56061 Understanding The Transfer Value Analysis …

1 This information is for UK financial adviser use only and should not be distributed to or relied upon by any other THE Transfer Value Analysis (TVAS) REPORT1 INTRODUCTIONUNDERSTANDING TVAS REPORTS IS NOT ALWAYS STRAIGHTFORWARD AND, FOR ADVISERS WHO ARE NOT FAMILIAR WITH THEM, IT IS NOT ALWAYS CLEAR WHICH SECTIONS OF THE REPORT IT IS ESSENTIAL TO GO THROUGH WITH guide aims to highlight key areas of the report and provide some Understanding of the terminology to help you have a meaningful conversation with your is not a full version of a TVAS report but rather an ReportAnalysis ReportIntroductionThe purpose of this Analysis is to provide information, regarding the possible Transfer of your benefits provided by the ABCL imited retirement Benefits Scheme scheme to an alternative pension arrangement. This Analysis does not, on its own, show whether or not transferring your benefits is advisable, as that also depends on manyother factors, such as your attitude to risk your personal circumstances and your objectives.

2 It does, however, give anindication of the likelihood of being able to match or exceed the benefits provided by your existing scheme with a Transfer toan alternative have been informed that the capitalised Value of your benefits ( Transfer Value ) in the ABC Limited retirement BenefitsScheme scheme is:The report compares this with the benefits that can be purchased by transferring this Value to: This Analysis needs to be read in conjunction with the illustrations provided by the recommended provider and anyrecommendations made by your adviser. The Analysis has been based on your personal information and the details supplied by the Scheme. 250, and is guaranteed until 01/07/2017. Scottish Widows retirement AccountThis Analysis shows the results estimated annual investment return needed, from the proposed plan, to provide an annuity and if specifiedannuity and Pension Commencement Lump Sum (PCLS), at the scheme retirement date (your 65th birthday) ofequal Value to the estimated benefits provided by the existing scheme.

3 This return is known as the Critical estimated annual investment return needed, from the proposed plan, to provide an annuity and if specifiedannuity and PCLS, at the scheme retirement date (your 65th birthday) of equal Value to the estimated startingbenefits, with no increases in payment, spouse s pension or guarantee period, provided by the existing return is known as the Hurdle estimated annual investment return needed, from the proposed plan, in order to provide benefits, at thescheme retirement date (your 65th birthday) of equal Value to the estimated benefits provided if the PPF takesover the provision of benefits from the existing scheme. This return is also known as the Critical estimated income options available from the proposed alternative pension Value of the death benefits provided by the existing scheme and the proposed plan at the date of transferand then at various 3 Client Name: A N Other Adviser Name: IFA Name Case Reference: 718659 The Capitalised Value of Your Benefits ( Transfer Value ) is the amount the trustees of the existing scheme will Transfer to another pension scheme in exchange for someone giving up their existing final salary pension benefits.

4 This is also commonly referred to as the Cash Equivalent Transfer Value (CETV). There are several factors that go into determining what the Transfer Value will be, including assumptions on the rate of growth of the scheme's investments, inflation rates, the types of benefits offered by the scheme and the scheme s liabilities. The Transfer Value reflects the current position of the member s benefits and could increase or decrease in the future. capitalised Value of your benefits4 TVAS ReportPENSION COMMENCEMENT LUMP SUM (PCLS)Your client may be able to take part or all of their pension benefits as a tax-free cash lump sum (also known as a Pension Commencement Lump Sum PCLS).If your client is a member of a defined benefit pension scheme, the scheme s rules will determine how much they can receive as a PCLS. If they re a member of a defined contribution (DC) pension scheme, they will normally have the option to take up to 25% of the Value of their pension pot as a certain circumstances, your client may be able to receive a PCLS in excess of 25% of the lifetime allowance if they ve applied to HMRC for either scheme specific lump sum protection or one of enhanced protection, fixed protection or primary protection in a year when the lifetime allowance has reduced.

5 Different terms and conditions apply to each of these Benefits at your Proposed retirement Age 65 The pension benefits shown below have been calculated as at 01/04/2017, and are increased to your normal retirement dateas detailed in the record of input data. Your benefits are increased to the date of this Analysis by applying the historicalrevaluation factors. From the date of this Analysis to your normal retirement date, the benefits are increased in line with theprescribed assumptions. On this basis your pension at age 65 is estimated to be:An Annual Pension of 14,106orA Pension Commencement Lump Sum of 65,108 and a reduced Annual Pension of 9,766 The amount of Pension Commencement Lump Sum quoted may be that chosen by you or specified by the scheme and mightbe less than the HMRC Pension Commencement Lump Sum and reduced pension assume that the terms, under the existing scheme, for giving uppension for a Pension Commencement Lump Sum, remain 4 Client Name: A N Other Adviser Name: IFA Name Case Reference: 7186595 TVAS ReportTHE INCOME options COMPARISON This section compares annuity or flexi-access drawdown benefits with the projected benefits available from the existing scheme.

6 This section firstly looks at the position assuming no PCLS is taken and secondly if PCLS is taken at the selected retirement age. The annuity and flexi-access drawdown figures in this section are based on the projected funds, at different growth rates from the selected pension plan, assuming the Transfer goes ahead. The projected fund values are highlighted at the top of each column. The comparison initially illustrates how much annuity could be purchased with the projected funds. The basis of the annuity can be agreed to suit the member s circumstances. The following row then reviews the position if the member instead uses flexi-access drawdown providing the same level of income as the annuity above, and projects until what age this could be sustained. The third comparison in this set highlights the level of income that could be sustained to expire at a given age. The given age can either be an assumption based on ONS data or a selected age.

7 The graph and table in this section project the level of income in the years following retirement for the existing scheme, annuity and flexi-access options Comparison at retirement Age 65 - Full PensionThe below table shows the income options that could be available if the Transfer was to go ahead to the proposedpension benefits from the existing scheme, calculated to be 14, per annumIn Scottish Widows retirement Account, your fund Value at retirement could provide an income of:Growth RateLow (2%)Mid (5%)High (8%)Fund 260, 365, 508, single life level income. 11, 16, 23, that drawdown fund will run out,assuming same income as an annuity is +Drawdown amount available to maintain alevel income to age 85* 13, 24, 43, below graph shows the projected pension benefits for the existing scheme with the income options that could beavailable if the Transfer was to go ahead to the proposed pension plan. The incomes in the graph include a StatePension of 12, starting at age 67 and increasing by existing scheme pension and annuity from the proposed plan would provide a guaranteed income for life.

8 Thedrawdown income from the proposed plan is not guaranteed and will be dependent on future investment SchemeAnnuityDrawdown65 14, 16, 24, 29, 29, 37, 33, 31, 39, 37, 33, 41, 43, 35, 18, 5 Client Name: A N Other Adviser Name: IFA Name Case Reference: 71865990 50, 37, 21, *Target age calculated using ONS National Life Tables, Great Britain (2014-2016)Page 6 Client Name: A N Other Adviser Name: IFA Name Case Reference: 71865990 50, 37, 21, *Target age calculated using ONS National Life Tables, Great Britain (2014-2016)Page 6 Client Name: A N Other Adviser Name: IFA Name Case Reference: 7186596 TVAS ReportIncome options Comparison at retirement Age 65 - ReducedPension and Pension Commencement Lump SumThe below table shows the income options with Pension Commencement Lump Sum (PCLS) that could be available ifthe Transfer was to go ahead to the proposed pension benefits from the existing scheme, calculated to be 9, per annum and PCLS of 65, Scottish Widows retirement Account, your fund Value at retirement could provide a reduced income and PCLS of:Growth RateLow (2%)Mid (5%)High (8%)Fund 195, 274, 381, 65, 91, 127, single life level income.

9 8, 12, 17, that drawdown fund will run out,assuming same income as an annuity is +Drawdown amount available to maintain alevel income to age 85* 9, 18, 32, below graph shows the projected pension benefits for the existing scheme with the income and PCLS options thatcould be available if the Transfer was to go ahead to the proposed pension existing scheme pension and annuity from the proposed plan would provide a guaranteed income for life. Thedrawdown income from the proposed plan is not guaranteed and will be dependent on future investment returns.*Target age calculated using ONS National Life Tables, Great Britain (2014-2016)Page 7 Client Name: A N Other Adviser Name: IFA Name Case Reference: 7186597 TVAS ReportAnalysis Results at your Proposed retirement Age 65 Annuity PurchaseCritical YieldFrom the proposed plan you would need to obtain an estimated annual investment return as shown below, in order topurchase an annuity to provide benefits of equal Value to the estimated benefits provided by the existing scheme atretirement.

10 This return is known as the Critical benefits taken as PensionReduced Pension plus PCLSS cottish Widows retirement Required to Purchase the AnnuityIn order to purchase an annuity to provide benefits of equal Value to the estimated benefits provided by the existingscheme at retirement the estimated Fund Required, also known as the Capital Value is as follows:All benefits taken as PensionReduced Pension plus PCLSFund Required 538, 459, RateFrom the proposed plan you would need to obtain an estimated annual investment return as shown below, in order topurchase an annuity to provide benefits of equal Value to the estimated benefits provided by the existing schemeassuming no spouse s pension, no increases in payment and no guarantee. This return is known as the Hurdle benefits taken as PensionReduced Pension plus PCLSS cottish Widows retirement Required to Purchase the AnnuityIn order to purchase an annuity to provide benefits of equal Value to the estimated benefits provided by the existingscheme, assuming no spouse s pension, no increases in payment and no guarantee at retirement the estimated FundRequired, also known as the Capital Value is as follows:All benefits taken as PensionReduced Pension plus PCLSFund Required 308, 278, IncomeAssuming an income of equal Value to the estimated benefits provided by the existing scheme, increasing by RPI perannum is taken from a drawdown arrangement, the fund at the medium rate of return will run out at the followingages:All benefits taken as PensionReduced Pension plus PCLSS cottish Widows retirement Account94101 Page 8 Client Name: A N Other Adviser Name: IFA Name Case Reference.