Pension Basics Webcast

Slide 1

Hello and welcome to this webcast recording provided by Aviva who provide your pension.  You may pause or rewind this recording at any time.

Slide 2

Before we go any further there is some important information that we need to share with you. The following presentation should not be regarded as giving any form of financial or investment advice. You shouldn't make decisions on the basis of this presentation alone. If you require advice, you should contact a financial adviser. You can find one using the website shown on the screen. 

This presentation is based on Aviva’s interpretation of present laws and HM Revenue & Customs practice for the current tax year. The tax benefits may change at any time and their value depends on your personal circumstances.

The value of an investment can fall as well as rise and it is not guaranteed. You may get back less than the amount that’s been invested.

Slide 3

Aviva has been helping people plan for the future for a long time: Our history dates back over 300 years. We currently manage billions of pounds worth of savings and investments for our customers and we are a leading provider of company pensions schemes in the UK.

Slide 4

So, what are we going to be covering today and how can we help you. Please pause and take a moment to read  the screen before moving on.

Slide 5

Why is it important to save for your future?

Slide 6

As people are living longer it is more important than ever to save for retirement.      

Slide 7

The new full state pension for the current tax year is shown on the screen. If you're entitled to a state pension, when will you get it? The current State Pension age has increased to 66 and the government is planning to increase this further in the future.

You’ll usually need to have 10 qualifying years on your National Insurance record to get any new State Pension. You’ll need 35 qualifying years to get the full amount. You may get less if you were contracted out before 6 April 2016.  Pension credit gives you extra money to help with your living costs if you are over state pension age and on a low income. Would you or someone you know qualify for pension credit? If you would like more information about your state pension age, would like to get a forecast of what you might get, or details about 'contracting out', or pension credit, you can go to the Government website www.gov.uk.

Slide 8

How does your pension work?

Slide 9

A great way to save could be through your company pension scheme. This is because it's tax-efficient; your employer pays in, too; their  your pension savings - so if you leave your employer, you can take them with you. And It’s flexible, meaning you can decide how much you would like to contribute, where the contributions are invested, and at what age you would like to take the benefits. You can access your savings from the 'minimum pension age' set by the government. This is currently 55 but is rising to 57 from 6 April 2028. You may be able to access it earlier such as when you have a protected pension age or can't work due to ill health or incapacity.

Slide 10

Your pension contributions will be sent to Aviva and invested in either the default investment solution or your chosen investment funds. Charges will be deducted whilst your money is invested. When you get to retirement you can then use the fund to provide yourself with an income, with various options available from the minimum pension age.          

Slide 11

Aviva has also developed three ‘rules of thumb’ for retirement saving to help people be better financially prepared:

The first: The 10 Times Rule: Aim to have saved at least 10 times your annual salary by the time you reach retirement age

The second: The 12.5% Rule: aim to save at least 12.5% of your monthly salary towards your retirement. This includes contributions from employee, employer and the government

and the Third: The 40 Year Rule: aim to begin saving at least 40 years before your target retirement date

Slide 12

During the current tax year you can receive tax relief on pension contributions of up to 100% of your earnings.  There is an ‘annual allowance’ of £60,000 on how much you can save into all your pension arrangements. Any contributions made over this limit will be added to your other income and be subject to Income Tax. However, you can carry forward unused allowances from the previous three years, as long as you were a member of a pension scheme during those years. Please note that for the previous 3 years the allowance has been £40,000 a year, also you can't pay in more than your earnings in a year, no matter how much unused allowance you want to carry forward.

Carry forward of unused allowance does not apply for the money purchase annual allowance.

Slide 13

Please pause here to read the information on the example contributions table before moving on.   

Slide 14

Investment options.

Slide 15

Your pension scheme offers a range of investments, and you can choose where your money goes. Let's look at how investments work, and what investments are available in your scheme.

Slide 16

The money you save into your pension is invested to help it grow but do remember that the value of investments can fall as well as rise and is not guaranteed - you could get back less than the amount invested.

Slide 17

All types of investments work on a risk and reward basis. Generally speaking , the riskier an investment is, the greater its potential for providing higher returns. The downside is that the value is likely to go up and down more, so there is a greater chance of losing money especially over the short term. With lower risk investments there’s less chance of you losing money, but the returns they’re capable of achieving generally tend to be lower and could possibly struggle to keep up with inflation. Towards the bottom of the risk and reward scale you would typically have Money Market investments, also known as Cash. They are not to be confused with deposit accounts with bank or building societies. Although less risky than other types of investments, there could be circumstances when these investments fall in value, for example if an organisation fails. The value of Money Market investments could also be eroded over time due to the effects of fund charges, product charges and inflation. At the other end of the scale you have Company Shares, also known as Equities. While there is more opportunity for potential gains with shares than with other investment types, there is also greater risk that they will fall in value. Generally, each fund offered by Aviva invests in one or more of the investment types shown. There is more information about these investment types in your investment booklet.

Slide 18

If you haven’t made a choice your money will be invested in the default investment solution. The default automatically manages your investments in the run-up to retirement and has been designed for the majority of members, however this may not suit your personal circumstances and retirement aims. More information on the funds used in the default, including their risks and charges, can be found in your investment booklet.

Slide 19

Here we see which funds are used in an example default investment programme, and how the proportion of each fund in the pension changes in the run up to your retirement. Please pause here and take a moment to read the information on the default investment programme on the screen before moving on.

Slide 20

Some funds will take into consideration Environmental, Social and Governance factors before investing in a company. These are non-financial aspects of their performance, here are some examples. Please pause and take a moment to read the information on the screen before moving on.

Slide 21

Retirement choices

Slide 22

You are able to take all or some of your fund as a cash. The first 25% of any cash withdrawal would be tax free, the rest would be taxed as income, like salary. Alternatively, you can take up to 25% of your fund as a tax-free payment and then either re-invest the rest into funds designed to provide you with a taxable income, known as flexi-access drawdown or purchase a lifetime annuity with the remainder, which can provide you with a regular taxable income for the rest of your life. You can also choose a combination of these options.                                    

Slide 23

Please pause for a moment to read the information on the screen before moving on.

Slide 24

Please pause for a moment to read the information on the screen before moving on.

Slide 25

As you get closer to retirement it is important to review your benefits and there are several things that can help you: Pension Wise from MoneyHelper is a free, government-backed service, offering clear, impartial and specialist guidance on your retirement options. If you're aged 50 or over, this service is available to you. Visit moneyhelper.org.uk/pensionwise or call 0800 138 3944 for full details of the service. We strongly recommend that you seek financial advice if you are unsure which options may be right for you. There may be a charge for this advice. Please read the screen to see how you can find a financial adviser.

Slide 26

As a member you will have access to an online account making it easier for you to plan and save for your future. In addition to giving you information about your pensions value and where your money is invested you will also have access to our tools and calculators.

Slide 27

Lets have a look at some frequently asked questions. What happens if you leave your employer? Your employer contributions will stop, and you may not have access to the whole of the previous fund range. Please note that charges will continue to be deducted. Depending on the type of pension you have, you may be able to continue paying into your pension through your own bank account. You can stop making contributions to your plan and your money will remain invested. With some types of pensions, you have to stop making contributions. You can transfer into another registered pension scheme. You can take your benefits if over the minimum pension age. When you leave your employer, you will be sent a leaver’s pack explaining your options.

What happens when you die? You can complete the nomination form to let us know who you would like your pension fund to go to if you die before taking your retirement benefits. It is normally free of inheritance tax, and can be taken as a lump sum or used to provide an income. After you retire the benefits that may be left to your beneficaries will depend on how you took your pension benefits.     

Can you transfer money in? Yes, you can transfer and if you have several pension plans, transferring some or all of them into one pot could make financial sense. Each potential transfer needs to be considered on its own merits. …. And there are pros and cons to consider, if you are unsure if a pension transfer is right for you, you should consider seeking financial advice.

Slide 28

There are various next steps for you to consider. Please pause and take a moment to read the information on the screen before moving on.

Slide 29

Thank you for listening we hope this presentation has been useful.