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Protected Retirement Plan

The pension freedoms that came into effect from April 2015 increased flexibility to access pension savings, inspired pension providers to improve product choices and enabled more opportunity to plan pension fund changes.

The LV= Protected Retirement Plan offers more flexibility and access to money than a standard annuity, by providing a guaranteed income option for a fixed term (rather than for a lifetime), which can also be cashed in at any time.

Here you can find information on the customer version of our Protected Retirement Plan.

Plan features at a glance

  • Minimum pension fund transfer of £10,000 (after any tax free cash).
  • Flexi-access drawdown or a capped to capped drawdown option is also available, subject to max GAD limits.
  • Built-in option to transfer out to another retirement product, or taken as taxable cash at any time.

Options

  • Anytime conversion feature option if your client's circumstances change.
  • Guaranteed income over a fixed term up to 25 years (minimum term applies).
  • A choice of no income, level or increasing income by a fixed percentage.
  • Selection of death benefits.
  • Additional tax efficient option.

Additional services

  • Access to the LV= member helpline gives 24/7 access to health advice, counselling services and expert legal advice
  • LV= Doctor Services which gives your clients access to six medical services via one simple app or phone call

A closer look...

Customers can choose to invest part or all of their pension fund in our Protected Retirement Plan to secure income, a guaranteed lump sum, or both, depending on the options selected, as summarised below:

Full guaranteed income only option that provides a guaranteed income for the chosen term:

All of the money invested can be taken as income. This will guarantee a level of income for a fixed term and can be used for efficient tax planning. As the whole fund is taken as income, no lump sum will be paid when the plan ends.

Full guaranteed lump sum:

The pension fund can be invested over a fixed term. We guarantee the amount we’ll pay at the end of the term, so customers know exactly what they'll get back regardless of market conditions. We call this the Guaranteed Maturity Value (GMV). No income payments will be made from the plan during the term.

Guaranteed income and guaranteed lump sum:

Regular income can be taken for a fixed term from the plan and then receive a lump sum when the plan ends. Both the income and the lump sum are guaranteed, so customers know from the outset exactly what they'll get back, and when.


For each of these options, if your client dies during the chosen term the plan will end and no further income or lump sum benefits will be paid unless you add death benefits. For further details please see our death benefits information.

Our fixed term annuity enables clients to keep their retirement options open. It’s now even more flexible as clients can change how they access their pension during the term of their plan. Clients can stop and convert to any other retirement product without financial advice, or choose to reinvest as long as financial advice has been given. The transfer value available at the time isn’t guaranteed, and could be less than the guaranteed maturity value, or the original investment

For Flexi-access drawdown, the transfer value can be taken as a lump sum payment which will be taxed as income.

Values could be significantly lower than GMV in the early years or if investment conditions have worsened.

Why use the conversion feature?

  • Income requirements change
  • A cash lump sum is needed
  • Family circumstances have altered

Who's eligible?

All customers automatically qualify for this feature when they take out a Fixed Term Annuity with us, so there’s no need to opt in and there’s no extra charge.

How does it work?

We pay the current value of your client’s Guaranteed Maturity Value (GMV) plus their unpaid income payments. To calculate the current value we look at the value of the underlying investments at the date they convert the plan. There are no penalties for using the conversion feature.

Examples

Example

Original fund value

Length of contract

Converted after

Gross income paid

Conversion value

Total returned (gross income paid + conversion value)

Total difference against original fund value

Customer 1

£34,587

5 years

2 years

£4,000 (2 x £2,000)

£27,635

£31,592

-8.66%

Customer 2

£420,804

10 years

5 years

£155,000 (5 x £31,000)

£330,470

£484,900

15.23%

For more information and an illustration of real customer returns from our conversion feature view our conversion feature guide.

Flexi-access drawdown allows clients to choose the income they need when the plan starts, without any restrictions on the amount. A capped to capped drawdown option is also available, subject to max GAD limits.

Can my income ever be reduced?

For Flexi-access Drawdown:

No, we promise never to reduce your income (unless future changes in the law mean we have to)

For Capped Drawdown:

Yes, it’s possible that we may need to reduce the level of income we pay you if we are required to by law. Please see the Protected Retirement Plan key features for a full income breakdown.

How is the default income calculated?

If you choose this option we’ll calculate an income level which aims to provide a guaranteed maturity value, that if used to purchase an annuity would provide an income of a similar level to that paid from this plan.

We will calculate this using our current annuity rates and the taking into account the chosen options (such as death benefits and if there is a desire for the annuity to increase).

Payment options

We can pay your client's annuity income:

  • Every month
  • Every three months
  • Every six months
  • Every year

We can either pay the first income payment as soon as we receive the money for the plan (in advance) or at the end of the first payment period (in arrears).

Our Protected Retirement Plan can also be used as an investment in a Self-Invested Personal Pension (SIPP).

All income is paid into a bank account within the SIPP so you can draw down income, whenever you need it, in the most tax efficient way.

Using the Protected Retirement Plan to provide your income also means you aren’t cashing in long-term investments, potentially at a time when they have a low value due to market fluctuation.

Please contact us further information on structuring retirement income for tax efficiency and flexibility.

Is your client worried about passing away before the end of their plan? They can choose to buy one or more of our optional death benefits at the start of the plan. There are three of these options outlined below:

Beneficiary's income

  • A beneficiary is chosen at outset to inherit all or part of the plan if your client dies during the plan term.
  • The chosen beneficiary will receive an income equal to the chosen percentage of your client’s income until either the end of the plan or until they pass away.
  • If the chosen beneficiary survives until the end of the term, we'll pay out the chosen percentage of the maturity value.

Guaranteed period

  • Income is protected for a set period of time - the first 1-10 years of the plan or the whole plan term, if longer.
  • if the guaranteed period is combined with a beneficiary’s income and the person chosen to receive that benefit is still alive and eligible when the client dies:
    • the guaranteed period will be paid as income to that person, and
    • the beneficiary’s income won’t become payable until after the guarantee period has ended.
  • If a beneficiary’s income is not payable, the remaining guaranteed period will be paid as a lump sum.
  • This option cannot be combined with Value Protection.

Value protection

  • The pension fund used to purchase the plan (including any adviser charge taken) is protected. This can be the full value of the fund or a percentage (between 0.01% and 100%).
  • The lump sum payable on death is the percentage of the pension fund protected, less the amount of income already paid from the plan.
  • If Value Protection is combined with a beneficiary’s income, the beneficiary’s income will be paid first. This means that the Value Protection benefit will only be paid if both your client and the beneficiary die during the plan term.
  • This option cannot be combined with a guaranteed period.

Taxation

  • If your client dies before age 75, any death benefits will be paid tax-free.
  • If your client dies at age 75 or older, the beneficiary will pay income tax on the death benefits at their personal rate.
  • If your client transfers an existing pension into this plan and they know that they're in serious ill health when they do so, should they die within two years of the transfer the death benefit could become liable to inheritance tax.

Tax treatment depends on your client's personal circumstances. Any references to taxation are based on our understanding of current legislation and HM Revenue & Customs practice, which can change.

Your client chooses at the outset whether they want to protect the full value of their pension fund.

The maximum lump sum payable under value protection is the initial annuity purchase price, less the sum of the income paid from the annuity.

Beneficiary's annuity

Your client can choose to have both options when they take out a pension annuity, so this may also be paid on death.

Full value protection

Full value protection gives your client the opportunity of providing a lump sum for their beneficiaries. It is equal to the initial annuity purchase price, less the total amount of income paid to both the annuitant and any beneficiary.

Partial value protection

Partial value protection works in a similar way to full value protection. However, only a proportion of the initial annuity purchase price is protected. In this case, the lump sum payable will be the proportion of the initial annuity purchase price protected, less the total of any income paid to both the annuitant and any beneficiary.

Who could benefit from value protection?

  • Clients concerned about losing out on their pension fund on early death, particularly those in ill health
  • Clients more interested in lump sum death benefits than annuity income
  • Risk-adverse clients who want a guaranteed income stream and the reassurance of a lump sum death benefits if they die

The cost of value protection

The cost of value protection varies by individual, and depends on a number of factors, including the annuitant's age and state of health.

To see what this means for your client, please phone our quotes team on 0800 085 0250 and we'll be happy to help. Our lines are open from 8.30am - 5.30pm Monday to Friday. For textdirect, first dial 18001.

Taxation

Any lump sum payable under value protection is taxed at source.

If the annuitant dies before age 75, the amount will be paid tax-free.

In order to avoid the possibility of a further charge to inheritance tax, where possible we’ll exercise our discretion when selecting who should receive any lump sum death benefit, although the annuitant’s wishes will be taken into account.

The tax treatment of the plan will, in part, depend on your client’s personal tax status, which may be subject to change.

Please refer to the Key Features for details of how benefits from your client’s plan will be taxed.

Any references to taxation are based on our understanding of current legislation and HM Revenue & Customs practice which can change.

All of our features are covered in full in our documentation.

Unsure if the product is right for your client? Our table below sets out our product at a glance to help you make an informed comparison.

Product features

Details

Minimum age at entry

55 (or at least 40 for early ill-health retirement or a protected retirement age).

Maximum age at maturity

90

Eligibility

We can only accept funds from a UK registered pension scheme or QROPS.

Term

Up to 25 years (minimum term applies).

Minimum purchase price

£10,000 (The amount after tax-free cash taken).

Applications over £500,000 are reviewed on an individual basis.

Guaranteed maturity value

When the plan is set up, we’ll calculate the guaranteed maturity value at the end of the plan term. This is based on the purchase price, term of the plan and the options chosen.

The guaranteed maturity value depends on:

  • the size of the pension fund invested in a plan
  • the plan’s term
  • the client’s age
  • how much income they choose, if any, and when they choose it to be paid, for example, monthly
  • the death benefit options they choose
  • investment markets at commencement

This value is guaranteed at the start of the plan and isn’t subject to changes in investment conditions over the chosen term.

Investment methods

A plan can only be bought with pension savings:

  • from a transfer of un-crystallised benefits from a registered pension scheme
  • from a transfer of an existing drawdown pension fund
  • as an investment within a SIPP wrapper

For pension transfers your client must be living in the UK when the plan starts.

Income

Your clients can:

  • choose to take a level income, an increasing income (up to 8.5% a year) or no income at all
  • for capped drawdown, choose an income which (subject to GAD limits) will be guaranteed whilst they're alive for the plan term
  • for Flexi-access drawdown, there is no maximum income limit as long as the selected amount is sustainable throughout the chosen term

Income frequency

Your client can choose to receive their income:

  • Monthly
  • Quarterly
  • Half-Yearly
  • Yearly

The first income payment can be paid either as soon as the plan starts (known as in advance) or at the end of the payment period (known as in arrears).

Value protection

This lets the client protect all or part of the fund used to buy the annuity when they die.

Beneficiary's Pension

An annuity can be chosen to provide the client’s spouse/civil partner or beneficiary with an income when they die.

Guarantee period

Income guarantees of 1-10 years or term of plan. Paid as continuing income if a beneficiary’s pension is payable. Otherwise paid as an undiscounted lump sum. This lets the customer protect the income payable on their plan for a selected period or the full term of the plan.

Adviser charging

Initial charge

Extras

  • Option to transfer out at any time, using our conversion feature
  • Society member benefits
  • LV= Dr Services

If you’re unsure if the product is right for your client, you can speak to the LV= Retirement Desk on 08000 850 250 or email us at [email protected] and we’ll be happy to help. Our lines are open from 8.30am to 5.30pm Monday to Friday. For TextDirect, first dial 18001. we will record and/or monitor call for training and audit purposes.

If your clients like the idea of receiving a guaranteed income and having control over their pension fund, our Protected Retirement Plan offers them more flexibility and access to their money. They'll have control over their plan and choice over what benefits they'll want to receive.

Flexible product design

You can choose from a wide range of options, allowing you to tailor the plan to best suit your client’s individual circumstances.

Options include:

  • Choice of term (up to 25 years, minimum term applies)
  • Choice of income level
  • Ability to choose an escalating income
  • Facility to provide a beneficiary’s income
  • Variety of death benefits
  • Flexible remuneration options.
How our Fixed Term Annuity compares

The tables below show how our Fixed Term Annuity compares against a lifetime annuity and drawdown pension. The tables allow you to compare the products which you can blend for the optimum solution for your client.

Our Protected Retirement Plan is available on its own or as part of our blended solution, the LV= Retirement Account. This allows you to combine multiple products into a single plan, which can be tailored to meet your retirement needs. The blended solution is becoming increasingly popular as a way to achieve the perfect balance of security and flexibility.

Annuity Features

Fixed Term Annuity

Lifetime Annuity

Drawdown Pension

Benefits known in advance

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Benefits guaranteed

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No investment risk

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if kept for the whole term

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No fund management changes

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Drawdown pension features comparison

Drawdown Pension Features

Fixed Term Annuity

Lifetime Annuity

Drawdown Pension

Keeps future options open

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Retains control of funds

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Future income risk

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Examples demonstrating how our Protected Retirement Plan can work in a selection of different scenarios

Scenario 1 - Extra income

Jenny’s a self-employed training consultant. She’s recently turned 55 and wants to reduce her hours until she’s 60, at which point she may consider retiring. She wants to use some of her pension fund to bridge her income over the next five years.

She doesn’t want to tie up her money for the long term and is wary of the risks of investing her pension savings in the stock market. She’d also like to use her tax free cash to treat herself to a holiday and buy a new car.

Her adviser recommends that she takes her maximum tax free cash and uses the remainder to buy a PRP that pays £400 a month for five years. She can then use the guaranteed maturity value to buy another retirement income product, or a taxable lump sum when she may decide to completely retire from work.

The security of the income and guaranteed maturity value also means that she won’t need to worry about investment performance.

Scenario 2 - Breathing space and potential health issues

James is aged 58 and single. He recently retired and wants to start receiving some income from the £95,000 fund that he’s built up in his employer’s group personal pension.

Although he’s concerned about some health issues he has, he doesn’t qualify for an enhanced annuity and wants to keep his options open until after age 65 when his state pension starts. He’s aware that annuity rates may fall but equally that he may benefit if they rise, or if his health worsens.

Having discussed his options with his financial adviser he buys a PRP with a seven-year term and no death benefits, and takes an income broadly equivalent to what he’d receive from a standard lifetime annuity.

Just before the end of the seven-year term, James sees his doctor, who diagnoses worsening blood pressure and angina. His adviser searches the market using the guaranteed maturity value and secures an enhanced annuity, paying James a higher income than a standard annuity.

Scenario 3 - Blended solution with LV=

Stephen gives up full-time employment at age 65 but takes a part-time job on less money.

He has a personal pension fund which he’d like to use to:

  • Provide a lump sum to buy a car and pay for a trip to Australia to see his daughter
  • Provide extra income for ten years to supplement his earnings from his part-time job and his state pension

Stephen would like to invest the remainder of the fund so in ten years’ time, when he stops working for good, he has another fund to use to provide income on top of his state pension.

His adviser suggests a blended solution with LV=

  • Tax free cash from the fund provides enough money for the car and the air fare to Australia
  • Use part of his fund to buy a PRP to provide a guaranteed income for ten years
  • Put the remaining fund in a flexible guarantee fund with a 10 year guarantee, so Stephen has the security of knowing that, regardless of what happens, he has a fund at age 75 to supplement his state pension
Scenario 4 - Exhausting funds in a tax efficient way

Ravi is aged 62 and has a pension fund of £75,000. He’s in good health and has other invested assets, including a buy to let property.

Ravi likes the idea of taking his entire pension fund as a single cash lump sum. He approaches his financial adviser to see how to do this in the most tax efficient way.

His adviser uses the LV= Retirement Pathfinder tool to produce a personalised model of the tax bill he’d face if he takes it as a lump sum. Ravi’s a basic rate tax payer but taking the full amount would mean that most of it would be subject to tax at 40%.

As an alternative solution, the adviser recommends a four year PRP with a nil Guaranteed Maturity Value. This will allow Ravi to take his whole pension fund as income over four years, which will minimise the amount of tax he has to pay.

Scenario 5 - Long term, focussing on rate available and flexibility

Joan is aged 65 and is in good health. She doesn’t qualify for an enhanced annuity and expects to live for a long time in retirement.

She’d like to receive a guaranteed income, paid over a number of years, whilst keeping her options open if her circumstances change in the future.

Joan’s financial adviser recommends setting up a PRP to her anticipated life expectancy, with a higher income than a standard annuity but with the potential for a lump sum to provide future income if she lives longer.

She buys a 20 year PRP with the peace of mind that she can use the conversion feature to convert to any other retirement product or take taxable cash during the term of the plan.

Great reasons to choose LV=

Our financial strength

We have 1.1 million members throughout the UK, with a 2018 operating profit of £136m (Source: LV= Annual Report 31 December 2018).

AKG has rated Liverpool Victoria Friendly Society as B+ (very strong) for Overall Financial Strength. (Source: AKG Actuaries and Consultants Ltd, Company Profile & Financial Strength reports 2018).

For further information, please visit our 2018 results announcement here (this link takes you to our lv.com website).

We're a mutual, not a PLC

As a mutual, we don’t have to answer to external shareholders – so we can concentrate on looking after you and your clients.

Retirement specialist

We also offer a wide range of other retirement solutions, therefore when your client’s fixed term annuity reaches maturity, you can be confident that we’ll have a solution for them.

Value add services

LV= Doctors Services

LV= Doctor Services gives your clients access to 3 expert medical advice services through one handy app wherever they are.

  • Remote GP
  • Prescription Services
  • Second Opinion
  • Remote Physiotherapy
  • Remote Psychological Services
  • Discount health MOTs

Member benefits

Every client who is covered by one of our personal or business protection and retirement products automatically becomes a member of LV=. This means they are entitled to a range of added benefits and support. These include free and unlimited access to our 24/7 confidential member helpline and discounts on a number of LV= insurance products.

Our LV= member helpline gives you 24/7 access to health advice, counselling services and expert legal advice.

Being an adviser isn't just about selling products. With this in mind we aim to help you as much as we can. See below for information to help support your business sales.

Suitability wording

We’ve produced a range of template paragraphs that are designed to describe generic features, as well as the specific benefits of our own products. You can use and adapt these paragraphs to help construct your own Suitability Letters.

 

A good suitability letter is:

  • your opportunity to justify and reinforce the reasons for your advice and recommendations
  • an excellent opportunity to document unmet and future needs and the importance of ongoing review discussions
  • your record of the discussions held and the recommendations made/not made and why

It should be clear, fair and not misleading. It should be personal, explain the reasons why a recommendation has been made and how it meets the customers needs and objectives. It should highlight any risks involved.

LV= has taken care to ensure the accuracy of the information at the time of issue but does not accept liability resulting from your use of it.

Tools
Screenshot of pathfinder

LV= Retirement Pathfinder

LV= Retirement Pathfinder, a free and impartial retirement modelling tool to help you and your clients create, view and analyse different retirement scenarios.

Read below a summary of the relevant product information about the customer version of our Protected Retirement Plan, in accordance with the Insurance Distribution Directive. Designed to help you make an informed decision and comparison for your client, we set out the product’s target market, distribution strategy, suitability, main features, risks, options and costs.

This information is also available in downloadable pdf format

This is only a summary of the product features. For more information please read the Key Features documents and Plan Conditions.

The LV= Protected Retirement Plan is a Fixed Term Annuity primarily suitable for providing a regular guaranteed income for a fixed term, an agreed maturity date and the potential for an agreed maturity value. The Guaranteed Maturity Value is calculated at outset.

It can be set up on a standalone basis, or as a Trustee Investment Plan (TIP) within the LV= Flexible Transitions Account.

We believe the main group of individuals that the plan is likely to appeal to as part of their planning for retirement income are:

  • 55+ year olds with a built up fund in a registered pension scheme

The product is also available on a Trustee basis.

To ensure your client receives a product that is right for them we believe this product should generally be sold on an advised basis, whether this be face to face or over the phone.

We will accept business through non-advised intermediaries, following completion of a full due diligence process.

  • Provides a guaranteed income over a fixed term
  • Available on a guaranteed maturity basis, full drawdown, or mix of both
  • Level or increasing income
  • Choice of income payment frequency
  • Conversion facility
  • Option to add death benefits
  • Your client must choose any benefits before the plan starts. They can’t change them afterwards.
  • Although we guarantee the amount payable at the maturity date, we can’t guarantee what income this will provide. This depends on the economic and investment conditions at that time.
  • Unless your client includes death benefits in their plan, their income will stop if they die before the maturity date and nothing else will be paid out. This may result in an inadequate provision of benefits for their needs.
  • If your client chooses a level income, or an income that increases each year by less than inflation, their income may not keep up with rising prices.
  • Fixed terms up to a maximum of 25 years are available (minimum term applies), with a maximum age at maturity of 90 years.
  • Minimum investment is £10,000. There is no maximum (although investments over £500,000 will be reviewed on an individual basis).
  • The investment must be funded from a UK registered pension scheme with a minimum age at entry of 55 (or at least 40 for early ill-health retirement or a protected retirement age).
  • Your client can choose how and when they are paid their annuity. They can have level income or increasing income, at a fixed percentage. They can choose not to have any income at all.
  • They can choose the frequency of their income payments - monthly, three-monthly, six-monthly or yearly.

Is suitable for clients who:

  • Wish to benefit from a guaranteed rate of investment return
  • Want to use their pension fund to provide a guaranteed level of income for a chosen number of years (up to 25 years)
  • Want to use some of their pension fund to secure income for a fixed term as part of a blended solution, with remaining pension funds to be invested for growth
  • Want to defer buying a lifetime annuity as they feel their circumstances may change in the future, for example because they’re in good health now, but feel their health may deteriorate in future, making them eligible for an enhanced lifetime annuity (with a better rate than that available from a standard lifetime annuity)
  • Want to guarantee their pension fund at the end of a chosen number of years
  • May want to pay to guarantee a regular income and/or lump sum will be paid out if they die during the plan term
  • Are willing and able to accept the risk that the income they receive after the end of the plan term may not be as high as they anticipated or could have received by purchasing a lifetime annuity at outset. This may happen if, for example, annuity rates fall over the term of the plan
  • May wish to drawdown the whole of their pension fund using Flexi-Access Drawdown
  • May be looking to avoid / mitigate against investment risk associated with stock market related investments.

Is not suitable for clients who:

  • Want to guarantee a fixed income for life
  • Want to purchase a Lifetime Annuity
  • Are targeting significant growth with their pension fund & are willing / able to accept a degree of investment risk
  • May wish to drawdown the whole of their pension fund in one go, or within the first 3 years.

To apply clients must be:

  • Transferring funds held in a UK registered pension scheme (or QROPS) with a minimum age at entry of 55 (or at least 40 for early ill-health retirement or a protected retirement age).
  • Aged 55 or older.
  • No older than 90 years at maturity.

Death benefits: Your client can choose to buy one or more of our optional death benefits at the start of the plan in case they pass away before the end of the term, with beneficiaries’ income, guaranteed period options and value protection. For more details, refer to the Plan Conditions.

Conversion: Our conversion feature is included with all new contracts at no extra cost, and allows your client to end their existing plan and transfer out at any time should their circumstances change. The conversion value is not guaranteed. For more details, refer to the Plan Conditions.

Member benefits: With this policy your client automatically becomes a member and is entitled to a range of benefits, at no added cost. These include voting rights, free advice helplines and discounts on selected LV= products. These benefits are non-contractual and can be changed or removed at any time, and conditions apply. More details about LV= membership and member benefits are available at LV.com/members.

LV= Doctor Services: All new policyholders have access to a number of app-based medical services and advice, at no added cost. These include virtual GP consultations, prescription and second opinion services. These benefits are non-contractual and can be changed or removed at any time, and conditions apply. For more details visit LV.com.

LV= Doctor Services is provided by Square Health Limited. This service is not regulated by the Financial Conduct Authority or Prudential Regulation Authority.

Initial charge: We make a charge at the start of the plan to cover the set-up costs and our yearly administration costs. We take these into account before we calculate the starting income, if you choose this, and the guaranteed maturity value.

Conversion Option Charge: nil.

Yes. Our conversion option allows your client to end their existing plan and transfer out at any time. So they won't have to wait until their plan is due to end if they don't want to. They can transfer out to another retirement product or take as a taxable cash lump sum at any time, for any reason without financial advice, or choose to reinvest as long as financial advice has been given. Please note the amount we pay when they convert their plan may be a lot less than the guaranteed maturity value they would have received if they had kept their plan for the full term agreed when it was set up.

All customers automatically qualify for this feature when they take out a fixed-term annuity with us, so there’s no need to opt in and there’s no extra charge.

The Transfer Value is calculated taking into account a number of things, including:

  • Your plan’s guaranteed maturity value
  • The total remaining target income to be paid until the maturity date
  • Any changes in investment conditions on assets appropriate to your plan
  • Any income we’ve withheld (plus interest).

Your client may take the transfer value as a lump sum payment which will be taxed as income.

We won’t apply any fees or penalty to convert your client’s plan.

The LV= Protected Retirement Plan has a Guaranteed Maturity Value (GMV) and LV= reserves capital to back this guarantee.

The Protected Retirement Plan doesn’t allow your client a choice of how their money is invested and so any risk is born by LV= and is factored into the pricing of the plan. Due to this, the benefits payable to your client aren’t affected by any investment returns after the plan starts.

Funds are invested on behalf of LV= by Threadneedle Asset Management (Threadneedle) at the start of the plan, and are placed into fixed interest investments such as corporate bonds. This means any risk relates to the possibility of default rather than a change in value related to stock market movements. Funds will be invested to match the cash flow requirements of the LV= portfolio of Protected Retirement Plans and as such, plans are not linked to a single investment. This is similar to how we buy assets to cover a portfolio of lifetime annuities.

The money is invested by Threadneedle Investment Services on behalf of LV=. Generally, this means investing in fixed interest investments such as corporate bonds to match the plan liabilities. We factor elements of risk into our plan pricing and rates. From your client’s perspective, there’s no impact as their benefits are fixed at outset.

...what happens if a client's income is more than the maximum limit?

From 6 April 2015, this only applies if your client is transferring in from a capped drawdown scheme.

We may have to restrict a client’s chosen income, or their beneficiary’s income, as a result of applying limits set by law and the Government Actuary’s Department (GAD) unless flexi-access drawdown is chosen. The limit is based on an individual’s age, pension fund size and the annuity rates set by GAD. At each income review date we have to review the client’s income, or their beneficiaries income, to make sure we don’t pay more than 150% of the GAD limit (which we call the ‘GAD maximum’). Also, at each GAD review date, which is normally every 3 years until your client reaches age 75 and yearly thereafter, we have to calculate a new GAD maximum.

If we do have to restrict a client’s or beneficiary’s income, we’ll tell them. We’ll pay the difference between the income they have chosen and the income we pay when the plan ends. We’ll also show this amount in the yearly statements. When the plan ends we’ll also add interest to this amount.

The income we pay your client and their beneficiary will normally be taxed under Pay As You Earn (PAYE) system. This is similar to tax on employment income.

We will deduct tax according to their tax code on their P45 and pass the tax on to HM Revenue & Customs.

Any lump sum payable under value protection is taxed at source.

If the annuitant dies before age 75, the amount will be paid tax-free.

If they die at age 75 or older, the amount will be taxed at the nominated beneficiary’s personal rate of income tax.

In order to avoid the possibility of a further charge to inheritance tax, where possible we’ll exercise our discretion when selecting who should receive any lump sum death benefit, although the annuitant’s wishes will be taken into account.

Tax treatment depends on your client’s personal circumstances.

For more details on how the benefits from this plan will be taxed, please see the key features document.

Any references to taxation are based on our understanding of current legislation and HM Revenue & Customs practice which can change.

Please call us on 0800 0322 990 or you can email us your query at [email protected]

8:30am - 5:30pm Monday - Friday

We will record and/or monitor calls for training and audit purposes.

Please call us on 08000 850 250

8:30am - 5:30pm Monday - Friday

For TextDirect first dial 18001. We will record and/or monitor calls for training and audit purposes.

The LV= Retirement Desk offers you access to experienced retirement income specialists who can provide insight and inspiration on the most suitable retirement income solutions for your clients in the post-budget world.

Please call us on 08000 850 250

Our staff will be happy to talk through any issues you have, and support you where needed with additional training.

8:30am - 5:30pm Monday - Friday

For TextDirect first dial 18001. We will record and/or monitor calls for training and audit purposes.

If you want general advice on LV= products and services, or have a pre-sales query you can email us at [email protected]

If you have a more specific enquiry, further contact points are shown below:

Please write or send your completed application form to us at:

LV= Retirement Solutions, Pensions New Business, Tilehouse Street, Hitchin, SG5 2DX

Trustee version

Our Protected Retirement Plan is available as a Trustee version.

Please call our Retirement Desk on 08000 850 250 or email us at [email protected] and we’ll be happy to discuss this option further. Our lines are open from 8.30am to 5.30pm Monday to Friday. For TextDirect, first dial 18001.

Telephone icon

Contact us about our Fixed Term Annuity

Quotes and questions: 08000 850 250

FOR UK FINANCIAL ADVISERS ONLY
LV=, County Gates, Bournemouth, BH1 2NF, UK