The basics

• Group occupational schemes are company pension schemes set up by employers for employees and run by trustees.
• Legal & General's group occupational scheme is called the Company Pension Scheme.
• These schemes are tax-efficient. Any employer contributions are paid gross. These contributions are normally classed as a business expense, so employers can claim full business tax relief on them. Employer contributions are not classed as a benefit in kind, so National Insurance contributions are not payable in respect of employer contributions.
• Contribution levels are set at outset, usually with both the employer and employee paying contributions.
• Employers must contribute.
• All employee contributions to the plan qualify for tax relief providing they, along with contributions paid to any other Registered Pension Scheme, are within statutory limits.
• The employer collects employee contributions using the 'Net Pay Arrangement' system. This allows member's contributions to be deducted from gross pay before the tax payable is worked out. Therefore, the correct tax relief is given automatically as the contributions are paid.
• The maximum amount a member can contribute to all Registered Pension Schemes of which they are a member and receive full tax relief on, is 100 per cent of their annual earnings.
• However, further restrictions may apply under the scheme rules. It's the trustees' responsibility to ensure that contributions to the Company Pension Scheme do not exceed such restrictions.
• If total contributions to all the Registered Pension Schemes of a member, including any paid by the employer, exceed what is called the Annual Allowance in any single tax year then a 40 per cent tax charge will apply on the excess.
• For the 2007/2008 tax year, the Annual Allowance has been set at £225,000. It will increase in stages to £255,000 for the tax year 2010/2011 and will be reviewed on an ongoing basis after that. This limit will not apply in the actual tax year retirement benefits are taken.
• We offer an extensive choice of investment funds.
• Each scheme member has their own separate account, which means they can monitor the value of their fund.
• Trustees can run their schemes online. They can also give scheme members permission to manage their funds online.
• Members cannot cash in their Company Pension Scheme plans and those who leave and join a new employer usually have to stop paying into the scheme. However, a member can transfer the value of their pension into another Registered Pension Scheme.

The value of the units which make up a fund can go down as well as up, so the value of a member's fund is not guaranteed. It is particularly important to remember this if a member is close to retirement. Please remember that the money is tied up until a member takes their retirement benefits. Please view the other risk factors associated with this product.

Your options

The options available on a company pension scheme are subject to the scheme rules and the scheme trustee's discretion. The options outlined here are a guide and are not applicable to all schemes.

• When a Company Pension Scheme is set up, trustees nominate from a wide range of investment options and choose the best funds to offer their scheme members.
• Members can then select from that range the funds that best suit their attitude to risk subject to the main scheme rules.
• As an employer, you can contribute as much as you want to the fund. However, your employee could be liable to a tax charge if the total contributions, including employer contributions, exceed the Annual Allowance in a tax year.
• If you're a scheme member:
  • You can take your Legal & General company pension at any time between 50 and 75 (rising to 55 on 6 April 2010) with the permission of the scheme trustees. It's important to note that the normal retirement age of your scheme is set by the trustees or your employer and is subject to the main scheme rules.
  • You can make contributions of up to 100 per cent of your annual earnings each year and still get full tax relief including higher rate (where appropriate). You can contribute more than this to any of your plans but you wouldn't get tax relief on the excess.
  • You can take part of your pension as a cash lump sum subject to the main scheme rules.
  • There are no restrictions on the value of the total benefits payable from all of your Registered Pension Schemes. However, anything over a certain amount, called the Lifetime Allowance (LTA), will be subject to a tax charge of up to 55 per cent on the excess. The LTA is £1.6m for the 2007/2008 tax year.

Risk factors

All investments carry an element of risk. Please bear these points in mind:

• The value of the units which make up a fund can go down as well as up, so the value of a member's fund is not guaranteed. It is particularly important to remember this if they are close to retirement. Please remember that the money is tied up until a member takes their retirement benefits.
• The amount of pension income provided by a retirement fund will depend on a number of things, including investment returns and the rates available to buy a pension when a member takes this benefit.
• The fund or funds a member chooses to invest in will have specific risks. For more information on the risks, please speak to a financial adviser or your Legal & General contact.
• If you invest in a fund that invests in property, it may be necessary to defer encashment of units during periods when a property is not easily sold. The maximum delay is six months. The value of the property is generally a matter of the valuer's opinion rather than fact.
• The law and tax rates may change in the future and the value of tax relief will depend on the individual's circumstances.
• Past performance is not an indicator of future performance.
• We can increase our charges, but will let you know before we make any change.
• If there is a decision to cancel within the 30 day cancellation period, the refund may reflect any reduction in investment value.
   

If you are an employee:

• What you receive from With Profits investments will depend on future bonus rates, which are not guaranteed and can change. Future bonus rates may be reduced if, for example, our expenses are higher than anticipated or there is an increase in the expected cost of guarantees and options for With Profits policies.
• Any investment in With Profits will share in the risks of other With Profits pension plans, which can reduce your bonuses and therefore the amount we pay you. You also share in the risks of other With Profits policies such as bonds.
• We write With Profits and non profit policies in our Long Term Fund. We provide guarantees for both With Profits and non profit policies and the assets in the whole fund are ultimately available to meet them. This means that, although you may benefit from support from the assets backing non profit business, we could reduce the amount we pay you if we have to use the assets backing With Profits business to support non profit business.
• We may reduce the amount we pay if you take your benefits early, transfer or switch out of With Profits. This is called a Market Value Reduction. We use the Market Value Reduction to treat customers who stay in With Profits fairly, as well as those who withdraw from it. The Market Value Reduction will usually be applied when investment conditions have been insufficient to support bonuses. It will also account for additional deductions that may be required to cover the cost of guarantees and options for With Profits policies.