Personal Pension Income Plan

The Skandia Personal Pension Income Plan is a tax-efficient plan held under the Skandia Personal Pension Scheme that provides immediate access to a tax-free cash sum (where applicable) and income withdrawal payments. It requires the transfer of a single initial sum from a Skandia Personal Pension Plan or other registered pension scheme. Your investment is used to buy units in the funds you have chosen.

Who can take out a Personal Pension Income Plan?

Any UK resident, subject to our age limits and scheme criteria.

Minimum and maximum ages

The minimum age is 50 and the maximum is 71. Lower ages may be possible if allowed by legislation. Minimum ages may not be applied for plans taken out by your dependants on your death.

Minimum contribution

The minimum transfer payment is £100,000. Transfer must be from other registered pension schemes or overseas schemes agreed by Skandia.

Protected Rights and Safeguarded Rights are held in a separate Personal Pension Income Plan from non-Protected Rights and non-Safeguarded Rights.

Term

The minimum term is two years.

Advantages

Convenient and cost-effective

The Skandia Personal Pension Income Plan allows you to consolidate existing pension arrangements into one plan for Protected Rights and Safeguarded Rights, and another for non-Protected Rights and non-Safeguarded Rights.

You have immediate access to your tax-free cash (where applicable), without having to buy a lifetime annuity or take an income with your remaining money until your 75th birthday. Once you reach age 75 you may be able to continue taking income withdrawals by transferring to another suitable product with Skandia if available, or with another provider.

Choice for you

Your remaining fund is invested in unit-linked funds, from which you may take an income up to the maximum allowed. Unlike a lifetime annuity, you can vary the income you take within defined limits according to your needs at the time. The maximum limit is calculated by applying a rate taken from tables specified by the Government Actuary’s Department (GAD) and applying it to the value of your fund on the Start Date. The rate will depend on your age, your sex and the yield on Government gilt-edged securities. The rate is multiplied by 120% to determine the maximum income you can take. The maximum limit is recalculated every five years. The minimum income level is zero.

When you finally want to commit to buying a lifetime annuity, our free of charge Open Market Option allows you to opt for the provider of your choice and so maximise the income you can get from your fund. (Skandia does not offer an annuity product.)

You can take tax-free cash and income withdrawals from specific funds, so deductions are not made across all funds under your plan.

Death benefits

If you die before you reach age 75 and before buying a lifetime annuity, any remaining non-Protected Rights and non-Safeguarded Rights funds will be paid at the discretion of Skandia Life Assurance Company Limited, the Scheme Administrator. You should, however, still let the Scheme Administrator know who you would like the benefits paid to.

If your plan includes Safeguarded Rights, you must name who you would like your fund to go to (your beneficiaries), otherwise any death benefits will be paid to your estate. The same applies to Protected Rights on death if you are single.

If you are married or in a civil partnership*, any Protected Rights funds must be used to provide income for your spouse/civil partner*.

Depending on your circumstances, your beneficiaries may be able to choose how they use the remaining funds to best meet their needs.

Investment services

To give you more control over your investments, we offer Phased Investment and Portfolio Rebalancing free of charge. These services may not be suitable if you are taking income withdrawals from specific funds. You should therefore discuss this with your financial adviser.

Risks

You should be aware that there are a number of risks involved in setting up a Personal Pension Income Plan. Some of these are set out below:

• When you transfer you give up all rights under your existing pension arrangement. Your previous scheme may be unwilling to let you transfer back if you change your mind.

• Your future income withdrawals may be lower than you expected, for example due to investment performance.

• The value of fund units can go down as well as up and investment growth cannot be guaranteed.

• If you take maximum income withdrawals, you may not be able to maintain that level of income in the future.

The annuity you finally buy will depend on:

• the remaining value of your pension fund, which will have been reduced by any income withdrawals

• the annuity rates available at the time – these could be higher or lower than the rates that would have applied if you bought an annuity earlier.

*As defined by the Civil Partnership Act 2004.

This web page is only intended as a general introduction to the Skandia Personal Pension Income Plan. Full details of the product can be found in the Skandia Personal Pension Income Plan product brochure, available from your financial adviser.

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Information on this website is not intended for Hong Kong residents. Information on this website about Skandia Group Companies is intended for UK residents only, unless it relates to Royal Skandia, Skandia Life Norge or Suomen Sivuliike. Skandia Group companies do not offer investment advice and no information on this website should be construed as such.

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