benefits from part of
their Retirement Account. The total value of their
Retirement Account is £250,000. £62,500 is settled
to provide pension benefits.
• Claw-back is applied to each payment made to
the Retirement Account that is still within the
Claw-back Term.
At the time of taking their pension benefits, a single
payment of £25,000 is within its Claw-back Term of
three years (36 months).
• Claw-back will not be triggered on death of the
Retirement Account holder, or a change of chosen
retirement date (except where pension benefits are
taken, or designated at a date which falls within the
Claw-back Term).
The adviser received a payment of £1,250 for that
single payment. There are eight monthly Commission
payments remaining.
Claw-back will be £1,250 x 8/36 x
£62,500/£250,000 x 1 = £69.44
• Adviser payments will be clawed-back from the adviser
to whom the original Scaled Commission was paid.
• For part claims, claw-back will apply pro rata
across all payments to the Retirement Account still
within their Claw-back Term. For regular payment
reductions, claw-back will apply first to the latest
payments to the Retirement Account in their
Claw- back Term.
Fund Based Commission
• This is taken as a percentage of the total value of
all the assets held within an element of your client’s
Retirement Account (different percentages can apply
to each element).
• It can be deducted monthly or yearly in arrears.
• The Claw-back Term will cease on funds that are
fully designated. If benefits are partially designated,
the Claw-back Term will continue for the balance of
the original period. The Scaled Commission will be
reduced accordingly.
• It will be deducted on the charging date, for the
lifetime of the Account.
• Once chosen, the Fund Based Commission
percentage cannot be increased but it is possible
to decrease and remove it. Please speak to your
Scottish Widows Account Manager for further details.
There are a number of factors which can change
the claw-back calculation. Please contact your
Scottish Widows Account Manager for further details.
22
Retirement Account
CHANGE TO ADVISER REMUNERATION BASIS
EACH RETIREMENT ACCOUNT ELEMENT CAN BE SET UP ON
A DIFFERENT BASIS (E.G. RETIREMENT PLANNING COULD BE PAYING
COMMISSION AND RETIREMENT INCOME COULD BE PAYING ADVISER CHARGES).
With client consent, however, it is possible
to convert a Commission-paying element to
an Adviser Charge-paying one if you want
to be remunerated for any advice you have
given on, for example, an increment. This
consent will be requested on the increment
application or charge change form.
It is not possible to convert an Adviser
Charge-paying element to a Commissionpaying one, and any new Adviser Charge(s)
can only be deducted with client consent,
and if advice has been given, or ongoing
services are to be provided.
Where Fund Based Commission is currently
being paid, we will require specific consent
to convert this to a Percentage of Account
Ongoing Adviser Charge. Once this
conversion has taken place no further
Commission can be paid for services in
relation to that element.
23
Retirement Account
CONTROL ACCOUNT(S)
THE CONTROL ACCOUNT(S) ACT AS A CLEARING AND TRANSACTIONAL ACCOUNT
FOR ALL PAYMENTS MADE TO AND FROM A RETIREMENT ACCOUNT.
If a Control Account has a positive balance it can receive
positive balance adjustments. You can contact us for
the current rate or go to www.scottishwidows.co.uk/
adjustmentrates
If your client wishes to make a pension encashment,
you need to ensure that there is a sufficient balance in
the relevant Retirement Planning Control Account to
cover this in full. We will not automatically sell units
from any Scottish Widows Pension Funds held or make
any payment and a Deferred Charge will not be applied,
and this may result in a partial or non payment.
The Service Charge(s), Adviser Charge(s) or Commission,
and certain investment-related charges and expenses are
deducted from the Control Account(s). Please refer to
pages 15-19 for further details on charges.
If your client wishes to take a regular income or an ad
hoc income payment, a sufficient balance in each
Retirement Income Control Account or sufficient units in
Scottish Widows Pension Funds will need to be
maintained in Retirement Income to meet the value of
the payments due. If there’s insufficient balance in the
Control Account to cover the income payment, and no
disinvestment instruction has been provided, and there’s
an element of Scottish Widows Pension Funds, then we’ll
disinvest proportionately across these funds from the
Retirement Income element to cover the income payment.
If the Control Account balance is insufficient and the
Retirement Account is invested in any Scottish Widows
Pension Funds (even if the Account holds other
investments), we’ll automatically sell units proportionately
from the Scottish Widows Pension Funds held to cover
the charges and/or income. Alternatively, to ensure that
a sufficient balance in the Control Account is maintained,
you can contact us to arrange a regular disinvestment
from specified Scottish Widows Pension Funds.
We will not automatically sell other types of investments
to cover charges and/or income.
A Deferred Charge will not be applied to cover income
payments and this may result in a partial or non-payment.
If, at any time, the balance of a Control Account and the units
available in Scottish Widows Pension Funds are insufficient
to meet the Service Charge(s), any Commission, and any
investment-related charges, these charges will become a
Deferred Charge. Please see the ‘Deferred Charge’ section
opposite for more details. Please note that a Deferred Charge
will not be applied to cover Adviser Charges.
24
Retirement Account
Adviser, service
and other charges
RETIREMENT ACCOUNT
Tax-free cash
CONTROL
ACCOUNT
Income payments
Regular, single or
transfer payments
Tax relief
ADVISER CHARGES AND THE CONTROL
ACCOUNT
DEFERRED CHARGE
Each day a Deferred Charge cannot be collected, we
will increase its amount by a percentage of the Deferred
Charge. You can contact us for the current rate or go to
www.scottishwidows.co.uk/adjustmentrates
Where ‘former Protected Rights’ and ‘non Protected Rights’
Control Accounts exist within the element, any Ongoing
Adviser Charge will be automatically taken across the two
Control Accounts, provided there is sufficient balance.
Where possible, this will be taken proportionally, depending
on the relative balances of each Control Account.
A Deferred Charge can be settled by selling investments
held under the relevant Retirement Account element,
with the proceeds paid to the relevant Control Account.
Alternatively, where possible, a single payment or
transfer payment may be paid to the Control Account to
settle a Deferred Charge. Regular payments, in respect of
Retirement Planning, will not be automatically used to
settle a Deferred Charge, but can be redirected by your
client to the Control Account for this purpose.
Where we are unable to deduct an Adviser Charge in full,
that instance of the charge won’t be paid, not even in part.
If an Adviser Charge fails, a letter will be sent to you and
your client explaining this. The failed charge will not be
carried forward to the next charging date.
If a part or total claim is requested, any Deferred Charge
will be settled from the proceeds of disinvestments
before any benefits or income payments are paid out.
We will write to you and your client if a Deferred
Charge occurs.
25
Retirement Account
TRADING
SCOTTISH WIDOWS PENSION FUNDS
At the Investment End Date, we’ll arrange to switch
the value of your Fixed Term Cash Deposit investment,
including the interest earned, back to the Control
Account. The proceeds will be available in the Control
Account on the working day following the Investment
End Date.
• If a request to buy or sell units is received by us
before midday, the trade will normally be subject to
the following day’s unit prices. Requests received
after midday will normally be subject to the unit
prices applying two days in the future.
• Switches between Scottish Widows Pension Funds
are carried out as simultaneous transactions,
involving both sell and buy trades. The trades are
subject to the pricing rules described above.
DISCRETIONARY FUND MANAGEMENT
• We will aim to transfer money to the Discretionary
Fund Manager on the date of receipt of an instruction.
• The timing of disinvestments from DFM assets to the
Control Account(s) will generally be dependent on
the liquidity of the DFM portfolio.
FUND SUPERMARKET
• If a trade request is received online, the request
will normally be passed to the Fund Supermarket
provider in real-time, who will aim to have the
trade completed at the price determined at the next
available pricing point.
SHARE DEALING
• Before trading can commence, you must move
sufficient funds into the Share dealing account.
• Where a request is submitted on paper, we will try to
pass the request to the Fund Supermarket provider in
time for the next available pricing point. On receipt
of the request, the Fund Supermarket provider will
aim to complete the trade at the price determined at
the next pricing point.
• Trading is available both online and by telephone.
You will be quoted a price for the transaction, which
can then be agreed and carried out in ‘real time’.
Processed trades will be confirmed and contract
notes issued subsequently.
There is more information about Share dealing in
‘The Retirement Account Share Dealing Guide’ (47937).
Switches involve both a sell and a buy trade. The sell
trade will be priced as described above. The buy trade
will normally be priced at the next available pricing
point following the completion of the sell trade.
COMMERCIAL PROPERTY
• We will aim to transfer money to the third party
administrator, Curtis Banks, on the date of receipt of
an instruction.
Switches between Fidelity Onshore Funds will be
processed simultaneously.
Please note that pricing points may vary according
to the funds being traded.
• Typically, a property purchase can take anything
from 8–12 weeks to complete. However, there
is no guarantee a purchase will take place in
these timescales.
FIXED TERM CASH DEPOSITS
• The timing of disinvestments to the Control
Account(s) depends on the nature and size of
the request, the amount of available cash and, if
necessary, the time taken to sell the property.
Each Fixed Term Cash Deposit that we make available
will have an Offer Period during which your client can
ask you to invest. There must be sufficient funds
available in the relevant Control Account on the day
the request is made.
Any payments received for which we have not received
an investment instruction will be held in the relevant
Control Account(s).
At the Investment Start Date, provided there are still
sufficient funds available in the Control Account, we’ll invest
the requested amount in the Fixed Term Cash Deposit.
26
Retirement Account
DEATH BENEFITS
• Where the lump sum option is applicable, there
is no tax charge if it is paid to a charity nominated
by a client.
If your client dies, the value of their Retirement
Account can be used to provide benefits, as follows:
• If they die before age 75:
• If a Retirement Account is arranged under an
individual trust, we will pay any lump sum death
benefit to the trustees.
–– Lump sum – any beneficiary can take the value
of the fund as a tax-free lump sum.
–– Income Drawdown – any beneficiary can take
the value of the fund through income drawdown.
The income will be tax-free.
• Some investments may take longer to sell than
others, and we may therefore pay the death
benefits in stages.
–– Annuity – any beneficiary can use the value of
the Retirement Account to buy an annuity.
Please note, however, that Scottish Widows can
only currently provide an annuity for a spouse or
any other dependant who must be under 75 at
the time of purchase. Income from any annuity
will be tax free.
• No inheritance tax will normally be payable on
the value of the Account because we will choose
the beneficiary, taking into account any nomination
your client makes.
• Where your client has not made a nomination and
there are no dependants, then we can nominate
a beneficiary.
• If they die on or after age 75:
–– Lump sum – any beneficiary can take the value
of the fund as a lump sum. This will normally be
taxed at their marginal rate of income tax.
ACCIDENTAL DEATH BENEFIT –
RETIREMENT PLANNING ONLY
–– Income Drawdown – any beneficiary can take
the value of the fund through income drawdown.
The income will normally be taxed at their
marginal rate of income tax.
If your client dies as a direct result of an accident before
their Retirement Account has been running for five years,
the amount we will pay will be the greater of 120% of the
total payments received, or the value of the investments
within Retirement Planning on the date that we receive
notification of death.
–– Annuity – any beneficiary can use the value of
the Retirement Account to buy an annuity.
Please note, however, that Scottish Widows can
only currently provide an annuity for a spouse or
any other dependant who must be under 75 at
the time of purchase. The income will normally
be taxed at their marginal rate of income tax.
Please note that Accidental Death Benefit does not apply
to Retirement Income.
No charge is made for the Accidental Death Benefit.
• A beneficiary could be a dependant, a nominee or
a successor.
–– A dependant is someone who is a spouse, civil
partner, or financially dependent on your client.
–– A nominee can be any other person that your
client chooses to nominate, even if they are not
dependant on them, and can also be a charity.
–– The beneficiary can pass on any unused
drawdown funds on their death to their own
beneficiary, known as a successor.
27
Retirement Account
COOLING OFF
Your client can change their mind within 30 days of receiving their cancellation notice.
• For elements on an Adviser Charge basis, we’ll return
all payments less any Initial Adviser Charges already
paid to you and, for single and transfer payments,
any fall in their value.
• For elements set up on a Commission basis, we’ll
return all payments less, for single and transfer
payments, any fall in their value.
28
Retirement Account
ONLINE FUNCTIONALITY
ONLINE FUNCTIONALITY
• Control Account automation for SW funds
• Start new regular client contributions
• RA comparison tool for quick go/no-go decision
• Make single payments
• Signature-free new business quote and apply
• Buy/sell or switch funds
• Quick quote
• Transfer value and current valuation
• Signature-free increment quote and apply
• View and redirect or change payments
• Online transfer applications
ONLINE CLIENT REPORTING
• Ideal for keeping your clients informed in a cost-effective way for your business
BACK OFFICE LINKS
• Assyst
• IFAMS
• Iress
• Intelliflo
• Best Practice
• JCS
• Capita
• Plum
• Durrell
• True Potential
29
Retirement Account
GLOSSARY
Term
Description
Accidental Death Benefit
The payment made by Scottish Widows if a client dies as a direct result of an accident before their
Retirement Account has been running for five years. This will be the higher of 120% of the total
payments received into the Retirement Planning, or the realisable value of the assets held within
Retirement Planning.
Adviser Charge(s)
Agreed between you and your client and facilitated by Scottish Widows. Paid when you have given
your client either ‘independent’ or ‘restricted’ advice.
Capped Drawdown
Drawdown where there are limits set by the Government on the amount of income your client can
take each year.
Claw-back Term
The agreed period over which Scaled Commission is paid to you and recovered each month from
your client’s Retirement Account.
Commission
Paid when you have provided a service to your client but have not given them advice.
Our personalised correspondence will refer to Commission as an ‘Adviser Payment Charge’.
However, the term ‘Adviser Payment Charge’ is also used in the policy provisions, schedules,
and endorsements to cover both Adviser Charges and Commission.
Control Account(s)
The Control Account acts as a clearing and transactional account, for example for all payments
made to and from a Retirement Account. The Retirement Account can have up to four Control
Accounts if it was set up before 6 April 2012, and up to two Control Accounts if it was set up from
6 April 2012 onwards.
Deferred Charge
A Deferred Charge occurs where Scottish Widows is unable to deduct any Scottish Widows
charges, Commission, or certain investment related charges due from a Control Account because
there is an insufficient balance. A Deferred Charge will not apply if we are unable to deduct any
Adviser Charges.
Designate
To move assets from Retirement Planning to Retirement Income.
Elements
The Retirement Account can have two elements: Retirement Planning and/or Retirement Income
Fixed Monetary Amount
Ongoing Adviser Charge
Set up for a fixed number of years or for the lifetime of the Retirement Account element, and paid
monthly or yearly in arrears.
Flexible Access Drawdown
Drawdown where there is no restriction on the amount that your client can take as income each
year, up to the full value of the Retirement Income element of their Account.
Full Pension Encashment
Where the full value of the Retirement Planning element is taken as a cash lump sum withdrawal.
25% will be tax-free and the remainder taxable. Pension encashment is also known as
Uncrystallised Funds Pension Lump Sum (UFPLS).
Fund Based Commission
Taken as a percentage of the total value of all assets held within a Retirement Account element.
Deducted monthly or yearly in arrears, for the lifetime of the Retirement Account element.
30
Retirement Account
GLOSSARY (CONTINUED)
Term
Description
Immediate Vesting Transfer
Uncrystallised pension funds transferred to the Retirement Planning element before a full or
partial designation to the Retirement Income element is made.
Initial Adviser Charge
Deducted from contributions, and paid for advice and services received in setting up a new
Retirement Account or making an increment to an existing one.
Investment Charge
Charges made by Fund Managers, the Discretionary Fund Managers, the Scottish Widows
Property Management Charge and any Share Dealing provider charges.
Monthly Charging Date
The date from which Scottish Widows deducts certain charges from the Control Account(s).
One-off Adviser Charge
An ad hoc charge, paid for any additional advice that falls outside the services that you have
already agreed in respect of your client’s Retirement Account.
Ongoing Adviser Charge(s)
Deducted from the Control Account(s) and paid for ongoing advice and services received during
the lifetime of the Retirement Account. Taken as a percentage of the Retirement Account element
or as a fixed monetary amount.
Partial designation
To move a partial Retirement Planning element to the relevant Retirement Income element.
Partial Pension Encashment
Where part of the value of the Retirement Planning element is taken as a cash lump sum
withdrawal. 25% will be tax-free and the remainder taxable. Pension encashment is also known
as an Uncrystallised Funds Pension Lump Sum (UFPLS).
Percentage of Account
Ongoing Adviser Charge
Taken as a percentage of the total value of all assets held within a Retirement Account element.
Deducted monthly or yearly in arrears, for the lifetime of the Retirement Account element.
Positive balance adjustments
A positive adjustment on the Control Account(s).
Property Management Charge
Covers certain purchase and ongoing administration costs of a Commercial Property.
Scaled Commission
Paid to you immediately and then recovered each month from your client’s Retirement Account
over the Claw-back Term.
Service Charge
A monthly charge to the Retirement Account for setting up and managing your client’s Retirement
Account. This charge is based on the value of assets held in both Retirement Planning and
Retirement Income.
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INFORMATION
www.scottishwidows.co.uk/ra
The information in this guide is based on Scottish Widows’
understanding of current tax rules and pension legislation.
These may change in the future.
Charges, terms and limits may change.
Full terms and conditions are available on request.
For up to date information and literature supporting
the Retirement Account, visit our website.
This information is for UK financial adviser use only
and should not be distributed to or relied upon by any other person.
Scottish Widows Limited. 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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