Preparing for your retirementWhether you’re planning ahead, taking your pension early or about to retire, taking the right steps now could put you miles ahead in the future.

This handy guide includes some useful tools, services and information aiming to take you through a series of steps to help you prepare for retirement and make informed decisions about your pension options.

The information is relevant both to your RBS Group Retirement Savings Plan and to any other pensions that you have.

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Hi,This pack is designed to help you prepare for your retirement and for the decisions you’ll make about how and when to access your pension savings. The information is relevant to both your RBS Group Retirement Savings Plan (‘the RSP’) and to other pensions that you may have. I hope that you’ll find it useful.

We hope to:

n help you understand the pensions you have and how you can use them

n encourage you to think about your retirement and plan ahead

n give you a process to use, some things to think about and some actions to take

n empower you so you’re able to make informed decisions

n give you peace of mind that you’re making the best decision for your future

n show you where to turn for support and make sure you’re aware of the retirement advice services available from LV=.

The RSP is managed by Legal & General. After a thorough search of the market, Legal & General carefully selected us (LV=) as the right partner to help you understand and navigate your retirement options and to give you expert retirement advice.

Legal & General has conducted full due diligence on our advice service and is confident that our processes focus on delivering the best outcomes for members of the RSP. Legal & General will not earn any fees from members it refers to us and we take full responsibility for our advice.

We look forward to helping you with your retirement planning and decisions.

David Stevens, Life Advice Director

Don’t forget there is a lot of useful information and tools on the Plan website, here: https://www.legalandgeneral.com/workplacebenefitsResp/rbs/

You can also manage your account online, to check the value of your Plan, keep your personal details up to date, adjust your target retirement age, and research and amend your investment choices. And, importantly, you should ensure the Trustees have up-to-date details of who you would want your benefits paid to if you die, by using the Nomination of Beneficiaries Form. You can manage your account here: https://www.legalandgeneral.com/workplacebenefitsResp/rbs/mya/

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Retirement planning process:Prepare1: What pensions do you have?

2: Find out how much your State Pension will provide

Consider3. How much income you will need

4. Estimate how long your pension savings might need to last

Explore5: Research your pension options – defined contribution pensions

6: Research your pension options – defined benefit pensions

7: Understanding tax implications

8: Consider what happens if you or a loved one dies

Seek support9: Avoiding pension scams

10: Free and impartial guidance from Pension Wise

11: Get expert retirement help and advice

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1. What pensions do you have?Get up-to-date information about all your pensionsFrom our research nearly two thirds of people aged 45-54 did not know how much they have saved for retirement*. So, a good place to start is to find out the details of all your pension plans. You could dig out your latest statements, update addresses with your pension providers and obtain up-to-date details of your pension plan if you don’t already have them.

For your Legal & General pension:

call: 0345 072 0266 or email: rbsrsp@landg.com or visit: www.legalandgeneral.com/workplacebenefitsResp/rbs/

For any other pensions, you will need to contact your provider. There’s a handy letter template you can use on the Money Advice Service website: www.moneyadviceservice.org.uk/en/articles/letter-templates#tracing-pensions(*ref. LV= State of Retirement Report 2017)

Understand what type of pensions you have There are lots of different pensions with some fairly confusing names. Let’s simplify things a little, there are broadly just three types of pension in the UK. These are:

1. The State Pension. This is an income paid to you by the Government, it starts when you reach your State Pension Age. (See Section 2.)

2. A defined contribution ‘DC’ pension. This is a pot of money. The value of the pot will go up or down depending on how your investments grow or fall in value. You will need to choose what to do with this money. Your RBS Group Retirement Savings Plan is a DC pension.

3. A defined benefit ‘DB’ pension. This includes ‘final salary’ and ‘career average’ pensions. This time you do not have a pot of money to choose how to use. Instead, a DB pension is the promise of a certain amount of income paid to you from a specific age. The amount you receive will depend on how long you were a member of the pension scheme and how much you earned (see Section 6).

It’s important to know the different types of pension because the options available for each are different. If you’re unsure what you have, ask your pension provider or you could use this helpful tool from Pension Wise: www.pensionwise.gov.uk/en/pension-type-tool

If you’ve lost track of any pensionsThe Government estimate there is currently £400 million in unclaimed pension savings. Their Pension Tracing Service offers a website to help people locate lost pension savings.

If you have lost track of any of your pension details, do allow some time for tracing them as it will help with your planning.

You can search for your lost pensions by going to www.gov.uk/find-pension-contact-details

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2. How much will your State Pension provide?Your State Pension is payable from your State Pension Age; this will be between the ages of 65 and 68, the actual date depends on when you were born. Note that your State Pension Age might be different to the ‘normal retirement date’ of any other pensions that you have. You cannot take your State Pension early, but you can defer it and take it later if you wish. It is not paid automatically, you need to claim it.

The new State Pension is usually a flat rate of £168.60 in the 2019/2020 tax year, payable if you have 35 ‘qualifying’ years. These include years when you paid National Insurance, but if you looked after children or received certain state benefits then these years may also count. Someone with less than 10 qualifying years will not receive any State Pension.

However, it is important to note that during much of your working life the State Pension rules were different. This means your entitlement may be different; you may need more or less than 35 qualifying years to receive the flat rate. Occasionally you may find that you have earned more than the flat rate, in which case the extra amount is protected.

So, it’s very important to find out about your personal State Pension details; to do this you can request a state pension forecast on the government’s website: https://www.gov.uk/check-state-pension

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3. How much will you need? Calculate your retirement budgetMany people don’t think in advance about how much income and savings they’ll need in retirement. So, it’s a great idea to plan ahead and start thinking about your budget. Get to grips with your current expenditure and think about what might change in retirement, both over the short-term and long-term.

Whilst looking at your current outgoings, you could also consider whether you can afford to put more money away towards your retirement, either in a pension or other savings.

You may find it helpful to break down your future needs into:

n essentials

n extras

n choices later in life, such as money for long term care and/or passing on an inheritance.

There are lots of tools available to help you with this process. You can access the planning tools available within the Helpful Resources section of the RBS Group Retirement Savings Plan website, here www.legalandgeneral.com/workplacebenefitsResp/rbs/

Alternatively, there is a useful retirement budget planner on the Money Advice Service website for you to complete to help you.

Go to https://www.moneyadviceservice.org.uk/en/pensions-and-retirement/budgeting

You’ll also be able to get tips here to help you make the most of your money.

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4. Estimate how long your pension savings may need to last

When you make decisions about your pension options it’s important to think about the long-term as well as the short-term. How long do you need your savings to last for? If you arrange a guaranteed income for life then you know that the income will continue for your lifetime. If you access your pensions more flexibly then there is a risk that you might take too much out of your pension too early and run out of savings too soon. You can minimise this risk by controlling the amount of money you withdraw (to try and ensure that your money lasts as long as you need it to).

Of course, it’s also a good idea to think about how your needs might change over time (for example, do you need an income that increases with the cost of living, do you want it to pay out to someone else after you have died)?

We recommend that you make cautious assumptions about life expectancy. People tend to nderestimate how long they might live so it’s good to listen to the experts; The Government has a useful tool you can use to help you work out your life expectancy and show you the probability of surviving to older ages. The results can be quite surprising.

https://visual.ons.gov.uk/what-is-my-life-expectancy-and-how-might-it-change/

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5. Research your pension options – defined contribution pensions

Here is a summary of the different ways that you can use a defined contribution pension pot:

Things to think about

Guaranteed income for life

Flexible regular or lump sum withdrawals

One-off lump sums

Take the whole pot

Technical name Lifetime annuity Flexi access drawdown

UFPLS* UFPLS* or ‘small pot rules’

Can I take a tax-free lump sum?

Yes, usually up to 25% of pension pot

Yes, 25% of pension pot

Yes, 25% of each withdrawal

25% of pension pot

Does this provide a regular income?

Yes Yes No N/A

Is this income guaranteed for life?

Yes No No N/A

May poor health or lifestyle factors increase the income?

Yes No N/A N/A

Will the income increase by inflation?

You choose this at the start

You are in control of how much income you take

N/A N/A

Can I take lump sums?

No Yes, taxable Yes, 75% of each withdrawal is taxable

N/A

Do I need to review my pension pot regularly?

No Yes Yes N/A

Could my money run out later in retirement?

No Yes Yes Yes

Can I change my mind and use my pot differently?

No Yes Yes No

May future contributions to my pension be affected?=

No Yes Yes Yes

Can I pass money on when I die?

Yes, various ways of doing this, must be selected at the start

Yes Yes Yes

*UFPLS stands for ‘uncrystallised funds pension lump sums’ =See Section 7 - the Money Purchase Annual Allowance’

Remember, you can use a mixture of different options, and you don’t have to access all your pot at once, you can leave some or all of your pot untouched until a later date.

Not all pensions offer all these flexible options. If you would like to take a flexible income (known as ‘flexi access drawdown’) from your RBS Group Retirement Savings Plan, then you would need to move your money to a plan that offers this facility. You could use Legal & General’s Mastertrust Pension Access Scheme and benefit from:

● competitive charges negotiated by the Trustees for members of the Plan

● a range of funds specially designed to mirror those of the Plan.

You can find more details here: www.legalandgeneral.com/workplace/_mt_pas/at-retirement/

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6. Research your pension options – defined benefit pensionsDefined benefit ‘DB’ pensions include ‘final salary’ and ‘career average’ pensions. They give you the promise of a certain amount of income paid to you from a specific age.

Retirement optionsA defined benefit pension pays out a guaranteed income for life. This usually increases each year and would usually continue to pay a reduced pension to your spouse, civil partner or dependants after you die. Most defined benefit pensions allow you to take a tax-free lump sum; this is often provided by giving up some of your income in exchange for the tax-free lump sum.

The amount of income you receive depends on a calculation relating to the number of years you were a member of the scheme and your ‘pensionable’ earnings (this might be your final salary, or your salary averaged over your career or another formula). Your latest pension statement should show you how much your pension income and lump sum might be. If you haven’t received one for a while, contact your provider for up to date details.

Transferring your defined benefit pension – a word of cautionYou may be able to ‘transfer’ from your defined benefit pension to a defined contribution pension. This means that you give up the right to your guaranteed income in exchange for a sum of money that you can move into a defined contribution pension. You would then be able to access the options discussed earlier in this guide.

This might be a suitable course of action for a minority of people. However, it can be risky because if you transfer you are giving up valuable guaranteed benefits and might find yourself worse off, even if your employer offers you incentives to switch.

Safety first approachWhether to transfer out of a defined benefit pension is a very complicated decision to make. If the transfer value is £30,000 or more you’ll be required to take financial advice, but because of the risks involved, we believe it’s always crucial to turn to an adviser that specialises in this area of retirement planning and one with an approach that puts your interests first.

At LV= our process for defined benefit transfers stands up to the highest scrutiny. We:

n put your interests first

n listen to your aims, circumstances and ambitions

n consider closely your long-term security in retirement, as well as short-term objectives

n start from the safety-first assumption that a transfer is more likely to be unsuitable

n operate a fee-charging structure that avoids our recommendations being influenced by fees payable if you proceed with a transfer

n all transfer cases are dealt with by appropriately qualified advisers and are also discussed and challenged at a high level with senior management and compliance personnel.

We believe our processes are significantly more robust than many other advisers working in this field, giving you peace of mind and security for your retirement choices.

The RBS Group Pension Fund If you have benefits in the RBS Group Pension Fund (a defined benefit pension), then you can find out all about your benefits here: https://rbsgrouppensionfund.co.uk/member-homepage

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7. Understanding tax implicationsIncome tax Apart from the tax-free lump sum (technical name Pension Commencement Lump Sum), anything else you take from your pension is taxable, using the usual income tax bands. This is what is meant if you hear people use the common jargon ‘taxed at marginal rates’. Here’s a helpful summary of the current income tax bands:

25%

of your pension fund can usually be taken tax free.

The remainder of your pension fund will then be subject to

income tax at your ‘marginal rate’, as shown here...

0% tax on the first £12,500

of income(This band is reduced

by £1 for every £2 of income over £100,000)

20% tax on... income from £12,500

to £50,000

40% tax on income from £50000

up to £150,000

45% tax on income over £150,000

If you live in Scotland and pay Scottish Income Tax then the rate bands are different. There is a personal allowance of £12,500 plus, but the following are payable:• Starter rate: 19% on income £12,501 to £14,549 • Basic rate: 20% on income £14,550 to £24,944• Intermediate rate: 21% on income £24,945 to £43,430• Higher rate: 41% on income £43,431 to £150,000• Top rate: 46% on income over £150,000.

Other factors may affect the amount of tax you pay. If in doubt, seek advice. Please note, any references we make to taxation are based on our understanding of current legislation and HM Revenue & Customs practice, which can change.

There are several important tax limits and allowances that apply to your pensions, which are explained below: Lifetime allowance This is a limit on the size of an individual’s pensions. It is £1,055,000 for the 2019/2020 tax year. If the value of all of your pension benefits exceeds the lifetime allowance then you would be charged tax on the excess. This charge is 25% if it is withdrawn as income or 55% if it is withdrawn as a cash lump sum.

Annual allowance This is the maximum amount of money you or your employer can pay into a pension. The annual limit is usually equal to your earnings for the year but is capped at £40,000. For high earners it is reduced; for every £2 of income above £150,000 per annum, £1 of annual allowance will be lost, so anyone earning over £210,000 will have their annual allowance capped at £10,000.

Money purchase annual allowance If you access a pension flexibly then the annual allowance is reduced to just £4,000 per year. This is triggered if you use flexi access drawdown, or take part or all of a pension as a flexible lump sum (‘UFPLS’). It is not triggered if you buy a lifetime annuity, or take only the tax free lump sum from a pension, or if you cash in a pension worth less than £10,000 using the ‘small pot rules’.

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8. Consider what happens if you or a loved one dies It’s unpleasant but important to think about what you would like to happen with your pension money when you die. Do you need to provide a continuing income for a spouse or partner? Would they prefer the flexibility to inherit pension money as a lump sum?

Some products allow you to pass on remaining monies to dependants, but not all of them.

It’s important to remember that your income needs in retirement may alter with changes in your circumstances. If you rely partially on income from someone else, might you need the flexibility to change your own pension arrangements if that income ceases? If you are in a couple, talk through things together, and understand what would happen to your income if your partner dies before you do.

It’s important to make sure your pension provider has up-to-date details of your preferred beneficiary/ ies. For the RBS Group Retirement Savings Plan you can complete and update your wishes by using the Nomination of Beneficiaries Form here: https://www.legalandgeneral.com/workplacebenefitsResp/rbs/mya/

Defined contribution pensionsIncome taxIf you die before age 75, then pension money is usually paid out tax-free to your beneficiaries. After the age of 75, you can still usually pass money on to your beneficiaries but it would be taxable as income; they would usually have a choice to receive it in one go, draw it gradually using flexible access drawdown, or use the money to buy a guaranteed income for life (an annuity). You can nominate anyone you wish as a beneficiary, your pension provider will decide who the money is given to, but will take your wishes into account.

Inheritance taxUsually money that is paid out from a pension on death does not count as part of your estate for inheritance tax. But remember, if you pass everything direct to a spouse then this may increase the inheritance tax due on their estate. If in doubt, seek advice.

Defined benefit pensionsIn the event of death this type of pension will usually continue to pay some income to a spouse or civil partner. It may continue to pay an income to other dependants (unmarried partners, children). The income would be taxable. You should ask your pension provider to explain their rules.

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9. Avoiding pension scamsUnfortunately, scammers are after your savings, and pensions are an easy target.

Scams will often start with someone contacting you unexpectedly, over the phone, via email or even face-to-face. They might pretend to be an adviser or a government service and they can sound very believable and professional. They may talk to you about an investment or business opportunity or try and persuade you to have a free review of your pensions. If you are below age 55 they may offer to help you access your pension.

Don’t take the risk. Don’t give out information to someone that has contacted you unexpectedly. The following organisations provide useful guidance about scams and how to avoid them.

www.pensionwise.gov.uk/en/scams www.fca.org.uk/scamsmart

10. Free and impartial guidance from Pension WiseSeeking guidance is a good place to start to help you to understand the various choices available. It will provide a general overview of the options available on the market but won’t make recommendations or tell you what to do with your money.

The Government’s Pension Wise service provides free and impartial guidance for those aged over 50 with a defined contribution pension. The service is available face-to-face, over the telephone or online.

https://www.pensionwise.gov.uk

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11. Get expert retirement adviceThere are various ways that you can access the money in the RBS Group Retirement Savings Plan. You might want a guaranteed income for life, flexible access to your money or to take all your Plan savings in one go.

So, you have lots of flexibility, but the choices can be complicated. Legal & General have partnered with LV= to provide you with access to expert retirement guidance and advice. After a thorough search of the market, LV= were carefully selected as the right partner to help you understand and navigate your retirement options. We offer a trusted, regulated and impartial advice service for a competitive fee.

Why choose LV=?n Our advisers can use the Legal & General Mastertrust Pension Access Scheme when recommending a

solution for you, which offers very competitive charges and a range of funds designed to mirror those of the members of the RBS Group Retirement Savings Plan. You can find more details here: www.legalandgeneral.com/workplace/_mt_pas/at-retirement/

n If we recommend a guaranteed income for life we will search the whole market of annuity providers to get the highest income for you.

n We’re a leading UK retirement solutions specialist, we’ve been helping customers like you for over 20 years; we specialise in retirement advice.

n Our advisers can save you time and money, helping you get your finances in shape. Leaving you to focus on enjoying your retirement.

n We’ll speak your language, avoiding jargon and have easy to use customer guides written in plain English.

We offer two advice services, with advice fees from just £500:

Option 1: Advice on your RBS Group Retirement Savings Plan only

Option 2: Advice about all your pensions

A low-cost, fixed-fee advice service. We will take into consideration all of your circumstances and look at the options available to you with your RBS Group Retirement Savings Plan only.

Our recommendation may include a variety of options including an annuity (we will shop around the whole of the market), a fixed-term annuity (with Legal & General), or flexible access to your money (with Legal & General).

This service has a fixed fee of just £500 (no VAT). The fee becomes payable if and when you proceed with our recommendation, and it can be taken from your pension (this is usually more tax-efficient than paying it to us direct).

A comprehensive retirement advice service. We will take into consideration all of your circumstances and recommend the best option for your pensions.

Our recommendation may include a variety of options including an annuity or fixed term annuity (we will shop around the whole of the market), flexible access to your money (with Legal & General or LV=).

We have agreed a significant reduction to our fees for members of the RBS Retirement Savings Plan. The fee usually becomes payable if and when you proceed with our recommendation, and can be taken from your pension (this is usually more tax-efficient than paying it to us direct).

It all starts with a chat… call us for a free initial conversation with no obligation.

We’ll listen to your needs and objectives and discuss what you’re hoping to achieve with your pension, then we’ll agree which service best meets your needs.

Call: 0345 070 0008 (Lines are open 8:30am – 7pm Monday to Friday and 9:00am – 12pm Saturday)

Or visit: legalandgeneral.com/retirementadvice

Call 0345 070 0008Lines are open

8:30am – 7pm Monday to Friday and 9:00am – 12pm Saturday

Or visit legalandgeneral.com/

retirementadvicePlease be aware Legal & General helpline staff cannot provide financial advice.

Financial advice is provided by LV=.Alternatively contact your usual financial adviser or search for an adviser

at https://www.unbiased.co.uk/.

You can get this and other documents from us in Braille or large print by contacting us.We offer a range of the pension and investment products from the Liverpool Victoria group of companies. We also offer investment products from a limited number of other companies, and annuity products from the whole of the market.

Liverpool Victoria Friendly Society Limited: County Gates, Bournemouth BH1 2NF. LV= and Liverpool Victoria are registered trademarks of Liverpool Victoria Friendly Society Limited (LVFS) and LV= and LV= Liverpool Victoria are trading styles of the Liverpool Victoria group of companies. LVFS is authorised by the Prudential Regulation Authority, and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, register number 110035. Liverpool Victoria Financial Advice Services Limited (LVFAS), registered in England No. 3027145, is authorised and regulated by the Financial Conduct Authority, register number 186890. LVFAS is a wholly owned subsidiary of LVFS. Registered address for both companies: County Gates, Bournemouth, BH1 2NF, Tel 01202 292333.

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