Reminder of important facts
What is an Option 32 Pension
You transferred benefits from a previous
employer’s occupational pension scheme
(OPS) into this policy. The options available
to you are included in the Taking your
pension benefits section.
In addition, depending on your original
OPS benefits, you may also have some life
Where does Royal London invest my
When you transferred pension benefits
from a previous employer’s pension
scheme into this policy we invested the
amount into the RLCIS OB & IB Fund,
referred to here as the with-profits fund.
We explain how we manage the withprofits
fund in the Principles & Practices
of Financial Management (PPFM) of the
RLCIS OB & IB Fund document
available on our website
royallondongroup.co.uk/RLCIS or on
request. In the event of conflict between
this guide and the PPFM, the PPFM shall
Does my Option 32 Transfer policy
have any guarantees?
Your policy comes with some important
guarantees. These are explained below.
When your policy was set up
Your policy will provide you with a
guaranteed amount of regular income on
your Chosen Retirement Date*. This
regular income is known as your ‘Basic
We set your Basic Pension when you took
your policy out by making assumptions on:
1. The future investment returns we would
make by investing the transfer value we
received from your previous pension
scheme into the with-profits fund and;
2. The number of years we would pay
regular income to you before you died.
In recent years
We may have added annual bonuses to
your policy when investment returns were
However, our investment returns in recent
years and expected future investment
returns are much lower than we assumed
when you took out your policy. Because of
this we have reduced, or even stopped,
annual bonuses for some types of policy.
Life expectancy rates have also increased
significantly since you took out your policy.
This means that pension providers, including
Royal London, have to pay regular income
to people for a longer period.
The combination of these factors means
that the underlying value of your policy
(i.e. the initial transfer value plus
investment returns to date, less expenses)
is significantly less than the value of your
guaranteed benefits and will remain so at
your Chosen Retirement Date.
Despite this, we guarantee that your policy
will pay out the total Basic Pension,
including any annual bonuses already
added, at your Chosen Retirement Date.
Guaranteed Minimum Pension
If your previous employer’s OPS
contracted you out of the State Earnings
Related Pension Scheme (SERPS), then
part of your benefits will provide a
Guaranteed Minimum Pension (GMP).
Regulations require that we must pay this
amount to you as a minimum (from age 60
if you are female and from age 65 if you
are male) and in a certain format.
When can I take my pension benefits?
Pension benefits can normally be taken
from age 55. However, if your Chosen
Retirement Date is before this date,
special rules mean that you will still be
able to take pension benefits from your
Option 32 Pension Transfer Policy from
age 50. We will write to you in the months
leading up to your Chosen Retirement Date
to inform you of your options, unless you
contact us to request an earlier retirement
However, early retirement will only be
possible if your pension pot is sufficient to
pay your GMP at that time.
Taking your pension benefits
If your policy does not contain GMP
The Government has made a number of
changes to the way in which you can take
your pension benefits. This means that you
now have more choice than ever before in
how you can take the pension pot you
have saved. In summary, these choices are:
Option 1 – Take all your pension pot as a
single lump sum, subject to certain
eligibility criteria. Normally, 25% of your
lump sum is tax free.
Option 2 – Convert your pension pot into
a guaranteed income for the rest of your
life. This is called an annuity. In certain
circumstances you may be able to take part
of your pension pot as tax-free cash, and
then use the rest to buy an annuity.
Option 3 – Take some of your pension pot
and leave the rest invested for another
time. You can take a series of lump sum
payments or income at different times or a
mix of both (including the option to take
up to 25% as tax free cash).
Option 4 – Postpone taking your pension
pot – you can leave your pension benefits
with us until you are age 75, after which
you will be required to take your pension
You cannot normally take advantage of
these options until you have reached age
55. However, if you are unable to work
because of poor health then you may be
able to take your benefits earlier.
If your policy contains GMP
The new flexibilities detailed above only
applies to pension savings held as Money
Purchase (also known as Defined
Contribution) benefits. Money Purchase
benefits are those where the pension
benefits provided by the scheme are based
on a fund value built up from
contributions into the scheme.
This new pension legislation does not
allow payment of such lump sums where
pension savings provide a Defined Benefit.
Such benefits are often based on the
length of your employment and your
wages or salary.
The GMP benefit within your policy is
based on the length of your service in your
former OPS and your salary. Accordingly,
this benefit has been classified as a
Defined Benefit and falls outside of the
So, no lump sum is payable except where
already permitted within the terms of your
policy. For example, if you have benefits in
your policy in excess of your GMP benefit,
there is a clause in your policy allowing
you to exchange this excess for a tax free
lump sum provided it is within certain
Taking your pension benefits –
As you approach your chosen retirement
date we will send you a detailed pack with
all your options and details of what you
need to do.
To help you understand your options and
make the right choices, the Government is
making available a free and impartial
guidance service - Pension Wise. We
strongly recommend that you use this
service to help you understand your
options and make the right decision. You
can access Pension Wise online by visiting
This service will not provide advice or
recommend specific products or providers.
If you feel you need advice, we recommend
you talk to a financial adviser. If you do
not have a financial adviser, you can get
details of local financial advisers by visiting
unbiased.co.uk. Advisers may charge for
providing such advice and should confirm
any cost to you beforehand.
What happens if I die before I take
my pension benefits?
Depending on the features of your original
occupational pension scheme, your policy
value will be used to provide either:
– a pension for your spouse or civil
– a lump sum payable to your next of kin
or a dependant, or
– a mixture of both.
If you die before the age of 75, it will
normally be paid tax free. If you die after
the age of 75, it will be subject to tax at
45% if it is paid before 6 April 2016. After
this date it will be taxed as income, i.e.
depending on their total taxable income in
a year, your beneficiary may pay income
tax on these payments.
What happens if I am in ill-health?
If you retire early due to ill health, we may
be able to make special arrangements for
when and how you access your pension
benefits. For example, if you are in severe
ill health it may be possible to access your
pension benefits before age 55.
Can I transfer my policy?
You can transfer your policy to another
pension provider at any time before you
access your pension benefits. We will not
charge for doing this.
However, if you do transfer your policy,
you will lose the valuable policy
guarantees described earlier.
We recommend that you speak to a
financial adviser before you transfer your
This guide is a short reminder of the
main features of your Option 32 Pension
Transfer policy and any important
changes that might affect your policy. You
should refer to the policy document we
sent to you when you took out your policy,
together with any contract endorsements,
for more detailed information. In the
event of conflict between this guide and
the policy document, the policy document
*Throughout this document, whenever we
refer to ‘Chosen Retirement Date’, this is
the date that you originally stated you
would like to retire and is the date shown
on your annual statement (unless
If you would like a copy of this leaflet in large print,
audio or Braille, please contact us.
Churchgate House, 56 Oxford Street, Manchester, M1 6EU
The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated
by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales number
99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL.