Switching from NEST to PFG Retirement Plan

David BerryGroup Pensions Manager

Welcome to the PFG Retirement Plan

• The PFG Retirement Plan (the Plan) could be an employee’s biggest asset and their main source of income in retirement.

• Membership is by invitation (valid for 3 months only) to employees on completion of 2 years’ membership of the NEST Scheme.

• Management colleagues will receive an invitation to join the Plan shortly after employment (valid until the 1st of the month following the completion of 2 months’ Company service).

• Employees are only be able to join the Plan by invitation as described above.

Agenda

• What the Plan can offer you• How the Plan works• Contributions and SmartPension• Investments• Taking benefits/Pensions Flexibility• Where to get more information

What The Plan Can Offer You? (1)

• Tax-Free Contributions into the Plan • A Company pension contribution of up to 10.6% of

your basic salary• Tax-free contributions into the Plan• Contributions that are exempt from National

Insurance if paid by SmartPension (a more efficient way of paying contributions)

• Up to 25% of your fund value as tax free lump sum when you take your pension

What The Plan Can Offer You? (2)

• Protection For Your Family

• Your fund is payable to your dependants on death before retirement

• The option to secure a dependant’s income when you take your benefits

• Life assurance equal to 3 x your basic salary• Group Income Protection scheme which has a

benefit of 50% of salary payable after 26 weeks illness up to State Pension Age

Personal Ownership

• Your Pension Policy and all contributions belong to you, not the Company

• You can cease your membership at any time but will not have a right to rejoin the Plan at a later date

• You do not need to stop working to start receiving your benefits• The Plan includes all of the Pensions Flexibility options

introduced by the Government in April 2015 – more later• Your fund is transferable to other suitable pension arrangements• If you leave the scheme or retire whilst in employment the

Company may be required to automatically re-enrol you into NEST

How the Plan Works (1)

EMPLOYER CONTRIBUTION

(up to 10.6%)

MEMBER CONTRIBUTION(up to 8%)

Investment Return

Tax Relief

MEMBER’S ACCOUNT

How the Plan Works (2)

INCOME IN RETIREMENT INCLUDING

FLEXIBLE OPTIONS POST APRIL 2015

…...

TAX FREE CASH *

MEMBER’S ACCOUNT

Contributions as percentage of salary

Member Contribution or Salary Exchanged

Company ContributionNon SmartPension

Company Contributionwith SmartPension

3% 5% 5.1% + 3% = 8.1%

4% 6% 6.2% + 4% = 10.2%

5% 7% 7.3% + 5% = 12.3%

6% 8% 8.4% + 6% = 14.4%

7% 9% 9.5% + 7% = 16.5%

8% (Maximum) 10% 10.6% + 8% = 18.6%

SmartPension (1)

• SmartPension is the way contributions are made to the plan.

• SmartPension benefits you in two ways:

• - You pay less NI, resulting in an increase in your take-home pay.

• - A higher rate of Company contributions is paid into your pension fund

SmartPension (2)

Taking an example of someone earning £1,000 per month who pays a 5% personal contribution.

•

Without SmartPension Using SmartPension

Monthly basic salary £1,000.00 £950.00Income Tax £23.33 £13.33National Insurance £39.40 £33.40Pension Deduction £40.00 £0.00Take home pay £897.26 £903.27

Total Invested £120.00 £123.00

SmartPension (3)

• Your salary before SmartPension is known as your Reference Salary and will be used in the calculation of all Company benefits and pay reviews.

• The reduction in salary is a change to your contractual salary and so any State benefits to which you may be entitled will be based on the lower amount.

• You are not required to contribute via SmartPension. If you choose not to use SmartPension, you will continue to pay tax and NI on your gross pay. Your contributions will be deducted from your take home pay, net of basic rate tax, and will automatically receive basic rate tax relief once invested.

Investment Options (1)How hands-on do you wish to be? The Plan’s investment fund range has been structured to help make it accessible to all members, regardless of how hands-on they wish to be with their investment decision.

We have shown the investment options in the pyramid below:

Top Tier - Default Option Second Tier - Alternative Option Third Tier - Core Funds

Fourth Tier - Full Fund Range

Full information on all of the funds can be found on the pension website at www.pfpensions.co.uk

•

Investment Options (2)• Top tier – the default optionThe Balanced II Lifestyle Profile is designed for those members with a medium attitude to investment risk and little desire to be hands on with their investments. This option is most suitable for those looking to take tax free cash and purchase an annuity when they retire.

• Second tier – alternative optionThe MyFolio Market IV Pension Fund is an alternative to the default lifestyle option designed for those members who wish to take marginally more investment risk, and does not include lifestyling as retirement approaches.

Investment Options (3)• Third tier – core fundsA core list of some of Standard Life’s pension funds has been selected following advice from an Independent Financial Adviser. • Fourth tier – the full fund rangeYou are not restricted to the above options. The full range of Standard Life’s funds is also available for those who wish to be very hands on.

Investment Options (4)• If you do not make an investment decision, you will be

invested in the Default Option.

• The Plan’s investment fund range has been selected following advice from an Independent Financial Adviser to help members decide on suitable investments.

• Ultimately, you must be comfortable that the investment choice you have made is right for you, whichever tier you opt for, or even if you do not make an active decision.

• The default options are currently being reviewed in light of recent government proposals and may change in the future.

Default Investment Option

•

New Retirement Choices

• From April 2015 Pensions Freedom and Choice or Pensions Flexibility was introduced

• The PFG Retirement Plan offers all the Flexibility options

The PFG Retirement Plan is simply a Tax-Effective Retirement Savings Account

When you join the Plan, an Account is

opened in your name

You and the Company make payments into your Account

The money in your Account is

invested tax-efficiently

£ £ £

From age 55 you can choose how to use the

fund – cash it in, take a series of cash payments, keep the funds invested

and draw down an income or buy an annuity or a

mixture .

What if you don’t join?If you do not join the Plan at your first opportunity you will have no right to join at a later date and you will reduce the level of protection should you die or fall ill.

Non pension scheme members are covered for a reduced level of life assurance of 1 x basic salary and are not covered by the Group Income Protection scheme.

If you choose not to join you loose valuable benefits provided by the Company (and the Company saves the cost of those benefits).

Contributions cost less than you thinkEmployee paid £1,000 per month pays 3% contribution through SmartPension. The weekly cost is:

Tax relief £1.38

NI Smart saving

£0.83

Cost to you £4.71

Contribution £6.92

More Information

• Read the Provident Pensions Website http://www.pfpensions.co.uk/

• Read the Member and Investment Guide• Read the Standard Life micro-site• Read the Standard Life Investment Guide• Ask questions – now or later via HR or:

pensionenquiries@providentfinancial.com Telephone: 01274 351351