Option 32 Pension Transfer Policy - Royal London





Reminder of important facts

What is an Option 32 Pension

Transfer policy?

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 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

new flexibilities.

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

prescribed limits.

Taking your pension benefits –

further information

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 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

partner, or

– 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


Additional information

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

will prevail.


*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

subsequently changed).


If you would like a copy of this leaflet in large print,

audio or Braille, please contact us.

Royal London

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.

MKT2626_RL 06/2015

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