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The Devil in the detail Guide to British Pensions

Contents

Guaranteed Annuity Rates With Profits Funds Market Value Reductions Enhanced Tax Free Cash Contract Charges

There are two types of Pension you may have in the UK:

1. Defined Benefit, also known as Final Salary

2. Defined Contribution also known as Money Purchase.

This guide focuses on Money Purchase and the importance of getting good advice from an advisor who understands UK Pensions. Pension to Canada have advisors based in the UK who have the high-est level of UK pension qualification and understand the current (and fast changing) pension rules. Contact us for a free consultation to un-derstand your personal circumstances and options.

About the Guide

Guaranteed Annuity Rates Can give you a bigger income

James’ British State Pension Guarantee Annuity Rates A guaranteed annuity rate is the minimum income that the pension scheme holder must offer you as an annuity, (an annuity is an income for life) when you retire, so you have a minimum income guaranteed. These are often more generous than the annuity rates you could get at the moment, typically an annuity rate in excess of 10%. If you are lucky enough to have one of these GAR benefits on a pension scheme it be-comes an important consideration when deciding on how to maximize your British retirement benefits. Guaranteed Annuity rates are rarely offered in today’s pension schemes but were quite common in pension schemes written in the 1960’s through to the mid 1980’s.

When you come to retire, if typical annuity rates are better than your

GAR is offering you, then you still have the option to shop around any-

way, so you can’t lose.

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Guaranteed Annuity

Rate

Sample Current Annuity Rate

Income (%)Guaranteed Annuity Rates

With Profit Funds

With-profits funds are a type of investment offered by many British Pension providers. The money you put into the With Profits Fund is pooled with other investors' money and invested in a mixture of shares, bonds, property and cash. If the investment per-forms well, you should get an annual bonus each year, as well as a 'terminal' bonus when your policy comes to an end.

What makes with-profits investments unique is the

'smoothing' process, whereby some of the return from

the investments in the fund is kept back in the years

when the fund does well and used to pay you more than

the underlying return on the funds in years when it does

badly.

Market value reductions (MVRs)

If you try to cash in your with-profits investment before matur-ity, you're likely to be hit with a market value reduction (MVR), also known as a Market Value Adjustment (MVA). An MVR is applied by some providers, particularly in times of weak fund performance, to ensure you don't leave with more than your fair share. MVRs of as much as 18% are not uncom-mon.

The good news for some is that many with-profits policies in-clude an MVR-free date, often at the 10-year mark. This is a day when you can escape from the policy without paying a penalty. If you have a with-profits policy, it's worth checking your MVR-free date, if you have one. Research from Skandia shows that around £13bn of new with-profits bond business was written in 2000, with a further £15bn in 2001, meaning many policies are now coming up to an MVR-free day. In contrast, 2003 to 2008 saw less than £3bn in annual sales.

Because returns over the years are smoothed, it's difficult for

the investor to calculate the fees they're being charged, and to

discover whether returns are being held back because of

smoothing or are being deducted in charges.

Pension to Canada has UK Expert advisors, based in the UK

with advanced qualifications. Contact us to understand if your

British pension plans could have Market Value Reductions.

James’ British State Pension

A Market Value Reduction may be

applied if you wishd to transfer at

any point where the Actual return

is below the blue line.

With Profit Investments What you see is not what you get!

With Profit Investments What you see is not what you get!

Enhanced Tax Free Cash Can give you more than 25% as a lump sum

Before April 2006 it was possible to have a tax-free cash enti-tlement of more than 25% through a company or occupational scheme pension scheme known as an ‘Executive Pension Plan (EPP)’ or a ‘Contracted In (or out) Money Purchase (CIMP or COMP)’ The % of your pension plan that is available to take as tax-free cash depends on your length of service, the date you joined your pension plan, your salary details in the years up to April 2006 and any other pension entitlements you have from the same company. Pension to Canada have advisors based in the UK who have the highest level of UK pension qualification and understand the current (and fast changing) pension rules. Contact us to understand if any of your British Plans may have ‘enhanced’ cash benefits

Contract Charges Impact your transferrable pension and your projected UK pension

Does your advisor understand the nuances of British Pensions? Pension to Canada always have a UK-based expert advi-sor look at the fine print in your pension plan contracts to ensure you can make an in-formed choice before you transfer any British Pension Plan to Canada Contact us to see how we can help you today!

Pension plan contract charges are specific to the pension plan offered by the insurance company or pension provider. Charged can come in many forms including:

Unit charges: Initial Units and Accumulation Units

These apply different rates of charges to different contributions typically ‘initial units’ will apply to earlier years and will suffer higher charges than later ‘accumulation units’

Transfer Penalties Reduce the amount of your fund available for transfer

Bonuses Can enhance your pension fund at predefined times

Bid-Offer Spread A type of initial charge

Annual Management Charges

Typically defined as a % and may include invest-ment fees in a range of the insurance company or pension provider’s own funds

Administration Charges Can be monthly and expressed as a percentage of fixed amount

Under 60s Request Free British State Pension Forecast Ensure HMRC has your correct information Explore moving other British Pension Plan(s) to Canada Assess your overall retirement provisions with a Financial Planner

Approaching Retirement 60+ (Women) Contact British Government International Pension Centre

65 (Men) to arrange payment of your British State Pension

Explore moving other British Pension Plan(s) to Canada

Over 65s

If you are not already receiving your British State Pension Contact the British Government International Pension Centre to arrange payment of your British State Pension

Campaign for increases to your British State Pension

What you should be doing now for your personal planning (by age)

Pension to Canada e: info@pensiontocanada.com t: 1-800-670-8172 w: www.pensiontocanada.com

Legal disclaimer The information contained within this document is of a general nature and cannot be relied upon as, nor be a substitute for professional advice. The benefits and information vary according to residency and domicile. No liability will or can be accepted fro any consequences arising from any transactions embarked upon in connection with this information. Nor is the information con-tained in this document a solicitation to enter into such an arrangement, or does it constitute in-vestment or financial advice. Pension and investment rules can be complex and you should al-ways seek professional advice before entering into any such agreement.