FOR ADVISERS ONLY
Our offer to distribute the Estate of the Scottish Life fund sooner
In February 2021, we wrote to advisers with certain clients invested in the Scottish Life with profits fund to ask for their feedback on a offer to distribute the Estate of the Scottish Life fund sooner.
Many of those who responded told us they were supportive of us making a formal offer and the Court has also given us the go-ahead to make our offer. So, we’re writing to those planholders again to ask them to vote on our offer. They’ll be sent a voting pack containing more information about it, including a personalised illustration.
Distributions from the Estate are currently uncertain
The Scottish Life Fund is closed to new business. As plans are claimed, the number of plans left in the fund goes down. This means we don't need to hold back as much money in the Estate. We’re currently able to distribute some of the Estate to planholders but we don’t know how much of the Estate we’ll be able to distribute when a plan is claimed. This is because we don’t know when the plan will be claimed or how big the Estate will be at that time.
We want to give planholders more certainty
Our offer would let us distribute more of the Estate to eligible planholders sooner than would otherwise be the case. This would increase the current value of their plan and give them more certainty over the amount we’ll pay them when their plan is claimed.
We need planholders to vote
We'd use a court approved process - a Scheme of Arrangement - to change how we distribute the Estate to our eiligble planholders.
Planholders need to vote on our offer online or by post by 12 noon on 2 November 2021. Or in person or virtually at the planholder meeting on 5 November 2021.
If enough planholders vote in favour of the Scheme, we’ll go to the Court and ask for its approval at a Sanction Hearing scheduled for 25-26 November 2021.
If the Court approves the Scheme, we expect to implement the changes at 11:59pm on 31 December 2021. We’d write to planholders shortly after implementing the changes to confirm that they’ve been made.
Part A of the Explanatory Book contains more information about the legal process.
- The Royal London Open Fund, our largest fund, will take on responsibility for holding back enough money to protect planholders’ plans against future risks and to meet rules set by our regulators.
- In exchange for this, and to help cover costs associated with our offer, a portion of the Estate will be paid to the Royal London Open Fund.
- We’ll be able to distribute the rest of the Estate to eligible planholders by increasing the value of their qualifying plan values by a known percentage when we implement our offer. This will secure their distribution from the Estate at that point.
So our offer involves planholders giving up some of the Estate to gain certainty over their distribution from the Estate.
We'll use a court approved process - a Scheme of Arrangement - to offer this exchange. Before that process can begin, we need planholders to vote on our offer by 12 noon on 2 November 2021.
No. We’ll continue to administer your client’s plan in the same we as we currently do.
If our offer doesn't go ahead, everything will stay as it is today. The amount that we'll be able to increase plan values by from the Estate will remain exposed to future risks and could be higher or lower than under our offer.
Our offer allows us to give planholders a known distribution from the Estate. This means they’ll have more certainty over the amount they’ll receive when they access their savings. We’re making our offer now so as many planholders as possible can benefit from it.
If we don’t do this now, we’d have to make similar changes eventually when there aren’t enough plans left in the Scottish Life Fund to manage it efficiently as a separate fund.
If your client's ProfitBuilder plan is due to mature before we expect our offer to take effect, you may want to take the opportunity to extend your client's plan by contacting us before they're due to receive their maturity benefits.
If your client is due to reach the Selected Retirement Age of their plan this year then you may want to speak to them before they take their retirement savings.
If your client has a Talisman pension plan and their selected retirement age will be reached sometime this year, they won’t be eligible for our offer from that date even if they don’t yet intend to retire. This is because their plan will stop being invested in the Scottish Life with profits fund when they reach their selected retirement age, in line with their terms and conditions. If your client is due to reach the Selected Retirement Age of their plan this year then you may want to speak to them before they take their retirement savings.
Please note: Any requests made after the Selected Retirement Age won't be accepted.
In 2018 we asked certain planholders whose pension plan contained a Guaranteed Annuity Rate (GAR) if they would like to exchange their GAR for an uplift to their plan. We used a similar process – a Scheme of Arrangement – to make this change.
For those plans covered by the previous Scheme of Arrangement, there will be no change to the previous increase applied to their plan. If the planholder opted out of that Scheme in order to keep their GAR, the GAR will remain unchanged by our new offer.
For plans covered by both the previous Scheme and our new offer, the Uplift from our new offer would apply in addition to the changes made by the previous Scheme.
We believe the voting packs we’ve provided to planholders give them enough information to make an informed decision.
Unlike our GAR offer in 2018, this offer does not have any impact on planholders’ guarantees. Our new offer asks planholders to make a risk-based decision relating to the level of Estate distribution that will be awarded to their plan. Therefore we do not intend to pay towards the cost of advice for any planholders who choose to seek advice in relation to our offer.