SUITABILITYREPORTTEMPLATE

Tohelpyoucreateyourownclientsuitabilityreports,we’vecreatedthistemplatetohelpwhenyou’rerecommendingRoyalLondonasthepreferredpensionprovidertoyourclient.

IfyouneedmorespecificinformationforyourreportaboutRoyalLondon,we’vealsocreatedthe

Keymessagesforyoursuitabilityreporttemplate.

It’simportantthatwithinyoursuitabilityreportyou clearlyexplaintoyourclientwhyyou’rerecommendingyourproposalandhowitmeetstheirfinancialgoalsandobjectives.WithintheFCA’sguidanceaboutsuitabilityreports,theyalsomentionhowthereportshould:

•provide a balanced view

•detailthecostsandchargesinvolvedand

•highlightanypotentialpenalties thatmaybelinkedtoyourrecommendation.

Ifyourclientisalreadysavingfortheirretirement,butaspartofyourproposalyou’rerecommendingtheycanceltheirexistingplanandtransfer theirbenefitstoanewplanwithRoyalLondon,inadditiontoprovidingalikeforlikecomparison,theFCAwillalsobecheckingtomakesurethatgoodandappropriateadvicehasbeen provided.Tohelpwithyouradviceprocess,we’vehighlightedbelowthefollowingpointswhichyou’llneedto take into account when producing your suitabilityreports.We’vealsoincludedsomeofthepointshighlightedbytheFSAintheir2008/2009Thematicreview:


•Knowing your client – finding out what their financial needs and objectives are.

•Analysingtheirexistingarrangements–reviewingtheirexistingarrangementsandidentifyinganyshortfalls.

•Researchingnewplans–identifyingsuitablenewplansandtheirbenefits.

•Identifyingsuitableinvestmentoptions–identifying theirsuggestedattitudetoriskandrecommendingsuitableinvestmentoptions.

•Carrying out regular reviews – regularly reviewing their circumstances and ensuring their investment options remain suitable.

It’simportantthatyouproduce yoursuitabilityreportinlinewithyour owncompliancerequirementsandthatifyou’readvisinganyclienttotransfertheirexistingplantoanewprovider,thatyou’reauthorisedtodoso,it’sin theirbestinterestsanditmeetstheFCArules.

PensionPortfolio[withIncomeRelease/SelfInvestmentPensionPlan]suitabilityreportpreparedfor[Nameofclient]

Thecontentsofthisreportandtherecommendationwasprovidedby[Insertnameandaddressoffinancial adviser]

Dateofinitialmeeting Dateoffollowupmeeting Dateofsuitabilityreport

Dateserviceagreementsigned

[Insertdate][Insertdate][Insertdate][Insertdate]

CONTENTSOFTHESUITABILITYREPORT

1.Introductionandoverview

  1. Summaryofyourcircumstancesandobjectives

•Attitudetorisk

3.Pensionswitching-Yourexistingarrangements4.Yourrecommendation

•Productrecommendation

•Providerrecommendation

•Otherproductconsiderations

5.ServicesandRemuneration

1.INTRODUCTIONANDOVERVIEW

Withinthissectionyou’llneedtoprovideyourclientwithbackgroundinformationaboutyourmeetingandthisreport.Herearesomesuggestionsaboutwhatyoumaywanttoinclude:

•detailsaboutyouandyourbusiness

•whattheirfinancialneeds,objectivesandtheirfuturegoalsareinplanningfortheirretirement

•informationabouttheimportanceofreadingthisreportalongsideanyillustrationandkeyfeaturesyou’reproviding

•detailsaboutanydocumentationyou’reprovidingthatoutlinestheservicesyou’llprovideandtheircosts.

2.SUMMARY OF CIRCUMSTANCES AND OBJECTIVES

Withinthissectionyou’llneedtosummarisetheirpersonaldetailsthatyoudiscussedduringyourmeeting.

Withinthetable belowisalistofsomeofthedetailsyoumaywanttoinclude,butdependingonyourclientscircumstancesyou mayneedtoincludeotherinformationas well.

Client details
Name
Dateofbirth
Maritalstatus
Numberofchildrenfinanciallydependent
Occupation
Employmentstatus
Taxstatus
Monthlyincome(net) / £
Monthlyexpenditure / £
Stateofhealth
Preferredretirementdate
Preferredretirementincome / £
Smoker

Within this part you’ll need to include details about the financial objectives you discussed with your client. Depending on their needs and objectives, here are some suggestions about what you may want to include:

[These points may be suitable for a Personal Pension plan]

•Iftheyarenotcurrentlysavingtowardstheirretirementandtheywanttostart.

•Iftheyarealreadysavingbutfromyourdiscussionsyou’veidentifiedthatthey’renotsavingenoughtoprovidethemwiththeamountofpensionthey’vesaidtheywantwhen they retire.Youmayalsowanttoincludedetailsabouttheamountofpensiontheywanttoreceivewhentheyretire.

•Ifthey’vehadbreakswithintheirworkinghistoryandthey’venotbuiltupenoughNationalInsurancecontributions to provide themwith a full State Pension,theymaywanttopayintoaseparatepersonalpensionplan.

•Iftheyarealreadysavingtowardstheir retirementbuthavemore than one planwhich they want to consolidateintojustone.Thismaybebecause:

•theywanttoreduce theirplancharges

•theirexistingpensionproviderdoesn’tprovidethemwiththeflexibilityortheinvestmentopportunities/performancetheyneed

•theyarenothappywiththelevelofservicetheirreceivingfromtheircurrentprovider.

[ThesepointsmaybesuitableforanIncomeReleaseplan]

•Iftheyarenearingtheirretirementageandtheywanttoseewhatoptionsareavailabletothemortheywanttotakeoutanewplanthatisflexibleanddoesn’tnecessarilymeanhavingtopurchaseanannuitystraightaway.

•Iftheywanttostarttakinganincomefromtheirplanandtheywanttochoosethemostappropriatewayofdoingso.

•Iftheyarealreadyretiredandtheywanttoreleaseadditionaltaxfreecash/incomefromtheirplantopossiblypayfortheirchild’swedding,helpwithadepositforahouseorpayofftheremainderoftheirmortgage.

•Iftheyarealreadyretiredandarereceivinganincome/pensionbuttheywanttocontinuecontributingtoaplan orlookatreducinganypotentialtaxliability.

[Thesepointsmaybesuitableforaselfinvestmentplan]

•Iftheyhaveoutlinedaninterestinwantingtotakeanactiveroleinchoosinginvestments,whytheymaywanttoconsidera Self Invested Personal Pension(SIPP) plan.

•Ifthey are acompany director and theywant toincorporatetheirbusinesspremiseswithintheirpensionplan.

Attitudetorisk

Withinthispartyou’llneedtoincludedetailsaboutyour client’ssuggestedattitudetorisk.Youmaywanttoincludeinformationabouthowriskaversetheyareandthelengthoftimetheyhaveuntiltheyretire.Youshouldbase your recommendationuponinvestmentoptionsthataresuitableforthemandwhichdoesnotexposethemtoanunnecessarylevelofrisk.

Herearesomesuggestionsaboutwhatinformationyoumaywant toinclude:

•It’simportanttoexplaintoyourclientthatthegreaterlevelofrisktheytakewiththeirinvestmentdecisions, increasesthechancesofgreaterrewardsaswellasthepossibilityofgreaterlosses.

•You’llalsoneedtopointouttoyourclientthattheirinvestmentscangodownaswellasupandtheymaynotgetbackthevalueoftheiroriginalinvestment.

•Ifyou’vegonethroughariskquestionnairewithyour client,you’llneedtodiscusstheoutcomefromthistool andensureyourclientagreeswithyourrecommendationandtheirsuggestedattitudetorisk.Ifyou’veusedourriskprofilingquestionnairethefollowinginformationmayhelp youtodefinetoyourclientwhattheirsuggestedattitude to riskis:

AttitudetoriskOutcome
Very cautious / Verycautiousinvestorsgenerallyhaveverylowlevelsofinvestmentknowledgeandrarelykeepuptodatewithinvestmentmatters.Theyalsoliketoknowthattheircapitalissaferatherthanseekinghighreturns.
Cautious / Cautiousinvestorshavelowlevelsofinvestmentmattersandarenotreallyinterestedinkeepinguptodatewithinvestmentissues.Theydon’treallyliketotakerisksandprefertokeeptheirmoneyinthebank.
Moderatecautious / Moderatelycautiousinvestorstypicallyhavelowtomoderatelevelsofinvestmentknowledgeandtheymaykeepuptodatewithinvestmentissues.Generally,moderatecautiousinvestorsareuncomfortabletakingriskswiththeirinvestments.
Balanced / Abalancedinvestorwillgenerallyhaveamoderatelevelofinvestmentknowledgeandtheymaypaysome attentionto investment matters.Theymay also beprepared to take someinvestment risk in orderto meettheirlong-termgoals.
Moderateadventurous / Amoderateadventurousinvestorwillhaveahighlevelofinvestmentknowledgeandwillbeafairlyexperiencedinvestor.Theyarealsopreparedtotakesomeriskastheyunderstandthisiscrucialinachievinglong-termgoals.
Adventurous / Anadventurousinvestorwilltypicallyhaveahighlevelofinvestmentknowledgeandexperience.Theyunderstandtheneedtotakeanelementofrisktoachievetheirgoalsandare generallypreparedtotake riskswithmostoftheiravailableassets.
Very adventurous / Averyadventurousinvestorwillhavealotofknowledgeandexperienceandwilltakeakeeninterestininvestmentmatters.They’llalsobelookingforthehighestpossiblereturnsontheircapitalandarepreparedtotakeaconsiderableamountofrisk.

3.PENSIONSWITCHING–EXISTINGARRANGEMENTS

Ifyourclientisalreadysavingtowardstheir retirement,withinthissectionyou’llneedtoconfirmwhattheir existingpensionplandetails are.Hereisanexampleofthetypeofinformationyoumaywanttoinclude:

Plandetails
Providerandtypeofpensionplan
Pensionplannumber
Yourcontribution / £
Employercontribution / £
Frequencyofcontribution
Retirementage
Investmentchoice
Fundvalue / £
Transfer value / £
Projection values / Low / Medium / High
£ / £ / £
Plancharges
Managementcharge(%)
Policy fee (£ or %)
Allocationrate(%)
Bid/offer spread (%)
Fundswitchcharge(£or%)
Penalties formakingtheplanpaidup
Reductioninyield(%)
Plan benefits
Onlinefunctionality
Marketvaluereductionfreeperiod
Tax-freecashentitlement
Guaranteedannuityrate
Guaranteedminimumpension
Stakeholderguarantee
Pensionplandeathbenefits / £
Optiontotakeretirementbenefitsdirectlyfromyourpensionplan

Ifaspartoftheirexistingplandetailsyou’velookedintothepastperformanceoftheirexistinginvestmentchoice,youmaywanttocompletetheseinthefollowingtable:

Pension plan investment choice / Percentagegrowth
xx/xx/xxxx to
xx/xx/xxxx / xx/xx/xxxxtoxx/xx/xxxxtoxx/xx/xxxxtoxx/xx/xxxxtoxx/xx/xxxxxx/xx/xxxxxx/xx/xxxx xx/xx/xxxx
[Investmentchoice]
[Investmentchoice]

It’simportantthatyoutellyourclientthatanypastperformanceisnotanindicationtoanyfutureinvestmentperformance.

Reasonsforrecommendingapensionswitch

Ifyourclientislookingtoswitchtheirexistingpensionplan,it’simportantthatyourrecommendationisinlinewiththeFSAs approachforpensionswitchingadvice.Tohelpyoumeettheircriteria,we’veprovidedlinkstotheirtemplatesbelow:

•FSAspension-switchingadvicesuitabilityassessmenttemplate[Excel]

•FSAspension-switchingadvicesuitabilityassessmenttemplate[PDF]

•Notestousingthetemplate[PDF]

Withinthispartofthesectionyou’llneedtoconfirmtoyour clientwhyyou’rerecommendingtheyswitchtheirexistingplan.As partof thisrecommendationyou maywant toincludesomeofthefollowingpoints:

•Iftheirexistingpensionproviderisnotprovidingthemwiththelevelofservicetheyrequire,ortheirexistingpensionplan is not flexible and does not adapt to theirchangingcircumstancesandtheirfinancialneeds.

•Ifthey’recurrentlyinvestedinaninvestmentoptionthatdoesnotmeettheirsuggestedattitudetoriskandthey’vesufferedfrompoorinvestmentperformance.

•Iftheywanttomakeadditionalorlumpsumpaymentstotheirplanbuttheirexistingproviderhasclosedthecontracttonewmoney.

•Iftheyhaveanumberofpensionplansthathavevarying charges,andmayhavedifferentretirementages,andtheywouldlike to benefit from consolidating these into theoneplanwherethereisonlyoneplanchargewhichislowerandismoresuitabletotheircircumstances.

•Yourclientisnearingtheirretirementageandisconsideringtakingtheirretirementbenefits,buttheywanttheflexibilityofbeingabletotaketheirbenefitsfrom theirplan without havingto purchase a separateannuityor take out a new pension plan.

•Theonlinefunctionalityavailableontheirexistingplanislimited.

•They would like some flexibility around the level of income they’ll receive.

•Theirexistingplandoesnotallowthemtowithdrawanincomedirectlyfromtheplan.

•Theirexistingplandoesnotallowthemtophaseintheirretirementoptions.

•Iftheywouldliketotakemoreofanactiveroleintheirinvestmentsand wouldliketobeabletochoosefromawiderrangeofinvestmentfundsthatcanbeofferedviaselfinvestments.

•Ifthey’reaCompanyDirectorandtheywanttoincorporatetheirbusinesspremisesintotheirpensionplantheymaywantaselfinvestmentoffering.

Importantpointstoconsiderwhentransferringanexistingpensionplan

Ifyourclientsarenearingtheirretirementageandtheyarestartingtothinkabouthowthey’lltaketheirretirementbenefitsit’simportanttheyconsideralloftheiroptionsbeforetheyswitch.Youmaywanttoincludesomeofthefollowingpointswithin yourreportto yourclient:

•Iftheytransfertheirexistingplantoa newpensionprovider,theymaylosesomeoftheirexistingbenefits.

•Iftheirexistingplanprovidesanenhancedtax-freecashentitlement(TFC),GuaranteedAnnuityRates(GARs)oraguaranteedminimumpension(GMP),andtheyrealisethatalthoughtheymayreceiveanewlowerchargedplaniftheyswitched,theywouldlosethese benefits.Dependingontheircircumstances,theymaychoosetocontinuewiththeswitchortheymaydecidethatthebenefitsavailableundertheirnewplanmaynotoutweightheselosses.

4.YOURRECOMMENDATION

Withinthissectionyou’llneedtoincludeinformationaboutyourrecommendation.You’llneedtoexplainclearlytoyour clientwhy you’rerecommendingtheproduct,theproviderandyoumaywanttodocumentwhyyoufeelyourproductrecommendationmeetstheirfinancialneedsandobjectivesoverothers.

Totryandexplainthisclearlytoyourclient,we’vebroken thisrecommendationdownintothreekeyparts:

•Product recommendation

•Providerrecommendation

•Otherproductconsiderations

Product recommendation

Withinthispart you’llneedtoincludesomeofthekeydetailsabout theRoyalLondonpensionplanthatyou’rerecommendingtoyourclientandalsowhyyou’rerecommendingthisproduct.Youmaywanttoincludethefollowinginformation:

Plandetails
Typeofpensionplan
Contribution / £
Frequencyofcontribution
Retirementage
Investmentchoice
Projection value / Low / Medium / High
£ / £ / £
Reductioninyield(%)
CriticalyieldA(%)
Critical yield B (%)
Plancharges
Managementcharge(%)
Externalinvestmentcharge(%)
Plan benefits
Onlinefunctionality
Tax-freecashentitlement
Optiontotakeretirementbenefitsdirectlyfromyourpensionplan

IfaspartofyourrecommendationyoualsowanttoincludeinformationaboutRoyalLondon’spastinvestmentperformance,youmayalsowanttoincludethefollowing:

Pension plan investment choice / Percentagegrowth
xx/xx/xxxxtoxx/xx/xxxxtoxx/xx/xxxxtoxx/xx/xxxxtoxx/xx/xxxxto
xx/xx/xxxxxx/xx/xxxxxx/xx/xxxxxx/xx/xxxxxx/xx/xxxx
[RoyalLondonInvestment choice]
[RoyalLondonInvestment choice]

Onceagain,it’simportantyoupointouttoyour clientthatanypast investmentperformance isnot anindication tofutureperformance.

[Useifyou’rerecommendingapersonalpensionplan]

Tosupportyourrecommendation forapersonalpensionplan,youmaywanttoincludesomeadditionalinformationfor yourclient.It’simportantthatif you’re recommendingapersonalpensionplantoyourclient,thattheyunderstandthepotentialrisksinvolved.Thefollowingpointsmayhelp youprovidethisinformationtoyourclient:

•AttheheartofthepersonalpensionplanistheCoreInvestmentswhichismadeupofacollectionofdifferentinvestmentfundswhicharemanaged bysomeoftheleadinginvestmentcompanies.

•Theplanhasaveryclearchargingstructureandclientswillonlypaychargesfortheservicestheyuse.

•RoyalLondonwillapplyachargeformanagingthepensionplan.Thischargewillcoverthecostsofsettinguptheplan,theongoingadministrationandtheinvestmentchargeontheCoreInvestments.

RoyalLondonwillalsorewardtheclientbyreducingtheplansmanagement chargeon the valueof theCoreInvestmentspartoftheirplan.Youcanfindmore detailsaboutthese management chargediscounts in our

[Keymessagesforyoursuitabilityreportsdocument].

•TheRoyalLondonpersonalpensionplanisalowcostsolutionthatisflexibleandcanadapttochangesin your circumstances.Italsooffersawidevarietyofinvestmentopportunitiesthatsuitvariousattitudestorisks.

•Justlikeanypersonalpensionplan,thevalueoftheirRoyalLondonplancangodownaswellasupandyour client may get back less thanthe amount they paid intotheirplan.Whichever investment choice they choose toinvestinwilldependonthelevelofriskthey’llhave.

[You’llneedtoincludedetailsofanyspecificinvestment riskswhicharerelevanttotheirinvestmentchoice.]

•Allpensionplansenjoyanumberoftaxadvantages,butit’simportantthatyourclientisawarethatthesecouldchangeinthefuture.

[Useifyou’rerecommendinganIncomeReleaseplan]

Tosupportyourrecommendation forapersonalpensionplan,youmaywanttoincludesomeadditionalinformationfor yourclient.It’simportantthatif you’re recommendingadrawdownoptiontoyourclient,thattheyunderstandthepotentialrisksinvolved.Thefollowingpointsmayhelpyou providethisinformationto yourclient:

•Yourclientwantstheflexibilityofapensionplanthatallowsthemtotaketheir benefitsdirectly fromtheirpensionplanwithout havingtopurchasea separateannuityortakeoutanewpensionplan.RoyalLondonoffersanIncomeReleasefacility through theirPensionPortfolio.

•Basedontheirchosenretirementageof[insertage]andtheirdecisiontotakeanincomeviaadrawdownplan,tomaintainthislevelofincomeduringtheirretirement,theirplanwillneedtogrowatarateof[insertCriticalYieldA]inorderforittomatchtheamountofincomethatwouldhavebeenavailableshouldtheyhavechosentooptforanannuityinstead.Thereisnoguaranteethey’llachievetheirrateofreturnandtheactualratemaybemoreorlessthanthis.

•Basedontheirchosenretirementageof[insertage]

andtheirdecisiontotakeanincomefromtheirplan,tosustainadesiredlevelofincomeforthedurationoftheirretirement,their plan will need to grow at a rate of[insertCriticalYieldB].Thereisnoguaranteethey’llachievetheirrateofreturnandtheactualratemaybemore orless thanthis.

•Ifbasedon yourrecommendation,yourclientischoosing togoforadrawdownplan,partoftheirretirementsavingswillremainininvestmentfundswhichmaybeaffectedbythefluctuationsinthestockmarketandsothevalueoftheirplanmaygodownaswellasup.

•Ifthevalueoftheirplan reduces,ortheytakeanincome fromtheir plan thatis in excess ofthe amount ofgrowththeirplanachieves,thismaymeanthattheamountofincometheyarereceivingisunsustainableandmayneed tobereducedinthefuture.It’simportantthatyour clientunderstandsthattheirincomelevelsmayneedtoreduce inthefutureandthatiftheychoosetotakethemaximumincomeavailable,therewillbeagreaterriskoftheirincomelevelsneedingtobereducedgoingforward.Also,ifyourclienthaschosentodeferbuyinganannuityforaperiod of time but has decided to draw an income fromtheir plan,then it’simportant theyrealisethat by choosing todeferthere isa riskthat whenthey cometo buyanannuityinthefuture,theymaynotbeabletomatchwhattheycouldbuynow.

•Allpensionplansenjoyanumberoftaxadvantages,butit’simportant yourclientisawarethatthesecouldchangeinthefuture.

[Useifyou’rerecommendingaSIPP]

TosupportyourrecommendationforaSIPP,youmaywanttoincludesome additionalinformationforyourclient.It’simportantthatifyou’rerecommendingaSIPPtoyourclient,thatthey understand the potential risks involved.Thefollowingpointsmayhelpyouprovidethisinformationtoyourclient:

•ThereareadditionalchargesassociatedwithusingtheSelfInvestment element of Pension Portfolio.These additionalchargesarecomparabletootherSIPPprovidersandwilldependonthetypeofinvestmentchosen.[YoucanfindoutmoreabouttheseSIPPchargesinoursupportmaterial].

•Thechargecanbemadeupoftheyearlyadministrationchargeorinvestmentandtransaction relatedcharges.

•TheadditionalchargesthatwillbeappliedtotheplanwilldependontheleveloftheSIPPfunctionalityusedandtheassetsheldwithintheplan.ThesechargeswillincreaseeachyearinlinewithAverageWeeklyEarnings.

•Ifoneoftheirfinancialobjectivesistotakeagreateractiveroleintheinvestmentoptionswithaviewtohavingawiderchoiceofinvestmentfundstochoosefrom,theRoyalLondonSelfInvestmentPersonalPension(SIPP)planmayhelp.

•Iftheyare aCompany Directorand theywant touse thevalueoftheirpensionplantopurchasebusinesspremises,theRoyal LondonSelfInvestmentPersonalPension (SIPP) plan may help.It’s important that yourclientunderstandstheriskofinvestinginanassetwherethevalueisamatterofopinion ratherthanfact,aswhentheywanttotaketheirbenefits,theymayfindtheassethardtosell.

Provider recommendation

Withinthispartyou’llneedtoincludesomekeydetailsaboutRoyalLondon.YoucanfindfulldetailsaboutRoyalLondonwhichyoucanusewithinyourclientsuitabilityreportsinourKeymessagesforyoursuitabilityreportdocumentaswellasonourwebsite.Asanexampleyoumaywantto includethefollowing information:

•RoyalLondonaretheUK’slargestmutuallifeandpensionscompany.

•Theaward-winningservice,technologyandproductinnovationRoyalLondonprovidesmeetthefinancialobjectivesofyourclient.

•TheamountoffundsTheRoyalLondonGroupmanageandthenumberofcustomerstheyserviceistestamenttothemandtheservicetheyprovidetotheirclients.

Otherproductconsiderations

•Ifwithinyoursuitabilityreportyouwanttoincludeinformationaboutwhyotherpensionproductsarenotsuitableforyourclientandwhyyou’renotrecommendingthem,someofthefollowingpointsmayhelpyou:

Stakeholderpensionplan

•Astakeholderpension planisa low-costpension planthatwasintroducedbytheGovernmentin2001totryandencouragemorepeopletosavefortheirretirement.

•Theseplansaresuitableforpeoplewhowanttotopuptheirretirementsavings,arenoteligibletojointheiremployer’spensionschemeorwhoonlywanttheopportunitytochoosefromasmallernumberofinvestmentfunds.

•Thechargesforastakeholderpensionplanarecappedandcannotexceed1.5%forthefirst10yearsandafterthat,theplanchargesmustremainat1%.

•Theinvestmentopportunitiesavailableunderastakeholderpensionplanwerenotsufficienttomatchtheirinvestmentneedsandobjectives.Ifthey’reaCompanyDirectorandwanttopurchasebusinesspremiseswithintheirpensionplanthisisnotavailableunderastakeholderplan.

Conventional lifetime annuity

•Aconventionallifetimeannuityispurchasedwithpensionsavingsthathavebeenbuiltupandcanprovideaguaranteedregularincomeforlife.Howeverifthereisachangeintheircircumstances,forexampletheirhealthdeteriorates,thelevelofretirementincometheyarecurrentlyreceivingcannotchange.

•Althoughthistypeofannuitycanprovideaguaranteedlevelofincomeondeathtoaspouse,canpaytax-freecashimmediatelyandcanbesetuptoautomaticallyincrease,thiscanalsoimpactontheamountofretirementbenefitstheymayreceive.

•Thelevelofincomeavailablethroughthistypeofannuitywilldependupontheannuityratesavailablewhentheannuityistaken.

•Ifyourclientshoulddieunexpectedly,theamountthistypeofannuitywillpayouttoaspousemaynotbethatattractivecomparedtootherretirementproductsthatareavailableinthemarketatthattime.

•Asthelevelofincometobepaidoutduringretirementisagreed upfront,itcan’t be changedand thereforetheamountbeingpaidoutmaynotbeinlinewithaverageearningsorrisinginflationandnoadditionalcontributionscanbepaidintotheirplanoncetheannuitystarts.

Unitlinked/Withprofitsannuity

•Thistypeofannuityprovidesaregularretirementincome inexchangeforalumpsumbutit’slinkedtotheperformanceoftheinvestmentfundssothelevelofincometheyreceivecangodownaswellasup.Andwhilsttheycould receivemorethanothertypesofannuityproductsareoffering,theycouldalsoreceiveless.

•Althoughthistypeofannuitywillprovideaguaranteedamountofincomeforlife,thelevelofincomecannotrespondtochangingpersonalfinancialcircumstances.

Short-termannuity

•Thistypeofannuitywillgenerallybepaidforaperiodofupto 5 years and the amount paid out will beguaranteedforthatperiodoftime.Attheendofthesetperiod,theycanchooseiftheywanttopurchaseanothershort-termannuityoranotherannuitycontract.

•Thelevelofincomepaidisfixedattheoutsetandcannotbechangedduringthesetperiod.

Phased annuity purchase

•Aphasedannuitycontract allowsaclientto taketheirretirementbenefitsinstagesbycombininglumpsumandannuitypurchaseseachyear.Howevertheydon’tprovideanyguaranteethatthelevelofincomebeingpaidwillbeashighaswhatisavailableunderotherannuitycontracts.

•Althoughtheclientwill onlyhaveusedpartoftheirretirementbenefitstoprovideanincome,andthey canstillmakecontributionsintotheotherpartoftheirplan, asthey’vebeentakinganincomefromtheirplanalready,theamountthey’llhavelefttopurchaseanannuitywithwillbereduced.Inadditiontothis,they’llalsonotbeabletoreceivetheirfulltax-freecashupfront.

Flexibleincomedrawdown

•Aflexibleincomedrawdownplanisanuncappedversionofthestandarddrawdowncontractandrequiresaminimumof£20,000securepensionincomeavailablebeforeanyonecaninvestinthistypeofcontact.

•Althoughthereisnolimitontheamountofincomethatcanbetakenfromtheplan,thereisnoguaranteethattheretirementincomewillbeashighasincomeavailableunderannuitycontractsandit’snotpossibletomakeadditionalcontributionsintotheplanwithoutincurringataxcharge.

Phasedincomedrawdown

•A phasedincomedrawdownplanletsaclienttaketheirretirement benefits instages though a combination oflumpsumandincomepaymentseach year.

•Althoughthisallowsaclienttocontroltheamountofincometheyrequireandcashinthelevelofincometheyneed,thereisnoguaranteetheirincomewillbeashighasthatofferedunderotherproducts.

•Thereis alsothe potential thatthe death benefitscould behigherunderthistypeofplanthanotherproducts.

•The value of the pension plan that is still invested can still go down as well as up and so the amount of pension their left with to buy an annuity may not be sufficient.

SelfInvestedPersonalPension(SIPP)

•ASIPPisaspecialtypeofpensionplanthatworksasa‘wrapper’aroundapensionplanandallowssomeonetohaveagreaterinvolvementinchoosingtheinvestmentopportunities.

•Inadditiontothetraditionalinvestmentoptionsavailablethroughpensionplans,aSIPPallowstheoptionofinvestingincompanyshares(equities),governmentbonds(gilts)andcommercialproperty.Howevertoinvestintheadditionalinvestmentoptions,youmustpaytheadditionalchargesthatcomewiththistypeofplan.

Workplacepensionscheme

•Iftheiremployerdoesnothaveagrouppensionplan whichthey canjoinortheirnotduetoreachtheirstagingdateforafewyearsandtheydon’twanttodelaycontributingtotheirretirementsavingsanyfurther.

•Iftheirapproachingtheirretirementagesoonandtheirmainobjectiveistostartdrawinganincome fromtheirplan.

•Ifthey’reselfemployedorareclassedasanonworker,

i.e.theyareamemberofthearmedforces,directororacompany,officeholderwhichincludesanon-executivedirector,companysecretary,amemberoftheboardor statutorybodyortrustee,oravolunteerandthereisnotagrouppensionplanforthemtojoin.

Investment

Withinthissectionyou’llneedtoincludedetailsaboutRoyalLondon’sinvestmentoptions.Youcanfindmoredetailsaboutourinvestmentofferingwithinourseparate Investmentsuitabilityreporttemplatebutherearesome suggestionsaboutwhatyoumaywanttoinclude:

•Aftercompletingtheriskprofilingquestionnaireanddiscussingitwithyourclient,you’veconcludedwhat yourclient’ssuggestedattitudetoriskisandthespecificinvestment option that you’rerecommending they should investin.

Governance

•AkeypartofRoyalLondon’sinvestmentpropositionis thegovernanceprovidedthroughtheInvestmentAdvisoryCommittee (IAC).

•The IAC will carry out regular reviews to ensure each fund continues to meet its’ original objectives. The fund range includes:

•Individualandexternalinvestmentfunds

•GovernedPortfolios

•FixedandFlexibleLifestyleStrategies

•TheMatrix

•Customisedoptions

•ExternalInvestmentSolutions

•GovernedRetirementIncomePortfolios(IncomeReleaseonly)

Core Investments

•At thecentre ofa client’splan istheCore Investments.

TheCoreInvestmentsaremadeupofRoyalLondon’sownfundsthataremanagedinternallybyRoyalLondonAssetManagement(RLAM) aswellasa rangeoffunds fromcarefullyselectedleadingexternalfundmanagersincludingDiscretionaryFundManagers(DFMs).

•Manyoftheirexternalinvestmentfundmanagersofferinvestmentfundsfromdifferentlocationsaroundtheworld.

•RoyalLondonofferover160individualinvestmentfunds whicharesuitableforvariousriskattitudes.

•Clientscanswitchbetweentheseinvestmentfundsasfrequentlyastheylikefreeofcharge.RoyalLondonmayapplyaMarketValueReduction(MVR)iftheyswitchedoutoftheRoyalLondon WithProfitsfund.

GovernedPortfolios

•RoyalLondonoffersnineassetallocationportfolios,calledGovernedPortfolios.Eachofthenineportfoliosismade upofdifferentinvestmentfundswhichincludeequities,property,corporatebondsandindexlinkedgiltsandtheytakeintoaccountthelengthoftimetheyhaveuntiltheyretireandtheirsuggestedattitudetorisk.

FixedLifestyleStrategy

•RoyalLondonpurposelydesignedeachoftheirFixed LifestyleStrategiestoinvestinportfoliosthatsuit differenttermstoretirementandattitudestorisk.EachoftheirstrategieswillinvestinaGovernedPortfolio,andwhentheclientreaches15yearsbeforetheir retirementdate,theportfoliowillautomaticallystarttoswitchintolowerriskportfolios,sothatwhenthey’renearingtheirretirementdate,theirretirementsavingswillbeinvestedineitheralowriskfundoracombinationofalowriskfundandIndexLinkedGilts.

FlexibleLifestyleStrategy

•TheFlexibleLifestyleStrategyallowssomeonetousetheGovernedPortfoliosandbuildtheirownlifestylestrategy.

•Theycanselectwhichpaththeywanttheirretirementsavingstofollowandwhenthey’re15yearsfromretirement,theirsavingswillgraduallyswitchfromhigherrisktolowerriskportfoliosautomatically.

The Matrix

•RoyalLondon’sMatrixinvestmentoptioncategorisesexternallymanagedequityfunds,whichareavailablethroughtheCoreInvestments,bytheirsectorandbyriskrelativetoabenchmark.

•Oncecategorised,theywillthentracktheerrorriskofeachof the funds.

Customisedoptions

•UsingRoyalLondon’srangeofGovernedPortfolios,acustomisedoptioncanbecreatedforspecificclients.

•Theinvestmentstrategywillbesuitableforvariousattitudestoriskandthe ongoinggovernancewillbeprovidedbyyou,astheiradviserdirectly.

External investment options

•Availablethroughstrategicpartnerships,RoyalLondoncanofferexternalinvestmentoptionsthrougharangeofriskgradedmultiassetfundoffunds.Thesearemanaged bysomeoftheleadingdiscretionaryfundmanagers.

•Theseinvestmentoptionscanhelpprovideaconsistent,robustinvestmentprocessthatmeettheclient’sneedsandobjectives.

Governed Retirement Income Portfolios

•RoyalLondonoffersfiveassetallocationportfolios,calledGovernedRetirementIncomePortfolios.

•Eachofthefiveportfoliosaremadeupofdifferentinvestmentfundswhichincludeequities,property,corporateandhighyieldbonds,andindexlinkedgilts.Theyhavebeenspecificallydesignedforclientswhoaretakingaregularincomefromtheirpensionandtakeintoaccounttheirsuggestedattitudetorisk.

5.SERVICESANDREMUNERATION

Within this section you’ll need to provide details of the services you’ve agreed to provide to your client and any adviser charge details you’ve agreed will be deducted from the plan in return for these services. Within this section you may want to include the following:

Agreed services

•Following the initial discussions with your client at the start, you’ll agree what services you’ll apply and their associated costs.

•How frequently you’ll provide regular reviews to your client.

•Howyou’llregularlymonitoryourclient’sinvestmentsandyou’lladviseifthereisanyadverseeffectswhichyou thinkwill havea negativeimpact on themor theirplan.

•Ifyou’llregularlyprovidethemwithinformationabouthowtheir chosen investmentfunds are performing.

Aspartoftheinformationyouprovideontheremunerationyou’veagreedyou’llreceive,youmaywanttoincludethefollowing:

Initialadvisercharges

•Thepercentage/amountofinitialadviserchargeyou’veagreed.

•Howfrequentlytheinitialadviserchargepaymentswillbededucted,whetheritwillbemonthlyquarterly,half-yearly or yearly.

•Thenumberofpaymentsyou’veagreedwillbedeductedfromtheplan.

Ongoingadvisercharges

•Thetype of ongoingadviserchargeyou’veagreed.

•Thepercentage/amountofongoingadviserchargeyou’veagreed.

•Howfrequentlytheongoingadviserchargepaymentswillbededucted,whetheritwill bemonthly,quarterly, half-yearly or yearly.

•Thenumberofpaymentsyou’veagreedandalsowhen theyaretostartbeingdeductedfromtheplan.

•Ifyou’veagreedtheongoingadviserchargepaymentswillincreaseandifso,whentheyaretoincreasefrom.

Contributiontype / Percentageormonetaryamount / Frequencyofpayments / Numberofpayments
Regularcontributions / %Or£
Singlecontributions / %Or£ / N/A / N/A
Transferpayments / %Or£ / N/A / N/A
Contributiontype / PercentageorMonetaryamount / Frequencyofpayments / Numberofpaymentsand whentheywillstartfrom / Increasingpaymentsandwhen theincreaseistostartfrom
Regularcontributions / % / N/A / N/A
Regularcontributions / %or£
Singlecontributions / % / N/A / N/A
Singlecontribution / £
Transferpayments / % / N/A / N/A
Transferpayments / £

ValueAddedTax(VAT)

If you’ve agreed adviser charges which are subject to VAT ortheyareVATexempt,you’llneedtoletyourclientsknowthisastheamountthey’veagreedtopaymaychangeinthefuture.

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