PFG Retirement Plan

Member Guide

and

Investment Guide

April 2018 (Supersedes all previous versions)

Contents

Part 1 – Member Guide

Section Page No

Introduction 4

Contacts 5

What the Plan can offer you 6

Contribution levels 7

Smart Pension 8

Single contributions and tax relief 9

Contribution limits 10

How the Plan is invested 10

Plan charges 11

Keeping track of your Pension Policy 11

Retirement benefits 11

State pension provision 13

Pension credit 15

Important information 15

Plan regulation 16

Glossary 17

Frequently asked questions – About the Plan in General 19

Frequently asked questions – About SmartPension 22

Part Two – Investment Guide – Choosing your Investment Fund

Section Page No

Introduction 28

Investment funds explained 30

• Asset classes 30

• Risk groups 31

• Fund types 33

• Investment manager Risk 33

Things to consider when making investment decisions 34

Would you prefer to make a one-off investment choice? 35

Charges 36

Selecting your own investment funds 38

Where can I get help with the Investment decision? 39

Important notes 39

4

Part 1 – Member Guide

Introduction

This guide outlines the features and possible benefits that will be provided for you and your

dependants if you are a member of the PFG Retirement Plan (the ‘Plan’).

The Plan has been established as a Group Flexible Retirement Plan with Standard Life. This Plan

combines the traditional elements of a Group Personal Pension plan with self-investment options – a

Group Self Invested Personal Pension (Group SIPP) – see “How the Plan is invested”. Detailed

information about the investment options can be found in the Investment Section of this Guide.

The Plan is a collection of individual pension policies that are approved by HM Revenue and Customs

(HMRC) and so can grow free of income tax and capital gains tax.

Most employees of Provident Financial plc group companies will be invited to join the Plan after a

continuous period of two years membership of the Provident Financial Workplace Pension Scheme

administered by NEST and the invitation must be accepted within 3 months. You will be enrolled on

the first day of the month, after submitting your completed application form. Most management

grade employees will receive an invitation to join the Plan on joining the company which must be

accepted by the 1st of the month following the completion of two months service. It is a company

policy that employees can only be a member of one company pension scheme and therefore members

wishing to join the PFG Retirement Plan will have to opt out of NEST, if they are a member.

All money paid into your Pension Policy will belong to you and you will not pay tax on any

contributions made to your Pension Policy, subject to HMRC limits. If you die before you start to

receive your pension, the cash value of your fund will be payable to your dependants or your estate.

This guide complements Standard Life literature available on their website, which includes the

Standard Life Planning for More in Retirement booklet, Group Flexible Retirement Plan Key Features,

Key Features Illustration, Your Pension Investment Choices brochure and other Investment

information. Please ensure you read these documents before deciding whether to join the Plan.

This guide is for information purposes only and is not intended to provide advice with

regards joining the Plan. If you are not comfortable making investment choices or are

unsure of any other decisions you may have to make in relation to the Plan you should seek

help from an independent financial adviser. There may be a charge for this service. This

applies throughout the whole guide.

5

Contacts

If you would like to speak to someone about the Plan, change your contributions, or if you have any

other questions, you can contact the Pensions Department at:

Email: pensionenquiries@providentfinancial.com

Telephone: 01274 351351.

Or you can contact the Pensions Department by post at:

Pensions Department

Provident Financial plc

1 Godwin Street

Bradford

West Yorkshire

BD1 2SU

Email: pensionenquiries@providentfinancial.com

6

What The Plan Can Offer You?

1 Tax-Free Contributions Into The Plan

• Up to 10.6% of the value of your pensionable salary from your employer as pension

contributions

• Tax-free contributions into the Plan (subject to HMRC limits)

• Contributions that are exempt from National Insurance if paid by SmartPension (a more

efficient way of paying contributions – see page 8.)

• Up to 25% of your fund value as tax free lump sum when you decide to take benefits from

your policy (but potentially restricted to 25% of the total value of your pension savings up to

the standard Lifetime Allowance or your higher personal Lifetime Allowance if greater)

2 Protection For Your Family

• Your fund is payable to your dependants on death before retirement

• The option to secure a dependant’s income when you take your pension

• In addition, life assurance* equal to 3 x your Reference Salary (basic salary before pension

contributions are deducted) is provided under the Provident Financial Life Assurance scheme

up to age 65 or State Pension Age if higher

• You will normally be covered by the Company’s Permanent Health Insurance scheme*. This

can provide income if you are absent from work due to a serious illness or disability for more

than 26 weeks up to age 65 or State Pension Age if higher. Full details can be obtained from

the HR Department.

*Please note that if you did not join the Plan at your first opportunity you will have no right to join the

Plan at a later date and you will reduce the level of protection should you die or fall ill. Non pension

scheme members and NEST members are covered for a reduced level of life assurance of 1 x basic

salary up to age 65 or State Pension Age if higher and are not covered by the Permanent Health

Insurance scheme. Individuals who joined the pension scheme after their first opportunity and high

earners may have restricted life assurance and income protection cover. Risk benefits are provided

subject to the terms of the insurance companies with whom the benefits are insured.

3 Personal Ownership

• Your Pension Policy and all contributions belong to you, not the Company

• You can cease your membership at any time but will not have a right to re-join this plan at a

later date.

• You do not need to stop working to start receiving your pension

• Your fund is transferable to other suitable pension arrangements

• If you leave the scheme or retire whilst in employment the Company may be required to

automatically enrol you into the Provident Financial Workplace Pension Scheme.

7

Contribution Levels

Default Contribution Level

If you sign and submit a joiner form to admit you to the Plan without specifying a particular level of

contribution then you will join as a SmartPension member and part of your salary will be exchanged

for pension contributions at the rate of 3% of pensionable salary.

Company Matching Contributions

If you choose to enhance your Pension by exchanging additional salary and thereby increasing

contributions, the Company will make contributions on your behalf, as shown in the following table:

Salary exchanged by youthrough SmartPension

%

The Company’s contribution

%

Total Pension contribution –paid by the Company

including SmartPensioncontribution

%

3 5.1 8.1

4 6.2 10.2

5 7.3 12.3

6 8.4 14.4

7 9.5 16.5

8(maximum)

10.6(maximum)

18.6(maximum)

If you wish to change the level of pension contributions that are being paid to your Pension Policy,

then you may do so at any time, but you must pay any increased level of contributions for a minimum

of 12 months. Please contact the Pensions Department on 01274 351351 or by email to

pensionenquiries@providentfinancial.com

You should note that the minimum member contribution is 3% of pensionable salary, and the scheme

has to certify that its contribution structure meets the government requirements for auto enrolment.

8

SmartPension

Under SmartPension, you decide how much you wish to pay into the Plan and your salary is reduced

by this amount. In exchange, the Company pays your contribution directly into your Pension Policy,

together with the Company’s corresponding contribution (see the table above).

As your salary is reduced, you do not pay tax or National Insurance (NI) on the contributions,

meaning a potential increase in your take home pay, compared to paying the same contribution

outside of the SmartPension arrangement. Your share of the Company’s National Insurance saving

that is achieved through SmartPension is included in the table below, which shows the effect on take

home pay of joining the Plan with and without using SmartPension.

This example of someone earning £2,000 per month assumes a 5% personal contribution. Without

SmartPension the pension deduction from take home pay, of £80, is net of basic rate tax, i.e. £100

gross contribution.

For the tax year 2018/19

Without SmartPension Using SmartPension

Monthly basic salary £2,000 £1,900

Income Tax £202.40 £182.40

National Insurance (NI) £155.76 £143.76

Pension deduction £80 NIL

Take home pay £1,563.84 £1,575.84

Total invested £240 £246

In this example, by using SmartPension, both take home pay and pension contributions increase.

This is a direct benefit from the saving in the Company’s and your National Insurance contributions. If

you reside in Scotland your Smartpension calculation will be slightly different due to Scottish rates of

income tax.

The reduction in salary is a change to your contractual salary and so any State benefits to which you

may be entitled will be based on the lower amount. The Company will keep a record of your salary

before any reduction made through SmartPension and this figure will be used in the calculation of all

Company benefits and pay reviews. This is known as your Reference Salary. Further information on

this can be found in the Frequently Asked Questions section of this booklet.

Unless you request otherwise, your contributions will be paid by SmartPension, however, your pay

cannot be reduced below the National Minimum Wage. You are not required to contribute via

SmartPension. If you choose not to use SmartPension, you will continue to pay tax and NI on your

9

gross pay. Your contributions will be deducted from your take home pay, net of basic rate tax, and

will automatically receive basic rate tax relief once invested.

If you do not use SmartPension and you are a higher rate taxpayer you will need to reclaim any

higher rate tax relief due. We recommend that you telephone the pension department on 01274

351351 to discuss this further before opting out of SmartPension.

Pension Contributions payable without SmartPension

Contributionpaid by you

(Gross)%

Contribution deductedfrom take home pay

(Net of 20% tax relief)%

The Company’scontribution

%

3 2.4 5.0

4 3.2 6.0

5 4.0 7.0

6 4.8 8.0

7 5.6 9.0

8(maximum)

6.4(maximum)

10.0(maximum)

Single Contributions and Tax Relief

If you want to pay higher contributions than the maximum indicated above or make a single

contribution from your own bank account, this can be done by sending a cheque to Standard Life.

You will automatically receive basic rate tax relief (20% for 2018/19 tax year) on any single

contributions you make, providing your total contributions are within the limits described below. Your

cheque should therefore be for the amount you wish to invest, less basic rate tax relief. You can work

this out by multiplying the amount you wish to be invested by 0.8.

An example of how this works is shown below:

Amount to be invested £1,000

Cheque in the sum of £ 800

Immediate tax relief obtained for you by Standard Life £ 200

Total paid to your Pension Policy £1,000

Higher rate tax relief* £ 200

*if you are a higher or additional rate taxpayer you will need to claim the extra relief through your tax

return direct from HMRC even if you pay monthly contributions through SmartPension.

It is not possible to make single contributions by salary sacrifice (SmartPension).

10

If you wish to pay one off contributions, please contact the Pensions Department.

Single contributions will not lead to any increase in the Company’s contribution.

Contribution Limits

There is no limit on the level of personal contributions that can be made to a Pension Policy up to

100% of your annual earnings; however, tax relief is only available on total contributions of £40,000

or less if your gross income from all sources exceeds £150,000 (see later). Contributions paid by

SmartPension will count as employer contributions and will reduce your taxable earnings accordingly.

Overall contributions, both personal and employer, to all of your Pension Policy are subject to an

overall limit known as the Annual Allowance. This is set at £40,000* for the 2018/19 tax year and

any contributions in excess of this amount are subject to a variable annual allowance tax charge of up

to 45%. You should seek independent financial advice if you believe you may be affected by the

Annual Allowance in this or any future tax years. Please also note that if you are aged 55 or over and

take some of your retirement benefits before stopping work, even from a previous employer’s scheme

or a personal pension you may be subject to an even lower Annual Allowance of £4,000. Please speak

to the Pensions Department if you think this might affect you.

* If your gross income from all sources exceeds £150,000 you are likely to have a lower annual

allowance as a result of Tapered Annual Allowance – see page 17.

How the Plan is invested

The Plan is invested through Standard Life, and provides a range of funds for you to choose from. An

attraction to the Standard Life Group Flexible Retirement Plan is that it combines the traditional

elements of a Group Personal Pension scheme with the self-investment option of a Group Self

Invested Pension Plan (SIPP) commonly referred to as a Group SIPP. There is a default investment

option for those not wishing to make investment decisions and detailed information on this and all

investment options can be found in Part 2 of this Guide. Details regarding the SIPP investment

options can be accessed on the PFG Retirement Plan section on the pension website

www.pfpensions.co.uk under the Standard Life Self Investment section.

The default investment option has been chosen by Provident Financial after taking advice, and it has

been designed to balance potential investment returns with acceptable levels of investment risk for

the majority of members. However, it may not be appropriate for your individual circumstances and

you should make sure your investment meets your personal objectives and your attitude to

investment risk. Further information on these issues can be found in Part 2 of this guide.

In view of changes introduced in the Taxation of Pensions Act 2014, providing more freedom and

choice for members when they reach retirement, we reviewed and changed the default investment

option to ensure that it remained appropriate. If you received an application form after 1 April 2016,

11

you will be put in the new default automatically. If you received an application form before this date

you will still be in the old default and you may want to review your investment choices.

Plan Charges

Standard Life deducts an annual charge starting at 0.35% of your Pension Policy value to cover

administrative and investment services in setting up and running the Plan. There are additional

charges starting at 0.01% to 0.02%. The initial base charge for the DefaultOption is 0.45% with

0.02% additional charges. Some specialist and externally managed funds may incur an additional

annual charge. Further details can be found in Part 2 of this guide. Self Investment options will also

carry additional charges and details of the options and charges associated can be accessed on the PFG

Retirement Plan section of the pension website www.pfpensions.co.uk under the Self Investment

section and on the Standard Life website.

The Company pays a fee to Punter Southall Aspire for the advice it gives to the Company regarding

the Plan. Standard Life will not pay commission to Punter Southall Aspire in connection with your

membership of the PFG Retirement Plan.

Keeping Track of Your Pension Policy

You can obtain information about your Pension Policy directly from Standard Life’s website. Go to

www.pfpensions.co.uk and then select ‘PFG Retirement Plan’, followed by ‘Your account’ for details

about how to access your Standard Life Pension Policy online.

Retirement Benefits

You can currently start to receive your pension income at any point from the age of 55. You can draw

your pension even if you are still working, although the earlier you start to receive payments, the

smaller your annual pension is likely to be.

One option, under current legislation, is to:

• Take up to 25% of your fund as a tax-free lump sum

and

• Purchase a taxable pension (annuity) with the remainder of your fund

You will have an ‘open market option’ when you come to secure your pension, which means that you

will be able to purchase your annuity from the provider offering you the best terms for your particular

circumstances. You will also have the option to add the following features:

• Annuity payments can be guaranteed for a minimum period

• The annuity can be set to continue, in whole or in part, to your spouse, civil partner or

dependant(s) after your death

• The annuity can increase in payment each year

12

You should note that the more options you add to your pension, the lower your starting pension will

be.

These are not the only options available and recent legislation changes have meant that members

have much greater freedom and choice as to how they take their benefits after age 55. Further

information on all retirement options can be found by going on to the pension scheme website and

clicking on the following link:

https://www.standardlife.co.uk/c1/retirement.page

Some of these options can have serious tax consequences and it is recommended that you obtain

independent financial advice before you make a final decision. There will be a charge for this advice

and this is something you would need to organise and pay for yourself.

If you do decide to purchase an annuity with some of your pension fund, to help you select the most

appropriate type of annuity and to choose the insurance company offering the best rates for that type

of annuity, Provident Financial Plc have engaged the services of Punter Southall Aspire to assist

members as they approach retirement. The Company will pay for the cost of this open market

annuity broking. This service is independent and free for members to use with no commission

charges whatsoever. This service is provided on a non advised basis. Members will be contacted as

they approach their selected retirement date with more information on this service.

No guarantee is given regarding the future value of the benefits of the Plan. The final value will

depend on factors such as the amount of money paid into your Pension Policy, any additional funds

that may have been transferred in, the investment returns achieved, the charges deducted by

Standard Life, the annuity rates at the time of retirement and the options you select for your annuity.

If the value of your pension savings does not exceed £10,000 from the Plan normally you may be able

to take the proceeds as cash lump sum, part of which will be taxable. If your savings are in excess of

this figure you still have the option to take the proceeds as a lump sum payment through other

retirement options such a Flexible Access Drawdown or Uncrystallised Funds Pension Lump sum, but

again part of this will be taxable. These options are currently available from age 55.

Lifetime Allowance and Pension Benefits

If the total value of your pension benefits (i.e. the value of your Pension Policy, plus the value of any

other pension benefits you may have and any death in service benefits you may be entitled to)

exceeds the lifetime allowance then benefits in excess of the allowance will be subject to a tax charge.

The allowance is currently £1.03m (2018/19 tax year); although it is proposed that this limit will

increase in line with the Consumer Price Index (CPI) in future. If you think you could be affected by

the lifetime allowance, you should seek independent financial advice.

13

State Pension Provision

The New State Pension

Please note that the State Pension system changed significantly from April 2016.

A new State Pension scheme replaced the previous scheme. You will get your State Pension under

the new scheme if you are:

• A man born on after 6 April 1951 or

• A woman born on or after 6 April 1953

An important change under the new scheme is that you need at least 10 National Insurance qualifying

years (the minimum qualifying period) when you reach state pension age to get any State Pension.

Time spent living or working outside the UK may also help you meet the minimum qualifying period.

You can get a State Pension estimate worked out under the new rules using the links below.

Changes to the State Pension system from April 2016

The earnings-related part of the old system which applied to employed people, called the Additional

State Pension (sometimes called the State Second Pension or S2P) was abolished.

The new State Pension is based on your National Insurance (NI) record alone. For the current tax year

2018/19 the new state pension is £164.35 per week – however you may get more than this if you

have built up entitlement to additional state pension under the old system – or less than this if you

were ‘contracted out’ of the additional state pension. To be eligible for the full £164.35 per week you

will need 35 years NI record.

How is the new State Pension calculated?

Your NI record as at 6 April 2016 has been converted into a ‘starting amount’ under the new State

Pension. This won’t be lower than the amount you would have received under the old system.

If your starting amount is higher than the full new State Pension

Under the old system, if you were employed (rather than self-employed) you paid Class 1 National

Insurance which entitled you to the Basic State Pension and an Additional State Pension. The

Additional State Pension was based on your earnings as well as the National Insurance contributions

you had made or been credited with.

If you had built up substantial entitlement to Additional State Pension this might mean that you have

already earned a pension under the old system which is worth more than £164.35 a week. If this

applies to you, you will get the full new State Pension amount and you’ll also keep any amount above

this as a ‘protected payment’ which will increase by inflation. However you won’t be able to build up

any more State Pension.

14

If your starting amount is equal to the full new State Pension

You’ll get the full new State Pension amount. You won’t be able to build up any more State Pension.

If your starting amount is lower than the full new State Pension

This might be because you were ‘contracted out’ of the Additional State Pension. You can continue to

build up your State Pension to the maximum (currently £155.65 per week) up until you reach State

Pension age. You can do this even if you already have 35 years of NI contributions or credits.

System.

State Pension Forecasts

You are able to get a State pension forecast from the Pension Service by contacting:

State Pension Forecasting Team

Future Pension Centre

The Pension Service

Tyne View Park

Whitley Road

Newcastle upon Tyne NE98 1BA

Phone: 0845 300 0168

You are also able to complete an online application at www.gov.uk/check-state-pension

State Pension system up to April 2016

For those reaching State Pension Age up to April 2016 the State provides two different kinds of

pension:

Basic State Pension

At state pension age, as long as you paid, or were credited with paying, sufficient National Insurance,

you were entitled to the basic state pension.

State Second Pension (S2P)

S2P was an additional state pension accrued during a person’s working life that is only payable to

those who reached State Pension Age before 6 April 2016. The amount that is payable depends on

your earnings and the number of years you worked. It was possible to contract out of S2P using your

Pension Policy in the Plan, which meant that part of your National Insurance contributions were

redirected to your Pension Policy. You did not receive an S2P pension for the tax years in which you

contracted out, but built an additional fund within the Plan instead. This was referred to as your

‘protected rights’ fund. The option to contract out using pension schemes such as this was removed

from April 2012, as was the term protected rights. All benefits are treated in the same way going

forward.

Contracting-out also applied to certain occupational pension schemes including the Provident Financial

Staff Pension Scheme.

15

Pension Credit

Depending on your total level of retirement income and your savings, you may also be eligible for

Pension Credit. The Government have also made changes to this from the 6th April 2016. Only the

guarantee credit applies to ensure a minimum level of income for those who have reached State

Pension age. The minimum level of income provided under the guarantee credit will be means tested

and therefore will take into consideration all private pension savings. The benefits arising from the

Plan could therefore affect either Pension Credit payments.

For further information please refer to the Department for Work and Pensions website at

www.gov.uk/pension-credit

Important Information

This guide is intended to be a summary. While every effort has been made to ensure that it is

accurate, if there is any difference between the terms and conditions of your Pension Policy with

Standard Life and this guide, the Pension Policy will apply. All information provided in this guide is

based on HMRC figures and regulations for the 2018/19 tax year.

If you have any queries regarding the guide or the Plan, you should contact the pension department

on 01274 351351 or email to pensionenquiries@providentfinancial.com.

This guide does not provide any individual advice and you should satisfy yourself that the Plan is

suitable for you. If you are unsure about the Plan’s suitability, you should seek independent financial

advice, for which there may be a charge. The guide is based on Punter Southall Aspire’s

understanding of current legislation and practice, which may change in future. In addition, there may

be changes to your personal circumstances which may affect your entitlement to tax relief.

Please ensure you read all accompanying literature provided to you with this guide and visit the

pension website.

Amendment or Termination

The Company reserves the right to amend, or withdraw, the Plan at any time. This is inclusive of the

right to increase, decrease or discontinue employer contributions. Nevertheless we will need to meet

our obligations under Auto- enrolment regulations if any future changes are made.

Cancellation Rights

You have the right to cancel your Pension Policy within 30 days of receiving your cancellation notice.

If you decide to cancel your Pension Policy, any personal contributions made outside of SmartPension

during this period will be returned net of basic rate tax relief. This may be subject to any fall in value.

16

Plan Regulation

Please ensure you read Standard Life’s Key Features documents and accompanying literature before

joining the Plan.

This guide has been prepared by the Company with the assistance of Punter Southall Aspire, the

advisers to Provident Financial plc, in relation to the PFG Retirement Plan.

Punter Southall Aspire (a trading name of Punter Southall Defined Contribution Consulting Limited) is

authorised and regulated by the Financial Conduct Authority. Registered address: 11 Strand,

London, WC2N 5HR. Registered in England and Wales no. 0873463. Its FCA Financial Services

Register number is 121328, which can be checked by visiting the FCA’s website at www.fca.org.uk, or

by contacting the FCA on 0800 111 6768.

Punter Southall Aspire and Standard Life are covered by the Financial Services Compensation Scheme

(FSCS). You may be entitled to compensation from the scheme if they cannot meet their obligations.

This depends on the type of business and the circumstances of the claim.

Investment – most types of investment businesses are covered for up to a maximum limit of £75,000

from 3 July 2015 under the Financial Services Compensation Scheme.

Insurance – insurance advising and arranging is covered for 90% of the claim, without any upper

limit.

Further information about compensation scheme arrangements is available from the FSCS on 020

7892 7300 or by email at enquiries@fscs.org.uk.

17

Glossary

Some of the terms and expressions used in this booklet have a special meaning and are explained

below:

‘Company’ means Provident Financial plc and any subsidiary or associated

company, whose employees have been admitted to membership of

the Plan

‘Earnings’ means Net Relevant Earnings, which are earnings on which UK

Income Tax is chargeable

‘HMRC’ means H M Revenue and Customs, the new name for the Inland

Revenue

‘Member’ means an Employee who fully participates in the Plan

‘National Living Wage’ or means the hourly rate for the minimum wage set by the Government

‘National Minimum Wage’ dependent on your age and whether you’re an apprentice. More

details can be found at https://www.gov.uk/national-minimum-wage-

rates

‘Pension Policy’ means the Standard Life policy which holds the ‘pot of money’ built

up to provide your pension, and includes all the contributions that are

paid in and investment returns on monies invested

‘Pensionable Salary’ means a member’s basic monthly salary, plus any other earnings

designated as ‘pensionable’ by the Company

‘Plan’ means the PFG Retirement Plan

‘Plan Adviser means Punter Southall Aspire (a trading name of Punter Southall

Defined Contribution Consulting Limited)

‘Reference Salary’ means the salary the Company will use to calculate Life Assurance,

Permanent Health insurance and other benefits. It is your

Pensionable Salary before the application of SmartPension or your

basic salary if you do not take part in SmartPension.

‘Retirement Age’ means the age at which you elect to retire

18

‘SmartPension’ means the way the Company has chosen to pay contributions to the

Plan. This is often referred to as Salary Sacrifice (see page 8 of this

guide for more information)

‘State Pension Age’ means the earliest you can draw your State Pension. It is defined by

your date of birth. A calculator exists on the gov.uk website to

enable you to establish your particular State pension age at:

https://www.gov.uk/calculate-state-pension

‘Tapered Annual Allowance’ The Tapered Annual Allowance was introduced by the Government on

6 April 2016. Where an individual’s gross income (termed ‘Adjusted

Income’ from all sources plus the company pension contributions

exceeds £150,000, the Annual Allowance is reduced by £1 for each

£2 of the excess, down to a minimum of an annual allowance of

£10,000 which will apply where the gross income figure is above

£210,000. More information about this can be found on the pensions

website at:

http://www.pfpensions.co.uk/cash-balance/in-detail/retirement-

benefits/changes-affecting-high-earners

‘Trustees’ are the Trustees of the Provident Financial Life Assurance Scheme.

The Trustees only have responsibility for the Life Assurance Scheme.

19

Frequently asked Questions – About the Plan in General

What is the PFG Retirement Plan?

It is a pension policy which both you and your employer can contribute to, for your benefit. You will

have your own Pension Policy, which belongs to you. The Plan is administered by Standard Life.

How much will my pension be?

The amount of pension you receive will depend on the contributions paid to your Pension Policy by

you and the Company, the investment performance of your funds, the effect of the charges deducted

by Standard Life and the annuity rates available at the time you secure your income, if this is what

you decide to do. Be aware that buying an annuity is not the only option at retirement.

How is my Pension Policy invested?

You have control and can choose from a wide range of investment funds. A default option is available

if you do not wish to make investment decisions yourself.

The Plan also has self investment options (SIPP).

For all investment choices please refer to Part 2 of this Guide. Details regarding the SIPP investment

options can be accessed on the PFG Retirement Plan section on the pension website

www.pfpensions.co.uk under the Standard Life Self Investment section.

Can I make single contributions to the Plan?

Yes. Please refer to the section of this guide entitled ‘Single Contributions and Tax Relief’.

Can I transfer existing pension arrangements into the Plan?

Yes, however some pension arrangements have valuable guarantees, or additional benefits, that

would be lost on transfer so in these cases it is important that you seek independent financial advice,

for which there may be a charge.

What happens if I leave the Company?

Because your Pension Policy belongs to you, in the event of leaving the Company you will retain your

policy at its full value. You can continue to make contributions into the policy; however there will be

no further contributions from the Company.

Alternatively, you can cease to contribute to the Plan and it will remain invested. Unless you are

eligible to draw benefits, your fund must remain invested in a suitable pension plan but you can

transfer it away from Standard Life. If you are considering transferring, you should consider the

charges, options and rules under the receiving pension policy or scheme and be comfortable that

transferring is in your best interest. You should seek independent financial advice regarding this

choice for which there may be a charge.

20

When can I take my pension?

You can currently draw your pension at any time from age 55 onwards. You may be able to take your

benefits earlier than age 55 if you retire through serious ill health. The decision whether to allow

early retirement in these circumstances will be based on criteria set by HMRC.

If you choose to draw your benefits, you may either continue to work or retire. In either case,

Company contributions to your Standard life Pension Policy will cease. We may be required to Auto

Enrol you into our Auto enrolment scheme however, if you continue to work, depending on your

circumstances at the time.

How can I take my pension?

Your pension fund can be used to purchase an annuity, which is a regular income payable for life. At

the time you purchase your annuity, you can take up to 25% of your fund as a tax free lump sum

(there are restrictions to the amount of tax free lump sums which can be taken from pension

savings). You do not have to purchase your annuity from Standard Life and can use the full annuity

market to secure the highest pension available at the time you retire – this is called your ‘open

market option’.

The amount of pension you will receive will depend on your Pension Policy value and annuity rates at

the time of purchase, as well as any additional benefits you choose such as annual increases in

payment or a pension for your spouse, civil partner or dependants on your death. The more options

you add to your pension, the lower the starting pension will be.

There are now a full range of other options available, and it is recommended that you obtain

independent financial advice about your retirement options as you approach your retirement date.

There may be a charge for this service. Further options are explained on the Standard Life website.

This can be accessed by following the link below on the Provident Financial Pension website:

https://www.standardlife.co.uk/c1/retirement.page

Provident Financial plc has arranged for Punter Southall Aspire to provide assistance to members at

the time they retire to select the most appropriate type of annuity at retirement and to purchase that

annuity from the most competitive insurance company. As part of this assistance, Punter Southall

Aspire will also provide outline information on Pensions Flexibility options to help members make the

retirement choices that meet their objectives.

What happens to my Pension Policy if I die before I start to receive my pension?

The full value of your Pension Policy will be paid to your nominated beneficiaries or estate. This will

normally be paid free of tax but will be measured against your lifetime allowance (£1.03m in

2018/19). If the value of any lump sum death benefits from your pension savings plus the separate

life assurance scheme exceeds this allowance figure the excess will be subject to a tax charge.

21

You can nominate your chosen beneficiaries by completing a ‘nomination form’ and sending this to

Standard Life. If you change your nominated beneficiary you should complete a new form and send it

to Standard Life.

What happens to my pension if I die after I begin to receive it?

If you chose to draw your retirement benefits via an annuity it will depend on the features you

selected when purchasing your annuity such as a spouse’s pension. You can elect to have your

pension paid in full for a guaranteed period, or secure a reduced pension payable to your dependants

in the event that you die before them. Generally, the more features you add to your annuity, the

lower your starting pension will be.

If you chose to draw your retirement benefits as a series of lump sums or by keeping your fund

invested and drawing down income as you needed it, it will depend on how much of your fund is

unspent at the time of your death. In some cases a member’s fund could be exhausted.

Is my pension fund secure?

Your Pension Policy belongs to you and is not an asset of your employer. The value of your policy will

depend on the performance of your chosen investment fund(s) and may go down as well as up – you

should therefore ensure you select investment funds that suit your attitude to risk.

Your Pension Policy is covered by the Financial Services Compensation Scheme. Please refer to the

section in this guide entitled ‘Plan Regulation’ for further information.

22

Frequently Asked Questions – About SmartPension

What is a SmartPension and how does it work?

It is a more financially efficient way for you to pay pension contributions. You voluntarily give up part

of your salary in exchange for your employer paying that amount as a gross pension contribution on

your behalf.

Both you and the Company will save National Insurance because of the reduction in your salary. The

Company will enhance its pension contribution with part of its National Insurance savings.

If you do not use SmartPension, then your contributions will be taken from your net pay after tax and

NI are deducted. As such, no NI contribution relief exists. You will also not receive the enhancement

to your contribution from the Company.

Can everyone use SmartPension?

SmartPension is offered to all Plan members, but it is recommended that this may not be beneficial if

your salary falls below a minimum level of £11,850 pa in the 2018/19 tax year. Because of the

available tax relief and the possible impact on state benefits, anyone earning below this level might

lose out by paying through SmartPension. Your pay must also not fall below the level of the National

Minimum Wage or National Living Wage (see page 16). If you wish to opt-out of SmartPension please

contact the Pensions Department.

By how much will my take home pay increase?

It will increase by the amount of NI that would otherwise be paid on the salary you choose to

sacrifice. The rate of NI normally payable depends on your taxable earnings, as shown below (figures

shown are for the 2018/19 tax year).

Your taxable earnings rate of NI payable per month

Less than £702 – Nil

Between £702 and £3,863 – 12%

Above £3,863 – 2%

If you want to find out by how much you could benefit, you can refer to the Pensions Department on

01274 351351 or email to pensionenquiries@providentfinancial.com

23

How does tax relief work?

If you contribute via SmartPension, you will not pay any tax on the gross amount you elect to

exchange. As a result, there is no requirement to claim tax relief on any pension contributions made

via SmartPension.

If you elect not to contribute via SmartPension, you make a net pension contribution from your net

pay and Standard Life automatically reclaims your basic rate tax relief, adding it to your contribution.

If you are a higher, or an additional rate tax payer, you can reclaim the additional marginal rate tax

relief via your tax return or by contacting HMRC directly.

If you choose to contribute via SmartPension and have previously requested a change to your tax

code from HMRC, to obtain higher or additional rate tax relief through PAYE, you will need to cancel

this request and revert to your normal tax code. If you do not, you may receive too much tax relief

and be liable to return any overpayment.

Is there a limit to the amount I can pay through SmartPension?

You can sacrifice as much of your salary as you wish up to 8%, provided that once you have done so

your sacrifice salary does not fall below the level of the National Minimum Wage or National Living

Wage (see page 16). You should remember to take into account any other salary sacrifice you make,

for example through childcare vouchers. Total pension contributions to all policies in your name are

subject to an overall limit called the Annual Allowance. This is set at £40,000* for the 2018/19 tax

year.

* If your gross income from all sources exceeds £150,000 you are likely to have a lower annual

allowance as a result of Tapered Annual Allowance – see page 17. You will also have a reduced

Annual Allowance if you have drawn any benefits from any pension schemes as a taxable cash sum,

or as a flexible income (which is not from a lifetime annuity).

Are there any downsides to SmartPension?

Tax relief through SmartPension is only available on earnings above £11,850. Certain state benefits

are linked to your earnings between lower and upper earnings limits. SmartPension is offered to all

Plan members, but it is recommended that this may not be beneficial if your salary falls below a

minimum level of £11,850 pa in the 2018/19 tax year. If you wish to opt-out of SmartPension please

contact the Pensions Department.

Most mortgage lenders will now take your Reference Salary (i.e. salary before SmartPension

deductions) into account when determining the amount they are prepared to advance you for house

purchase purposes, but, it is important to speak to potential lenders to clarify this.

There are many factors to consider when reviewing your SmartPension decision including; the total

amount you pay through Salary Sacrifice e.g. childcare vouchers, your income from all sources,

especially second employments, your spouse’s/partners benefits, your National Insurance history and

24

any state benefits in payment. Advice on SmartPension decisions may be obtained from your

Financial Adviser, Citizens Advice Bureau or The Pensions Advice Service.

Which state benefits could be affected?

If your post-sacrifice salary falls between the lower and upper earnings limits for National Insurance

purposes, (£702 and £3,863 per month in the 2018/19 tax year) you may see a proportional

reduction in your entitlement to the following state benefits:

• Maternity allowance

• Statutory maternity pay (SMP)

• Statutory adoption pay (SAP)

• Statutory paternity pay (SPP)

The Company’s recommendation regarding the minimum salary level at which SmartPension is viable

is intended (but can’t be guaranteed) to help you avoid any loss of State Benefits such as ,

Jobseekers and Employment Support Allowances, as a result of salary sacrifice. Maternity allowance

is payable directly by the State and only to women who do not qualify for SMP.

You should satisfy yourself that you are not disadvantaged by using SmartPension. If you are unsure

of the impact it will have on any of your state benefit entitlements we recommend that you should

seek independent financial advice, for which there may be a cost, alternatively you can visit the HMRC

website: http://www.hmrc.gov.uk/specialist/salary_sacrifice.pdf If you wish to opt-out of SmartPension

please contact the Pensions Department.

Will SmartPension affect tax credits?

Paying pension contributions by SmartPension will not decrease entitlement to tax credits. Please note

however that if you use salary sacrifice for childcare vouchers, you may see a reduction in any

entitlement to the childcare element of Working Tax Credit. This is not linked to using SmartPension

for pension contributions.

If you are in receipt of tax credits, you should inform HMRC of your new, post-sacrifice level of

taxable earnings. You can do this by calling the Tax Credit Helpline on 0345 300 3900.

What about pay review, bonus and my other Company benefits?

The Company will base all employee benefits on your Reference Salary. Any salary related benefits

will be based on your Reference Salary and may include:

• Company pension contributions

• Salary reviews

• Bonus

• Life assurance

• Company maternity, paternity, parental and adoption pay*

• Sick pay*

25

*Please note that statutory payments will be based on your taxable earnings after SmartPension.

This is because statutory payments are calculated by the Government based on your actual earnings.

What happens if I go on maternity/adoption leave?

The Government does not allow Statutory Maternity Pay to be used for SmartPension.

If you are going on maternity or adoption leave, you will be provided with further information about

the implications of SmartPension but will remain a member of the Plan (unless you request

otherwise).

What happens if I am going on paternity leave?

You can remain a member of the SmartPension arrangement during this time.

If you are paid throughout your period of parental or paternity leave, you and the Company will

continue to pay contributions into your Pension Policy during your absence.

What happens if I am off work sick?

You can remain a member of the SmartPension arrangement for as long as you are receiving

Company sick pay at your full rate of salary.

Can I put my NI savings back into my Pension Policy?

Yes. To do this you will need to increase the amount you sacrifice accordingly. The increase required

will depend on your personal circumstances. If you would like to discuss this option, please call the

pension department on 01274 351351.

Can I make backdated payments by SmartPension?

No. For a SmartPension to be allowable by HMRC, you must elect to sacrifice salary or bonus before

you are entitled to receive them as a cash payment. However, you can increase the amount of future

sacrifices.

How do I start using SmartPension?

All Plan members will be automatically enrolled using SmartPension. If you do not wish to use this

facility and would like to pay contributions by deduction from your net pay (after the deduction of tax

and NI), please contact the Pensions Department.

Can I change my mind?

Yes. You will be able to opt out of using SmartPension in April each year. You must have completed

12 months’ membership of the scheme before this option is available to you. You may be able to opt

out within the first 12 months of membership at your employer’s discretion, if you experience a

‘lifestyle change’, for example pregnancy, marriage or the redundancy of your partner. An opt-out

form can be obtained from the Pensions Department.

26

You can also change the level of your payments at this time. Any requests to opt-out or change

contribution level at any other time will be considered by the Company on an individual basis.

My question is not answered here – who should I speak to?

If you have a question about the Plan, please contact the Pensions Department:

Pensions Department

Provident Financial plc

1 Godwin Street

Bradford

BD1 2SU

Tel: 01274 351351

Email: pensionenquiries@providentfinancial.com

27

Part Two – Investment Guide – Choosing your Investment Fund

Section Page No

Introduction 28

Investment funds explained 30

• Asset classes 30

• Risk groups 31

• Fund types 33

• Investment manager Risk 33

Things to consider when making investment decisions 34

Would you prefer to make a one-off investment choice? 35

Charges 36

Selecting your own investment funds 38

Where can I get help with the Investment decision? 39

Important notes 39

28

Introduction

How hands-on do you wish to be?

The Plan’s investment fund range has been structured to help make it accessible to all members,

regardless of how hands-on they wish to be with their investment decision.

Full information on all of the funds can be found in the fund factsheets on the Standard Life website

accessible from the PFG Retirement Plan section of the pension website at www.pfpensions.co.uk

We have shown the investment options in the pyramid below:

Top tier – the default option (for members who joined after 2016)

The Active Plus III Universal SLP (Strategic Lifestyle Profile) fund is one of Standard Life’s core

lifestyle investment options. It is designed for those members who have not yet decided how they

wish to draw their retirement benefits with a medium attitude to investment risk and little desire to be

hands on with their investments. This option is explained in more detail on page XX. It is most

suitable for those who have not yet decided how they may take their retirement benefits.

If you do not make an active investment decision, you will automatically be invested in the Default

Option, but as this has changed a few times in the past you may not be invested in the current

Default Option. The Default Option is reviewed on an annual basis and may change again in the

future. Any change in the Default Fund will apply to new members only and existing members’ funds

will continue to be invested in line with the investment instructions that were in place prior to the

change unless the member opts to change their investments to the new Default Fund or any other

fund choice.

Top Tier - Default Option

Second Tier - Alternative Options

Third Tier - Full Fund Range

29

Second tier – alternative options

Most members do not wish to be involved in taking investment decisions and monitoring the

investment performance of their funds in detail and the Default Option is broadly suitable for

members of any age. At retirement members can take their benefits as an income for life provided by

an insurance company (An annuity), by taking the benefits as a single lump sum/a series of lump

sums, or by keeping their funds invested and withdrawing some income from the investments each

year (known as drawdown). In all cases part of the retirement account can be taken as tax-free cash.

Members who have made a decision about how they wish to draw their benefits need to ensure that

their funds are invested in the most appropriate fashion during the ten years before they retire. Such

members may wish to consider ceasing to invest in the Default Option and choosing an alternative

Lifestyle Profile or other investment that is matched to their retirement plans.

Those intending to take tax free cash and purchase an annuity with the balance of their fund may

wish to consider the Standard Life Annuity Strategic Lifestyle Profiles such as Standard Life Active Plus

III Annuity SLP (Code A3AP). For more information see http://library.standardlife.com/slpann.pdf

Those intending to take their benefits as a single lump sum/a series of lump sums may wish to

consider the Standard Life Lump Sum Strategic Lifestyle Profiles such as Standard Life Active Plus III

Lump Sum SLP (Code C3AP). For more information see http://library.standardlife.com/slplump.pdf

Those intending to take their benefits by keeping their funds invested and withdrawing some income

from the investments each year may wish to consider the Standard Life Active Retirement Strategic

Lifestyle Profiles such as Standard Life Active Plus III Retirement SLP (Code R3AP). For more

information see http://library.standardlife.com/slpar.pdf

The alternative options are explained in more detail on page 37.

Third tier – The full fund range

You are not restricted to the above options. The full range of Standard Life’s funds is also available

for those who wish to be very hands on. The fund range is set out in the Standard life booklet Your

Investment Choices available on their website.

If you do not make an active investment decision, you will automatically be invested in the Default

Option. The default option is reviewed on an annual basis and may change in the future.

The Plan’s investment fund range has been selected for Provident Financial plc, following advice from

Punter Southall Aspire, to help members decide on an investment strategy that may be suitable for

them. The tiers do not represent a recommendation by Provident Financial plc or Punter Southall

Aspire.

30

Ultimately, you must be comfortable that the investment choice you have made is right for you,

whichever tier you opt for, or even if you do not make an active decision. Please read the ‘Important

notes’ section of this guide on page 40 before making a decision.

Investment funds explained

This section introduces you to some of the terms and ideas you will need when deciding how your

pension should be invested.

Full details of the funds available under tiers two and three can be found in the Your Pension

Investment Choices booklet on the Standard Life website in the Documents and Forms section, which

can be accessed from the Provident Financial Pensions website.

Please note that the value of any investment can fall as well as rise and is not guaranteed – you may

get back less than you pay in. Past performance is not a reliable guide to future performance.

Asset classes

An asset class is a specific category of assets or investments, such as equities, property, bonds or

Money Market instruments (including cash). Assets within the same class generally exhibit similar

characteristics.

Equities

• Equities (also known as stocks or shares) represent part ownership in a company. The return

received from equities is a combination of any dividend income and any changes in the capital

value. Equities are one of the more volatile asset classes and can therefore suffer sudden sharp

falls or rises. Equities can offer good growth potential over the longer term but may have a higher

volatility than other asset classes meaning that they can suffer from investment losses especially

in the short term.

Property

• Property investments can be either direct (e.g. property or land) or indirect (e.g. shares in

property companies or collective investment schemes). The return received from property is a

combination of income from rent and any changes in the capital value of the property. The values

of different types of property do not necessarily move in line with each other. For example,

industrial values could be rising at the same time that the value of shop properties is falling.

If you decide to invest in a property fund, you should be aware that property can be difficult to

sell, so you might not be able to sell your investment when you want to. Property investments can

suffer from loss of capital value over time.

31

Bonds

• Bonds are loans to a government or a company for a set period of time. UK Government bonds are

known as ‘gilts’. Bonds from companies are known as corporate bonds. The return received from

bonds is a combination of any interest received and any changes in the capital value. The value of

a bond may fall if, for example, the company or government issuing the bond is unable to pay, or

delays the payment of, interest when it is due, or is unable to pay back the loan amount when it

is supposed to.

Money Market instruments (including cash)

• Money market instruments include not only bank and building society deposits but also a variety of

other instruments, such as Certificates of Deposit and Floating Rate Notes. The return received

from money market instruments is a combination of interest and any changes in the capital value.

It is important to note that some of these assets are not the same as cash deposit accounts and

there are circumstances where their values will fall.

Volatility Ratings – Strategic Lifestyle Profiles

For their Strategic Lifestyle Profiles, Standard Life use five Volatility Ratings to help you select the

Profiles which best meet your needs.

The Volatility Rating of a Strategic Lifestyling Profile is an indicator of how much the Profile price

might vary in relation to other Profiles. The higher the volatility rating, the less stable the Profile price

is likely to be. You may be able to use this guide to decide how much risk you are comfortable taking

with your investments.

The Standard life ratings are categorised in brief as follows (a fuller breakdown is provided in the

Standard Life Investment brochure outlined above):

Risk Level I – Lower Risk

• This level will have the highest amount in lower risk investments and a lower amount in higher risk

investments. This may suit you if you have a conservative approach to investing and only want to

take a limited amount of risk and expect to achieve only modest or relatively stable returns.

Risk Level II – Lower to Medium Risk

• This level has a high amount in lower risk investments but can still invest in higher risk

investments. This may suit you if you are relatively cautious with your investments but are willing

to accept some risk to try to achieve a reasonable return.

32

Risk Level III – Medium Risk

• This level invests in both lower risk investments and higher risk investments. This may suit you if

you have a balanced attitude to risk; not seeking risky investments but not avoiding them either,

accepting fluctuations in the value of your investment to try to achieve better long term returns.

Risk Level IV – Medium to Higher Risk

• This level has a high amount in high risk investments but can still invest in lower risk investments.

This may suit you if you are relatively comfortable with investment risk and accept there may be

significant fluctuations in the fund value while aiming for higher long-term returns.

Risk Level V – Higher Risk

• This level will have the highest amount in higher risk investments and a lower amount in lower risk

investments. This may suit you if you are very comfortable with investment risk and accept the

full extent of stock market fluctuations to aim for high long-term investment returns.

Risk groups – full fund range

To help you select the funds which best meet your needs, from the full fund range, Standard Life has

categorised their funds in seven different risk groups and more detail on how they arrive at these

ratings can be found in the Your Investment Choices booklet on the Standard life website.

Volatility rating of an investment linked fund is an indicator of how much the fund price might vary in

relation to other funds. The higher the volatility rating, the less stable the fund price is likely to be.

You may be able to use this guide to decide how much risk you are comfortable taking with your

investments.

The Standard life ratings are categorised in brief as follows (a fuller breakdown is provided in the

Standard Life Investment brochure outlined above):

Cautious (Volatility rating 1, 2 and 3) – Below Average Risk

• The Cautious group offers some potential for growth. While this growth is limited compared to the

Balanced and Opportunity groups, the Cautious group are expected to have a below average risk.

Balanced (Volatility rating 4 and 5) – Average to Above Average Risk

• The Balanced group offers more potential for growth than the Cautious group, but in turn is

expected to be more risky.

Opportunity (Volatility rating 6 or higher) – Higher Risk

• The Opportunity group offers the greatest potential for growth, but is expected to carry a greater

risk of capital loss.

33

Fund types

Managed

• These funds are usually managed by a single fund manager who invests with a view to the long

term. The fund manager will decide what percentage of your money to place in different types of

assets, depending on the risk group; as outlined above. This can include equities and bonds.

Lifestyle profiles

• Lifestyle profiles are a strategy for the life of your Pension Policy, the aim being to start off in

higher risk managed investments and move into lower risk investments automatically as you

approach your selected retirement age thus reducing volatility.

Fund of Funds

• These funds work by using an independent investment expert who researches funds and fund

managers from around the world and selects the specialist areas that form part of the required

asset allocation for the fund. For example, funds and managers will be chosen for their expertise

in different types of equities and bonds. The independent expert continually monitors each fund

and will decide if any individual fund or fund manager should be replaced. These funds can help

investors who are unsure which fund or manager to choose and are happy to pay a marginally

higher charge for on-going monitoring and review.

Specialist

• These are funds that generally do not fit easily into any of the asset classes (equities, property,

bonds or money market instruments), or if they do they apply different investment principles to

more conventional funds.

• A fund could also be classed as specialist if there is insufficient data for the Association of British

Insurers (ABI) Investment Classification Committee to monitor their classification effectively.

Investment Manager Risk

Passive investment

A passive investment will, before charges are deducted, aim to track or replicate the performance of

an index or indices. Market volatility will exist but relative performance will not be positively or

negatively impacted by stock selection decisions of the fund manager.

Active investment

An active investment will use a fund manager to try to achieve above average returns. The fund

manager will try to outperform the market by investing in shares or bonds or other areas which

he/she believes will provide a higher than average return. However, there is also the potential for

under performance. Active investment may introduce greater volatility and will tend to be more

expensive than passive investment.

The above is a brief overview and does not contain full information about where the funds invest.

34

Things to consider when making investment decisions

Spreading the investment risk

Whichever option you choose the value of your Pension Policy and its benefits will depend on the

performance of the funds you invest in.

If you decide to make your own investment decisions, you can invest the contributions across several

different asset types, geographical locations and sectors.

One important aspect of successful investment is diversification, i.e. not putting all your eggs in one

basket…. And you can diversify in several different ways. Here are the most common ones.

Asset diversification

Different assets behave differently under different market conditions. For example, a change in the

market that affects equity prices may not affect government bonds.

Geographical diversification

Economic cycles, currency valuations and industry developments vary from country to country, so you

may want to spread your investment across several countries.

Changes in exchange rates between currencies may also cause the value of your investment to fall or

rise.

Stock diversification

Different companies and industries are affected by different business risks, such as quality of

management, competitive environment and market conditions.

When choosing your investment funds, you can diversify by selecting:

• Funds that are invested in a range of asset classes such as managed or balanced funds

• A fund where the assets are spread globally

• A range of funds. Some of the funds available under the Plan concentrate on one asset type

and/or on a narrow geographical area. Investing in a range of these funds spreads your money

across a range of assets and geographical regions. You can also include global funds, managed

and balanced funds in your choice

35

Would you prefer to make a one off investment choice?

The top tier of the Plan’s investment fund range is a lifestyle option, designed to enable you to make

a one-off investment choice upon joining the Plan.

What is lifestyle?

Lifestyling is an investment strategy designed to invest in growth assets such as equities over long

periods and automatically switch your funds and future contributions to protect the value of your

retirement benefits in later years, by moving more of your funds into less volatile assets such as

bonds and cash.

Lifestyling aims to provide good levels of investment return when you are younger, while aiming to

protect the capital and pension value of your account as you approach retirement.

Under this option, the contributions to your Pension Policy will initially be invested in a growth phase,

typically with exposure to equities and bonds. Once you are approaching your selected retirement

date, your new contributions and existing funds will then be increasingly invested in lower risk funds.

Considerations for investing in a lifestyle profile

The switching process for Lifestyling is based on your selected retirement date. Therefore you must

ensure that Standard Life is informed of your planned retirement age and of any changes to your

plans otherwise Lifestyling may not work effectively.

Standard Life offer a range of Lifestyle Strategies geared to specific ways you may wish to take your

benefits, and these will be communicated to you as you approach retirement. Other options are

available in the second tier for those who do not wish to take advantage of Lifestyling, as well as a

wide range of alternative funds from the third or fourth tier.

It is possible to change your investment choice at any time if you no longer wish to be invested in a

lifestyle profile.

36

Charges

All contributions to the PFG Retirement Plan are made without deduction, meaning that 100% of your

contributions are invested. A fund specific annual charge (AC) is then applied to the money invested

in each fund. As the Company has negotiated special terms for the members of the Plan, Standard

Life will rebate 0.65% of the annual charge of every fund by adding units to your Pension Policy each

month. There are then additional charges on this base charge to arrive at a total annual fund charge.

Full details of how the annual charge is applied, including any additional expenses for specialist funds

can be found in Standard Life’s Your Pension Investment Choices brochure.

The current effective annual charge, including the negotiated special terms, for the lifestyle options

and their constituent funds, are set out below.

Top Tier – the Default Option

Base

Charge

Total

Charge

Standard Life Active Plus III Universal SLP

(Strategic Lifestyle Profile) – initial fund has an

effective Annual Charge (AC) of

0.45% 0.47%

Second Tier – Alternative Options

A range of Strategic Lifestyle Profiles explained onthe Standard Life Website atwww.standardlife.co.uk/c1/lifestyling.page

From 0.35% 0.36%

Third Tier – the full fund range

A wide range of funds as set out in the booklet“How to choose the right investment options foryour pension” which can be found athttp://library.standardlife.com/gpen4.pdf

From 0.35% 0.36%

Please note: Although correct as at April 2018 the charges throughout this guide may change in the

future. Also be aware that most funds have small additional expenses over and above the AMC.

These relate to such costs as custodian fees for each fund and add an extra charge to the AMC. The

total cost is known as the TER (Total Expense Ratio).

Top tier – the Default Option – Universal Strategic Lifestyle Profile

Standard Life’s Active Plus III Universal SLP (Strategic Lifestyle Profile) fund is aimed at Plan

members who want their investment managed for them.

Up to nine years before your selected retirement age, 100% of the contributions made to your

Pension Policy will be invested in Standard Life’s Active Plus III managed fund.

37

The Active Plus III Pension Fund is a medium risk fund that aims to provide long term growth while

Investing in a diversified portfolio of assets across the UK and overseas, including equities, bonds,

property, cash deposits and money market instruments .This is done in order to try and reduce the

risk associated with being solely invested in any one asset class. The Active Plus III Pension Fund is

predominantly equity based and is actively managed by Standard Life’s investment team, who will

vary the proportions held in each asset class to try to take advantage of any opportunities they

identify.

Once you are within nine years of your selected retirement age, the future contributions and some of

the existing funds are gradually moved into lower risk options, starting with the Standard Life Pre

Retirement Pension Fund and then gradually moving into including the Standard Life At Retirement

pension Fund. The investment strategy is shown in the above graph.

Second tier – the Alternative Options – Strategic Lifestyle Profiles

Most members do not wish to be involved in taking investment decisions and monitoring the

investment performance of their funds in detail and the Default Option is broadly suitable for

members of any age. However, at retirement members can take their benefits as an income for life

provided by an insurance company (An annuity), by taking the benefits as a single lump sum/a series

of lump sums, or by keeping their funds invested and withdrawing some income from the investments

each year (known as drawdown). In all cases part of the retirement account can be taken as tax-free

cash.

Members who have made a decision about how they wish to draw their benefits need to ensure that

their funds are invested in the most appropriate fashion during the ten years before they retire.

Members may wish to consider ceasing to invest in the Default Option and choosing an alternative

Lifestyle Profile or other investment that is matched to their retirement plans.

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Those intending to take tax free cash and purchase an annuity with the balance of their fund may

wish to consider the Standard Life Annuity Strategic Lifestyle Profiles such as Standard Life Active Plus

III Annuity SLP (Code A3AP). For more information see http://library.standardlife.com/slpann.pdf

Those intending to take their benefits as a single lump sum/a series of lump sums may wish to

consider the Standard Life Lump Sum Strategic Lifestyle Profiles such as Standard Life Active Plus III

Lump Sum SLP (Code C3AP). For more information see http://library.standardlife.com/slplump.pdf

Those intending to take their benefits by keeping their funds invested and withdrawing some income

from the investments each year may wish to consider the Standard Life Active Retirement Strategic

Lifestyle Profiles such as Standard Life Active Plus III Retirement SLP (Code R3AP). For more

information see http://library.standardlife.com/slpar.pdf

Selecting your own investment funds

Third tier – the full fund range

If you wish to be completely hands-on with your investment choice, you can select from any

combination of the funds available from Standard Life, which can be used to create your own portfolio

and vary the amounts invested to suit your personal preference. Your aim should be to create a

balanced portfolio so that if one market performs badly only a proportion of your investment is

affected.

The full range of funds can be found in the Standard Life brochure How to choose the right

investment options for your pension available on the Standard Life website at

www.standardlifepensions.com/pfg/investment-choices

Charges

The total charge for each fund can be calculated by adding together the annual charge and the

additional expenses shown in the Standard Life literature and deducting the rebate that has been

agreed for the PFG Retirement Plan of 0.65%.

The charges, additional expenses and rebate are not guaranteed. They are regularly

reviewed and may be changed in the future.

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Where can I get help with the investment decision?

If you are unsure about how you want your funds invested and require more information, you can

contact the pension department on 01274 351351.

Alternatively you can obtain investment fund information from the Standard Life website accessible

from the PFG Retirement Plan section of the pension website at www.pfpensions.co.uk

If you are in any doubt about which funds to invest in then you should take independent financial

advice. Provident Financial plc and Standard Life cannot give you individual financial advice.

If you require advice you can obtain details of IFAs in your area by calling the IFA Promotion helpline

on 0330 1000 755 or by visiting their website at www.unbiased.co.uk

Please remember that you may be charged for any advice you receive and Provident Financial plc will

not meet the cost of this advice.

Important notes

Before making your investment choices please make sure you read the following information, which

includes details of some of the risks you should be aware of:

• Before buying a product, you need to be aware of the risks and commitment involved. Details are

available in the Key Features Document on the Standard Life website which can be accessed from

the Provident Financial Pensions website.

• The return on your investment in investment-linked funds is directly related to the performance of

the assets in which they invest and the charges on the fund.

• The price of units in investment-linked funds depends on the value of the underlying assets and

can go down as well as up. You may not get back as much as you invest.

• The volatility ratings for funds are kept under review and might be subject to change.

• The sterling value of overseas assets in these funds may rise and fall as a result of exchange rate

fluctuations.

• The asset mix for each investment-linked fund is continuously reviewed and may be changed in

line with developments in the relevant markets. A proportion of each fund may be held in cash

and other money market instruments.

• In order to maintain fairness and equity between unit holders remaining in and unit holders

leaving a fund, Standard Life may, in exceptional circumstances, delay transferring or switching

all or part of your funds for up to one month or, in the case of units of a fund which invests

directly or indirectly in buildings or land, for up to six months. The delay could be much longer if

the fund is linked to an external fund manager and that fund allows a longer delay. If Standard

40

Life delay the transfer or switch, Standard Life will use the unit prices that apply on the day on

which the transfer or switch actually takes place.

• If you decide to invest in a property fund, you should be aware that property can be difficult to

sell, so you might not be able to sell your units when you want to. In exceptional circumstances, it

may take up to six months. The valuation of property is generally a matter of a valuer’s opinion

rather than fact.

• You can only be invested in one lifestyle profile, and if you select a lifestyle profile you cannot

invest in any other fund as well, but you can opt in or out of this at any time without penalty.

• You can switch your payments in and out of various funds to change the mix of investments but

you can only invest in 12 funds at any one time.

• Funds linked to the fund of external fund managers may be withdrawn at any time by their

respective investment company – this is outside Standard Life’s control. Standard Life is not

responsible for the investment performance of these funds. The external fund manager may

suspend dealings in their fund or delay withdrawals from it.

• The charges and additional expenses are regularly reviewed and may be increased to reflect

increases in overall costs and/or changes in assumptions made. Any increases in charges will not

increase Standard Life’s profit margins above reasonable levels.

• As part of a fund manager’s investment strategy, they may lend some assets from their funds to

selected financial institutions, with the objective of improving the returns of the fund. Lending

assets involves an element of risk. This risk is managed by the fund manager who may apply

controls, such as obtaining security from the borrower and the monitoring the borrower’s credit

rating

• Funds may be able to use derivatives for the purposes of efficient portfolio management and in

some cases meeting their investment objective. A derivative is a financial instrument, the value of

which is derived from the underlying value or movement in other assets, financial commodities or

instruments, such as equities, bonds, interest rates etc. There is a risk that counterparty will

wholly or partially fail to honour their contractual obligations under the arrangement. Where

counterparty fails the fund could suffer a loss. As part of the management of a fund it is possible

to use a number of controls, such as holding collateral and monitoring credit ratings, in order to

reduce the impact of this risk. Depending on how they are used, a derivative can involve little

financial outlay but result in large gains or losses. Standard Life has control over the use of

derivatives in its funds and external fund managers are responsible for their own controls.

• Some of the funds described invest in underlying funds managed by fund managers other than

Standard Life Investments. Where you choose to invest in one or more of these funds you should

note that the fund descriptions are provided to Standard Life by the external fund manager.

Standard Life cannot guarantee the accuracy of this information.

• It should also be noted that the investment performance you will experience from investing in the

Standard Life version of an external fund will vary from the investment performance you would

experience from investing in the underlying fund directly. This will be as a result of a number of

differences, such as charges, tax and timing of investment.

41

The purpose of this part of the guide is to help you make the investment decisions in respect of your

funds in the Plan. It can give general guidance only and you are responsible for ensuring that you are

invested in funds which meet your objectives and attitude to risk. Your individual circumstances will

have a significant impact on what funds may be best for you. It is important to bear in mind that the

past performance of funds is not a reliable guide to their future performance.

Please also note that since the value of your investment can fall as well as rise, its value cannot be

guaranteed and as such it is possible that you may get back less than you originally invested.

Where fund managers may not be able to realise assets in a particular fund then delays may be

imposed on switching and certain withdrawals

This guide has been prepared by Provident Financial plc with the assistance of Standard Life and

Punter Southall Aspire. The information within the guide is based on Punter Southall Aspire’s current

understanding of existing legislation, which might change in future. Punter Southall Aspire has

advised Provident Financial on the general suitability of certain funds within the Standard Life range

and the default option available to members, it is not however in a position to give members

investment advice.

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