2015 Pension Freedoms

30 March 2015
A summary of the retirement options available from Royal London pension plans after 6 April 2015.
Our service standards for new business

Our existing commitments will remain. Typically, we will:

  • acknowledge receipt of applications within 24 hours, including requests for outstanding information.
  • proactively chase other providers for transfer monies.
  • pay TFC and income to clients within five working days, once we have all the information we need.

The pension freedoms announced in the 2014 Budget will be introduced under a permissive statutory override. This means that providers are under no obligation to offer them, and it's likely some will be more willing (and able) than others.

Here's a summary of the retirement options we will offer after 6 April 2015:

Product options

Uncrystallised Fund Pension Lump Sum (UFPLS)

In our view UFPLS is intended to allow lump sum withdrawals. This allows us to offer UFPLS on the full range of Royal London pension products without having to create new income payment systems:

  • Full lump sum withdrawal will be available on all our DC pension contracts1 with no additional charge.
  • Partial UFPLS will be available on all contracts with a partial vesting facility.
    • A lump sum payment can be taken once in each tax year with no charge.
    • If any further lump sum payments are taken in the same tax year, a charge will apply when the second lump sum payment is taken.

Flexi-Access Drawdown (FAD)

Clients who want a regular income should use FAD. As a leading provider of income drawdown you won't be surprised to learn that we'll be fully ready to offer FAD from 6 April under our Pension Portfolio plan:

  • All new drawdown plans after 6 April 2015 will be set up as FAD plans under Income Release.
  • Clients in a Pension Portfolio plan set up after 17 December 20072 will be able to access FAD directly using the integrated Income Release facility without the need to set up a new policy. A one-off setup fee of £184 will apply, as at present, to the first designation event.
  • Clients in an older income drawdown arrangement (Tal 98 and Tal 86 ID) will also be able to access FAD via their existing policy.
  • Clients in a pre-17 December Pension Portfolio, Retirement Solutions or older contracts will be able to access FAD via an internal transfer to Income Release.

Capped drawdown

Clients who wish to remain in capped drawdown will be able to do so. Royal London will continue to monitor GAD limits and carry out triennial reviews.

  • Plans where the income taken exceeds the GAD limits will be automatically converted into FAD.
  • Income Release, Tal 98 and Tal 86 ID plans can continue as capped drawdown.
    • If GAD limits are exceeded the plan will be converted to a FAD without the need to transfer benefits.
    • Future designations will also be on a capped drawdown basis unless income limits are exceeded.

Support tools

We're building a number of useful tools to help you assess the needs of your clients. These tools will also help you to demonstrate/explain the options available to your clients and the impact of the decisions they could make.

We're also planning to offer customer-facing tools to help with this process, however these won’t be available immediately from 6 April 2015.

Further information

Read more about our personal pensions proposition, or speak to your usual Royal London contact.

Notes

1 With the exception of plans containing GMP. GMP is a defined benefit (DB) and does not qualify for the new freedoms.
2 The launch date of Income Release.

Last updated: 01 Apr 2016

This website is intended for financial advisers only and shouldn't be relied upon by any other person. If you are not an adviser please visit royallondon.com.

The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London EC3V 0RL.