The Financial Conduct Authority is a financial services regulator. It requires Penfold to give you this important information to help you to decide whether the Penfold Pension is right for you. You should read this document carefully in line with the accompanying Key Features Document so that you understand what you are buying, and then keep it safe for future reference.
This generic illustration gives you an indication of what income may be available to you at retirement from the Penfold Pension and how much you may have to pay in charges.
We will also provide you with annual statements to help you keep track of your pension benefits.
Assumptions
In calculating the projected pension benefits, and potential income at retirement we have made the following assumptions.
Inflation Rate Assumption
2.00% inflation rate.
Important information about this assumption and calculation: The figures below have been adjusted to take into account inflation. This is to give you an idea of their value in today’s prices. Think about how much £500 could buy 10 years ago and then think about what it can buy you today.
Investment Growth Assumption
We have assumed that your investments will grow at the rate of 2%, 5% and 8% per year before inflation; After taking into account inflation of 2.00% the growth rates will be as follows: 0.0%, 2.90% and 5.90%.
Please note that each plan has different investment strategies and risk profiles.
Important information about this assumption and calculation: These examples are only an illustrative guide and the returns are not guaranteed and are not minimum or maximum amounts. The value of your pension will depend on how your investment grows, the performance of the funds, on the tax treatment of the investment and rates of inflation.
The value of your pension can go down as well as up and is not guaranteed. You could get back less than you have paid in.
Charges Assumption
0.75% per year except where you have selected the Sharia plan in which case the charge is 0.88% per year.
The Annual Fee is made up of two parts:
- an Administration Fee of 0.58% on first £100,000 which is reduced to 0.23% on any amounts over £100,000 which pays for Penfold’s service (and our Partners)
- an Annual Management Charge (AMC) from the money manager of 0.17% for all plans except the Sharia plan which is 0.30%.
Important information about this assumption and calculation: This is to give you an idea of how much you will pay in charges. However the actual amount you will pay in charges depends on the value of your account.
The only fee Penfold charges is the Annual Fee, which is calculated as a small fixed percentage of the amount you have saved up in your Penfold Pension. The appropriate monthly proportion of the Annual Fees is deducted each month from your pension portfolio. For more information please see our Charges Guide.
Retirement Age & Retirement Income Assumption
We have assumed that:
- you retire at the age of 68
- you take 25% tax free cash lump sum
- you buy a guaranteed pension income (lifetime annuity) with the remaining balance of your pension fund for yourself only. This will be paid monthly in advance for at least 5 years and for the rest of your life thereafter
Important information about this assumption and calculation: We have assumed that you retire at the age of 68, however you can start to take your pension from the age of 55. If you were to take benefits at a different age or if you were to choose a different type of annuity, for example one that continued to pay out to your spouse or civil partner after your death, then the income would be different.
Annuity rates change over time and this could impact the amount of income you receive in retirement if you decide to buy an annuity to provide retirement income.
Your retirement income will depend on how your investment grows and on interest and annuity rates at the time you retire.
Tax Relief Assumption
Tax relief at basic rate is applicable to personal contributions to the SIPP.
Important information about this assumption and calculation: In the examples below we assumed that if:
- You pay £40 each month, we will claim £10 tax relief from HMRC:
- £50 total contribution per month
- You pay £200 each month, we will claim £t0 tax relief from HMRC:
- £250 total contribution per month
If you pay tax at a higher rate you may be able to reclaim additional relief from HMRC.
Generic Illustrations
Low Growth
2.0% before inflation (all plans except the Sharia Plan). So after deducting 2.0% each year for inflation the growth rate in real terms will be 0.0% growth.
Mid Growth
5.0% before inflation (all plans except the Sharia Plan). So after deducting 2.0% each year for inflation the growth rate in real terms will be 2.9% growth.
High Growth
8.0% before inflation (all plans except the Sharia Plan). So after deducting 2.0% each year for inflation the growth rate in real terms will be 5.9% growth.
Low Growth – Sharia Plan
2.0% before inflation. So after deducting 2.0% each year for inflation the growth rate in real terms will be 0.0% growth.
Mid Growth – Sharia Plan
5.0% before inflation. So after deducting 2.0% each year for inflation the growth rate in real terms will be 2.9% growth.
High Growth – Sharia Plan
8.0% before inflation. So after deducting 2.0% each year for inflation the growth rate in real terms will be 5.9% growth.
