Income at retirement There are various ways of taking an income from your pension fund, including: –Lifetime annuity –Enhanced/ impaired life annuity –Investment linked annuity –Income drawdown Some may only be suitable if you have a large pension fund or other substantial assets and you are comfortable taking some risks with your pension fund
Lifetime annuity A lifetime annuity converts your pension fund into an income for the rest of your life, however long you live Can be a fixed income or ‘escalating’ e.g. in line with inflation Can provide an income for you or for you and your spouse 3 Whilst lifetime annuity option is secure, once the decision to purchase an annuity is made it cannot be changed.
Enhanced or impaired life annuity 4 These pay a higher-than-normal income (in comparison to a conventional lifetime annuity) if you have a health problem that reduces your lifetime expectancy. Whilst generally offering more income, this is only available to people with health problems/conditions.
Investment linked annuity Similarly to a conventional annuity these provide an income for life. Typically invested in a with profit fund or a choice of unit- linked funds. Some offer a minimum income guarantee. 5 Whilst the aim is to allow the income to grow in line with investment performance, there is a risk income could go down as well as up.
Income drawdown 6 Lets you draw an income from your pension fund while leaving it invested. There are two kinds: Capped drawdown, where there are limits on the income you can take each year; and Flexible drawdown, where there are no limits, provided you can show you have other income of a certain level called the minimum income requirement. Whilst more flexible, income drawdown plans are usually exposed to investment risk.
A new option – MetLife Freedom Income Plan Provides a guaranteed income for a fixed term of your choosing. Provides a Guaranteed Maturity Amount (GMA) at the end of the term. Allows you to leave the plan early under certain circumstances. It’s not a lifetime commitment, so you don’t have to give up control of your pension fund – allows you to ‘test drive’ your retirement. At the end of selected term you can review your circumstances and select the solution that best suits you. Both income and GMA are guaranteed and not exposed to investment risk. Because annuity rates are not fixed, the rates available at the end of your selected term will impact the income you will receive in the future.
Freedom Income Plan – how it works 8 3.You know from outset your Guaranteed Maturity Amount (GMA). 4.At the end of your selected term you are able to review your circumstances and select a retirement solution that best suits your needs. Income and GMA are linked - higher the income the lower the GMA and vice versa. Both income and GMA are fixed and known at outset. Both income and GMA are free from investment risk. Income and GMA are linked - higher the income the lower the GMA and vice versa. Both income and GMA are fixed and known at outset. Both income and GMA are free from investment risk. 2.You select a level of income to suit your needs. Income can be fixed or increase annually, up to 8.5% p.a. 2.You select a level of income to suit your needs. Income can be fixed or increase annually, up to 8.5% p.a. 1.You select a term that suits your needs. Terms run from as little as three years to 25 years 1.You select a term that suits your needs. Terms run from as little as three years to 25 years
Year 8 Freedom Income Plan What if my circumstances change? 9 Year 1 Year 9 Year 8 Year 7 Year 6 Year 5 Year 4 Year 3 Year 2 Year 10 Start of 10 year plan Year 8, qualify for enhanced annuity, use Freedom Clause to leave plan early Original plan end date Note: Amount received may produce a higher or lower income under enhanced / impaired annuity than under FIP, depending upon options selected. Please see ‘risks’ for further details on how the Freedom Clause works. Whilst the term is fixed, the Freedom Clause gives you the power to leave early if: Due to illness you qualify for enhanced terms on a lifetime annuity, or Your dependant dies (if dependant’s benefit selected at outset)
The Freedom Income Plan offers valuable death benefit options, so you can ensure your family are taken care of if something should happen to you. Freedom Income Plan – looking after your family Value Protection (0% - 100%) A lump sum equal to the purchase price less income taken can be paid. Value Protection (0% - 100%) A lump sum equal to the purchase price less income taken can be paid. Guaranteed Period (up to 20 years) A lump sum equal to the current value of the remaining guaranteed income can be paid out. Guaranteed Period (up to 20 years) A lump sum equal to the current value of the remaining guaranteed income can be paid out. Dependant’s Benefits (0% - 100%) Pays income until the end of the term, and Guaranteed Maturity Amount (GMA) if dependant survives to maturity. Dependant’s Benefits (0% - 100%) Pays income until the end of the term, and Guaranteed Maturity Amount (GMA) if dependant survives to maturity. or You can also include Dependant’s Benefits
Comparison with other choices at retirement Freedom Income Plan Fixed lifetime annuity Drawdown Flexibility Control No investment performance risk Keep options open Transfer out available Choice of Lump Sum Death Benefits
Freedom Income Plan – why choose it? Gives you the flexibility to choose a plan term and income level that suits your personal financial circumstances –if you want to top up your income while working part time or waiting to receive other pension income such as the state pension, or –if you just want to take your tax free cash and not take an income immediately Enables you to keep your pension in your control and to preserve its value with a Guaranteed Maturity Amount agreed at the start of the plan Allows you to keep your options open for longer rather than locking into a lifetime annuity as soon as you want to take an income/ take tax free cash Allows you to keep your options open without taking the risk of going into income drawdown as soon as you want to take an income/ take tax free cash Allows you to leave the plan early should you qualify for terms on enhanced annuity, or you dependant dies (if dependant benefits selected at outset) Offers valuable death benefit options
Who is it suitable for? You don’t want to make a final retirement decision today, but would rather keep your options open. You want income now and defer your retirement decision You think you may be eligible for an enhanced annuity later in life and want to defer purchasing an annuity now. You want to ensure your family are taken care if you should die during the plan term. You don’t want the uncertainty of investment performance risk affecting your income or future maturity amount
Why MetLife? One of the world’s leading insurance companies –Over 140 years of experience –Operating in over 60 countries –Over 90 million customers worldwide –Over 66,300 worldwide employees, with 300 staff based in the UK and Ireland. –Provide financial products and services to over 90 of the top 100 Fortune 500 ® companies. –$4.2 trillion of life insurance in force (as at ) *FORTUNE 500®, May FORTUNE 500® is a registered trademark of FORTUNE® magazine, a division of Time, Inc.
How secure is the Freedom Income Plan? The MetLife Freedom Income Plan is covered by the Financial Services Compensation Scheme (FSCS), which provides cover up to a maximum of 90% of the total amount due to you at that time. Further information on how the scheme works can be found in the Freedom Income Plan Key Features Document, or direct from the FSCS. 15
Risk factors Future income – whilst the maturity amount is guaranteed at the end of the selected term, the income you can buy from it at this time will not be. Annuity rates could be higher or lower in the future compared to what they are now. So, the income available at maturity could be higher or lower than the amount a lifetime annuity would provide if bought now. Income levels – the amount of income taken from the MetLife Freedom Income Plan each year is subject to Government limits. These limits are calculated regularly. As a result, we may have to restrict income to this level in the future. If this should happen, any excess income, plus interest, will be added to the Guaranteed Maturity Amount. Income rates – if your pension funds are received after the expiry date of the Guaranteed Illustration Period, the purchase rates on the date of receipt of your pension fund will apply. Your benefits could be lower than those shown in your original illustration. Inflation – if your income remains at the same level throughout the selected term, it may not keep up with the level of inflation. Death benefits - if no death benefits are selected and you die during the term of the plan, no benefits will be paid to your beneficiaries. Freedom Clause – if you choose to exercise the Freedom Clause, and have selected 100% Value Protection, we will calculate your transfer value based on current market conditions, principally interest rates, and a reasonable deduction for our administrative costs. If 100% Value Protection is not selected, we may take medical evidence, and this may reduce the amount available under the Freedom Clause. This may mean you would get less income from an enhanced annuity than expected. Change in situation – you will not be able to change the level of income or any other benefits once payments have started. Other than exercising the Freedom Clause, you will not be able to transfer out of the Plan during its term. 16
Important Information This presentation has been provided to recipients for information only and has not been approved as a financial promotion. Notwithstanding the foregoing, this presentation is only being provided to professional financial advisers. This presentation does not constitute an offer or inducement to purchase or subscribe for securities in a product or fund. The information in this presentation may not be complete and may be changed, modified or amended at any time and is not intended to, and does not, constitute any representations and warranties of MetLife Europe Limited. The information contained in this presentation is intended to provide general information only and does not take into account individual objectives, financial situation or needs. Please remember, if a guarantee option is not selected the value of investments can fall as well as rise. An investor may not get back the amount invested. Past performance is no guide to future performance. Investments in MetLife products are not like a bank or building society which accrue interest. All reasonable care has been taken in relation to the preparation and collation of this presentation. Except for statutory liability which may not be excluded, no member of MetLife accepts responsibility for any loss or damage resulting from the use of or reliance on this presentation by any person. The information is taken from sources which are believed to be accurate but no member of MetLife accepts any liability of any kind to any person who relies on the information contained in it. The copyright of this presentation and any documents supplied with it and the information contained therein is vested in MetLife. They should not be copied, reproduced or redistributed without prior consent. MetLife Europe Limited (trading as MetLife) is authorised by the Central Bank of Ireland and subject to limited regulation by the Financial Services Authority. Details about the extent of our regulation by the Financial Services Authority are available from us on request. Registered address: Riverside One, Sir John Rogerson's Quay, Dublin 2, Ireland. Registration number UK branch address: One Canada Square, Canary Wharf, London E14 5AA. Branch registration number BR Web Site: / 1 / 0912F 17