PENSION TRANSFERSYOUR RESPONSIBILITIES AND HOW OUR SERVICE CAN HELP

FOR FINANCIAL ADVISERS ONLY

OUR TRANSFER VALUE ANALYSIS (TVA) SERVICE PROVIDES SIGNIFICANT VALUE TO ADVISERSArranging a TVA report can be very complex and time-sensitive, so a thorough understanding of final salary schemes is required before embarking down this route.

We have been offering a TVA service (TVAS) to financial advisers for over 20 years. The TVAS team currently consists of 10 members, with over 40 years’ combined TVA experience, 60 years’ defined benefit pensions experience and a range of qualifications between them.

They use their experience and familiarity with defined benefit (DB) schemes to:

• help you understand what’s needed to produce a report by providing a checklist for you to use

• interpret and vet the data to ensure that accurate information is input so you and your client get a reliable, high-quality TVA report

• help with general guidance and any TVA queries you may have

• provide a quality TVA report as quickly as possible – targeted with a 10 day turnaround.

REQUEST YOUR TVA REPORTS FULLY ONLINE Using PROMPT, our online submission tool, you can request TVA reports and send paperwork straight to our TVAS team in a matter of minutes, without leaving your desk. The process is quick and efficient, saving you and your business time and effort.

HOW MUCH DOES A TVA REPORT COST?In line with the FCA’s position on the supply of TVA services, we make a charge for the production of a TVA report. The cost is £150 + VAT per report charged by an invoice which we will send to you in the month after the report has been issued.

THE TVA REPORT FROM 1 OCTOBER 2018The TVA report meets many of the new regulatory requirements from 1 October 2018 when considering whether a DB transfer should go ahead or not. It is important to understand how our TVA service can help you and what else you will need to do to complete your assessment and make your recommendation.

WHAT’S INCLUDED IN OUR TVA REPORT?

• The Transfer Value Comparator (TVC) – on the single basis prescribed by regulation.

• Critical yields for annuity purchase on a variety of different bases (single life, joint life, full pension, cash and reduced pension, at normal and early retirement ages, level escalation in payment as well as increases in escalation with a guaranteed period).

• It looks at the likely pattern of benefits that might be taken from DB, defined contribution (DC) and annuity arrangements. It considers full pension and cash and reduced pension at normal and early retirement ages. It does this on a compare-and-contrast basis.

• It undertakes any comparisons of benefits and options consistently.

• It plans for a reasonable period beyond average life expectancy.

• It considers how each arrangement would provide death benefits on a fair and consistent basis, primarily considering death benefits pre-retirement.

• It uses rates of return and other standard assumptions prescribed by regulations.

• It ensures consistency in the rates of return assumptions taking into account other assumptions, such as inflation.

• It uses published population statistics, which allow for mortality improvements.

• It provides a balanced and objective presentation of the Pensions Protection Fund.

• It takes into account all charges (including adviser charges) where prescribed by regulations.

Prepared For Mr C Yield23 August 2018 Page 5 Prepared by Emma Dumper

Old Mutual Wealth

TRANSFER VALUE COMPARATOR

You have been offered a cash equivalent transfer value of £787,000 in exchange for you giving up any future claims to apension from the scheme.

Will I be better or worse off by transferring?

We are required by the Financial Conduct Authority to provide an indication of what it might cost to replace yourscheme benefits.

We have done this by looking at the amount you might need to buy the same benefits from an insurer.

It could cost you £1,261,324 to obtain a comparable level of income from an insurer.

This means the same retirement income could cost you £474,324 more bytransferring.

Notes

1. The estimated replacement cost of your pension income is based on assumptions about the level of your schemeincome at normal retirement age and the cost of replacing that income (including spouse's benefits) for an averagehealthy person using today's costs.

2. The estimated replacement value takes into account investment returns after any product charges that you might beexpected to pay.

3. No allowance has been made for taxation or adviser charges prior to benefits commencing.

ACTIONS

• Consider the effects ad hoc withdrawals could have on the likely pattern of benefits that might be taken from DB, DC and annuity arrangements.

• Align how each arrangement would meet the client’s income needs throughout retirement.

• Consider any trade-offs that may occur by prioritising different client objectives.

• Take into account the impact of the proposed transfer on the tax position of the client.

• Assess the benefits that could be paid from an enhanced annuity.

• Take into account the impact of the proposed transfer on the access to state benefits.

• Consider how each arrangement would provide death benefits pre and post retirement.

ACTIONS

• A balanced and objective presentation of DB scheme funding or employer covenants.

• Use additional rates of return and other assumptions not prescribed by regulations, explaining to the client why these other rates and assumptions have been used.

• Preparation of the analysis using more cautious assumptions where appropriate.

ACTIONS

• Start by assuming the transfer is not suitable.

• Clearly demonstrate, on contemporary evidence, whether the transfer is in the client’s benefit.

• Demonstrate the client’s attitude and understanding of the risks involved in the DB transfer.

• Demonstrate the client’s attitude and understanding of investment risk.

• Demonstrate the client’s realistic income needs, how they can be achieved, the role played by the DB scheme in achieving them, and the subsequent impact the DB transfer could have on them (including any trade-offs).

• Demonstrate that you have considered alternatives.

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FOR FINANCIAL ADVISERS ONLY

This section of the document is a straightforward checklist designed to help you follow the right steps to completing an appropriate pension transfer analysis (APTA).

COMPLETING THE APTAThe TVA report is unable to fully meet all the APTA requirements. Once you are in receipt of the TVA report, you will need to undertake the following in addition to complete your APTA:

ASSESSING THE SUITABILITY OF THE TRANSFERThe APTA is an important element of the pensions transfer process. As well as undertaking an APTA, you must also undertake the following when assessing the suitability of the transfer:

You can also consider undertaking the following as part of your client’s APTA:

The value of your client’s investments may fall as well as rise and they may not get back what they put in.

www.oldmutualwealth.co.ukPlease be aware that calls and electronic communications may be recorded for monitoring, regulatory and training purposes and records are available for at least five years.Old Mutual Wealth Life & Pensions Limited is registered in England & Wales under number 4163431. Registered Office at Old Mutual House, Portland Terrace, Southampton SO14 7EJ, United Kingdom. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services register number 207977. VAT number 386 1301 59.

SK18703/218-1520/September 2018