New at Retirement Solutions
Not all DC pension schemes are able or willing to offer the full range of new pension flexibilities. This may be due to the cost of making changes to their administration systems and processes, or because they're concerned about the increased burden of risks and potential liabilities on their schemes.
At the end of last year we launched the first of a number of new Mastertrust at retirement initiatives. This allowed members of our GPP 2000 and Stakeholder schemes to have the option of Flexi-Access Drawdown by transferring into our Mastertrust.
From the start of February this year we will be extending the proposition to cover trust schemes. This will provide solutions for:
- Trustees of DC pension schemes that do not have the desire to offer their members a full range of flexible retirement options, but want to provide members with access to a post retirement solution that operates in tandem with their scheme
- Members that want to access their pension savings in a way that they aren't able to do "in scheme"
Options for members
Within the trust solution, members with a minimum transfer value of £30,000 will have the following options:
- A tax-free cash sum of up to 25% of some or all of the pension pot and leave the remainder invested to provide a taxable income now or in the future
- A regular monthly income of at least £100 taxed at the member's marginal rate
- Occasional lump sum payments of at least £2,000 taxed at the member's marginal rate
Uncrystallised Funds Pension Lump Sums:
- Occasional lump sum payments of at least £2,000, 25% of each payment is tax-free and 75% is taxed at the member's marginal rate
Members must select one or more of the above options when they join the Mastertrust. However, they can choose to vary or stop these options in the future and use some or all of their remaining pension pot to convert into an open market option and buy an annuity or transfer it to another registered pension scheme.
The following features are not available:
- Additional member contributions after they have joined.
- Taking a full Uncrystallised Funds Pension Lump Sum equal in value to their entire pension pot.
Outline of Terms
There are standard terms available that include an Annual Management Charge (AMC) of 0.40% deducted from the member's pension pot. If a member does not want to make a fund choice, we will invest their transfer in the Legal & General Retirement Income Multi-Asset Fund 3. The current Fund Management Charge for this fund is 0.30%, giving a total member charge of 0.70%. The funds available are the same as in our Mastertrust Sole Governance range.
These are our current charges which can change.
All applications for the new retirement solutions are subject to acceptance by Legal & General.
Some variations from the standard terms may be given with the agreement of Legal & General and the Mastertrust trustees. This would only include requests for client specific funds outside the Sole Governance range and the payment of an initial fee in exchange for some of the AMC.
If you would like to know more please speak to your usual Legal & General contact.