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A guide to Primetime Retirement
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2 Primetime Retirement Guide | Dec 2013
• Founded in 2004
• More than 10,000 customers
• More than £600m invested
• Unique SIPP based structure for added flexibility
• A company solely focussed on the retirement income market
At a glance
An introduction by the CEO and FounderI’d like to introduce you to Primetime Retirement, a specialist company totally focussed on the retirement income market.
When I founded the company in 2004 (as Living Time), I brought together a team who were passionate about the need to Offer More Options to people who were about to retire. I wanted to offer an alternative to the traditional lifetime annuity which could enable retirees to keep their options open in what could be 20 or 30 years of retirement.
This desire remains as strong today as it did in 2004. Indeed, the need is even greater today than it was then as lifetime annuity rates have been driven down to record lows in recent years, whilst the desire for flexibility and choice is growing.
I believe that many people retiring now want to keep their options open and don’t want to make the decision to buy a lifetime annuity that usually cannot be varied in the future, even if circumstances change significantly.
Welcome to the world of Primetime Retirement
Kim Lerche-ThomsenCEO and Founder
Who is Primetime Retirement?
Why is it important to keep your options open in retirement?With a retirement that may last 20 to 30 years or more, it is important to consider purchasing products that will reflect your changing needs through this time. So, what could change in your retirement?
Your health could deteriorateThe majority of retirees are healthy when they retire but sadly, by the age of 75, around half of them are in poor health. Deferring the purchase of a traditional lifetime annuity until later into retirement could enable you to benefit from enhanced rates, potentially boosting your retirement income significantly.
Your spouse or partner may die before you or you may get divorcedBy keeping your options open, you can choose different levels of death or dependant benefits during your retirement that reflect your circumstances at the time, rather than locking in to one set of benefits that cannot be changed. By doing this, it may enable you to subsequently purchase a lifetime annuity on a single life basis rather than a joint life basis and potentially obtain a higher income than would otherwise have been the case.
Your income needs may changeDuring your retirement, your income needs may change because you have received an inheritance or you have downsized your home. With a traditional lifetime annuity it is not usually possible to change your level of income once it has commenced.
Keeping your options open
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How does a Fixed Term Annuity help me keep my options open?A traditional lifetime annuity pays you a guaranteed income for the rest of your life, but once set up, cannot usually be changed to reflect changes in your circumstances.However, a fixed term annuity is just that – an annuity that is paid for a fixed number of years and then a capital sum is returned to you at the end of the term to purchase another product (subject to legislative requirements at the time).
The Primetime Retirement Plan is a fixed term annuity with a term of 5 or 6 years. It provides you with a monthly income chosen by you (within limits prescribed by the government under Capped Drawdown – see Glossary of Terms at the back of this guide) and gives you a pre-determined capital sum (a Protected Maturity Amount) at the end of the term that carries no investment risk. You can choose any income from £nil to the GAD maximum (see Glossary of Terms).
In addition, the Primetime Retirement Plan will always return at least your initial investment (including any income paid) if you die during the term of the Plan. This type of benefit is known as Value Protection (see Glossary of Terms).
For the ultimate flexibility, you are also able to request a transfer value to another product during the term but it should be noted that as the product is designed to be held for the full length of the term, you may not get back your initial investment if you chose to do this. Any transfer value will be based on the underlying value of the remaining income payments due to be paid plus the value of the Protected Maturity Amount (PMA). If interest rates have risen since taking out the Plan, then this value may be materially less than the initial investment.
Keeping your options open
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An example of The Primetime Retirement Plan in actionEmma has £80,000 in an existing pension fund that she wants to transfer to a six year Primetime Retirement Plan. She chooses to take the maximum Pension Commencement Lump Sum of £20,000 (see Glossary of Terms) and invests the balance of £60,000 into the Plan.
Emma is 60 and can choose an income between £nil and £3,816 pa (the maximum allowed under government legislation as at November 2013). She chooses an income of £3,000 pa and this would give her a Protected Maturity Amount at the end of 6 years of £50,680 (based on rates as at November 2013). However, had she chosen a lower income then the PMA would be higher and vice versa.
If Emma were to unfortunately die during the term of the Plan, then a death benefit would be payable equal to £60,000, less any income paid. The death benefit could be used to buy a dependant’s income or could be paid out as cash, subject to a tax charge (currently 55%). For example, the death benefit after 2 years would be £54,000 (see illustration).
At the end of the term she can utilise the £50,680 to buy another fixed term annuity, a traditional lifetime annuity (enhanced if she is now in poor health) or move in to Income Drawdown, subject to any legislative restrictions at the time (see Glossary of Terms).
Please speak to your adviser to obtain a personalised quotation.
Keeping your options open
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6 yearly payments of £3,000pa£18,000 total
2 yearly payments of £3,000pa£6,000 total
6 year Primetime Retirement Plan:
1
1
2
2
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4 5 6Fund Size £60,0006 year Primetime Retirement Plan
Fund Size £60,0006 year Primetime Retirement Plan
Fund Size £50,680Protected Maturity Amount (PMA) after 6 years
Fund Size £54,000Dependant receives the sum of the original fund less any income paid immediately upon death.
Control of your fund during retirementThe two key differences between a traditional lifetime annuity and the Primetime Retirement fixed term annuity are the provision of the Protected Maturity Amount that is payable at the end of the term, and the return of the original investment if you die during the term of the Plan.This enables you to retain control over the value of your investment throughout retirement, rather than lose it at the point of retirement. It is this retention of control that enables you to keep your options open until your circumstances are such that certainty of income for the rest of your life becomes the prime driver of the choice you then make.
Flexibility on how you provide for your dependantsBecause the Plan is written with Value Protection as standard, there is no need to specify any requirements you may have to provide income for dependants when you purchase your plan, giving you greater flexibility if your circumstances change during the term of the Plan.
The ultimate flexibility of a transfer valueIn order to offer you the maximum flexibility of “keeping your options open”, the Primetime Retirement Plan allows you to take a transfer value to another suitable retirement product at any time, based on the market value at the date of transfer. Typical reasons where this ultimate flexibility may prove valuable are as follows:-
• If you are diagnosed with a medical condition that would allow you to benefit from an enhanced lifetime annuity
• Death of a spouse/partner or other financial dependant
• Divorce or marriage
• Any change in financial circumstances requiring an income review
Our retirement plan in detail
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The Primetime Retirement Plan in a nutshell
Keeping control of your investment into
retirement
Value Protection death benefit as
standard
Avoiding stock market volatility as
all the benefits under the Plan are known in advance, giving peace of mind
Ability to benefit from
increases in annuity rates in the future if interest rates go up
(but see risks)
Option availableto give up part of the
Protected Maturity Amount to potentially benefit from
stock market returns through a rise in the FTSE
(see separate guide for more details on this option)
Fully protected
under FSCS* up to £85,000 *See Glossary
of Terms
Ability to leave early for the ultimate flexibility
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Keeping your options open as your
circumstances change
Primetime Retirement LimitedPrimetime Retirement Limited is authorised and regulated by the Financial Conduct Authority under reference 505240.
A SIPP based PlanThe Primetime Retirement Plan is a deposit based investment, held within a Self Invested Personal Pension (SIPP – see Glossary of Terms) for greater flexibility. All the costs of setting up and maintaining the SIPP are included in the benefits shown on quotations. The SIPP is managed by Pointon York SIPP Solutions Limited, a specialist SIPP administrator which is authorised and regulated by the Financial Conduct Authority.
The deposit takerInvestec Bank plc holds the deposit in respect of the Plan. The deposit is structured to provide the fixed level of income and a maturity amount at the end of the term so the benefits can be paid from the Primetime Retirement SIPP. Investec Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
For the avoidance of doubt, Investec Bank plc is acting solely as deposit taker in respect of the Plan and is not responsible for the product structure, marketing or management of the Plan and makes no representation or warranty with respect to the Plan structure.
FSCSIf Investec Bank plc is unable to meet its financial obligation to deliver the payments in respect of the deposit, you will need to seek compensation from the Financial Services Compensation Scheme (FSCS). Investec Bank plc is covered by the FSCS. The FSCS can pay compensation to depositors if a bank is unable to meet its financial obligations. In respect of deposits, the maximum amount that can be claimed would be £85,000. It should be noted that the £85,000 limit relates to the combined amount of all eligible deposits with Investec Bank plc, not just the Primetime Retirement Plan.
Technical Information
Future IncomeAnnuity rates may be lower in the future. The income that the PMA could buy at the maturity date is not guaranteed. It may be higher or lower than the amount received from the Plan during the term. It may also be less than a lifetime annuity would pay if purchased now.
Income LevelsIncome from the Plan is restricted by Government limits which can change and therefore the Plan income may be restricted in later years. Any income that cannot be paid will be retained within the SIPP bank account and added to the PMA to be paid at maturity.
InflationInflation will reduce what you can buy with your income in the future.
TaxationTax treatment depends on individual circumstances and is subject to change.
Receipt of investmentsPrimetime Retirement Plan rates change from time to time reflecting changes in market conditions. If funds are not all received by the date stated on the quotation (the closing date) then you may not be able to secure the same rates, although you will be offered the opportunity to purchase a Plan at the rates prevailing at that time.
The risks explained
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Technical Information
The choices at retirementWe believe that there are three main choices at retirement:-• A traditional lifetime annuity
• A fixed term annuity
• Drawdown (see Glossary of Terms)
The risks and benefits of each choiceFor each of these three main choices, we have looked at the risks and benefits under 4 main headings and the result is summarised below:
The Primetime Retirement Plan is designed to sit as a half way house between the traditional lifetime annuity and Drawdown, capturing as many benefits as possible and as few risks as possible.
How does the Primetime Plan fit into the retirement income market?
Avoids Investment
Performance Risk
Avoids Future Income
Risk
Keeps Future
Options Open
RetainsControl
ofFunds
Conventional Lifetime Annuity
Fixed Term Annuity
Drawdown
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What should I do next?
If you think that one of our plan options may be appropriate for your needs, you should consult your financial intermediary before taking any further action.Our plans are open to anyone aged between 55* and 75 years of age, at the time of taking out the plan, who has an appropriate pension fund to invest. Your financial intermediary will be able to tell you if your pension fund is suitable for this type of investment.
*49 if no income is taken prior to age 55.
You should also make sure that you fully understand the benefits and risks of these plans. The risks are explained on page 8 of this guide.
Your financial intermediary will provide you with a personal illustration that will specify the plan benefits based on your level of investment.
If there are any terms that have been used in this guide that you do not understand, you may find the ‘Glossary of Terms’ on the next page helpful. Alternatively, speak to your financial intermediary.
What other sources of information are there about the plan options?A range of literature is available that clearly explains all of the features, benefits and risks of the different plan options available, including:
• Key Features Document
• Primetime Retirement Plan Guides
• Policy Conditions
• Sample Rates Sheets
Further Information© lnvestec plc. The brochure contains numerous trade marks belonging to lnvestec Group plc and other companies in the lnvestec Group. These trade marks include, but are not - limited to, the lnvestec logo, lnvestec plc, lnvestec Bank plc, lnvestec Structured Products and lnvestec. If you are In doubt as to whether an item is a trade mark of the lnvestec Group, please contact us for clarification at 2 Gresham Street, London EC2V 7QP.
lnvestec does not owe any fiduciary obligations to Primetime Retirement Limited or to any investors in the product. lnvestec makes no express or implied representations or warranties concerning (i) the accuracy or completeness of the contents of this document, (ii) whether or not the product described herein may achieve any particular level or meet or correlate with any particular investment objective or (iii) the fitness for any purpose of the product or completeness of this description. lnvestec Bank plc and its affiliates shall have no liability to any person for the quality, accuracy, or completeness of the information in this description. lnvestec Bank plc has not collaborated in the development and promotion of the product described herein and makes no warranty or representation, express or implied in connection with the product or the purposes for which it is used. lnvestec Bank plc has not issued or approved this document for the purposes of the Financial Services and Markets Act 2000.
This brochure is not produced by lnvestec Bank plc or any of its affiliates and has not been assessed by lnvestec Bank plc as to its accuracy nor its suitability. © lnvestec plc. All rights, save as expressly granted, are reserved.
COMP 12-082 | Dec 2013-11-20
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Glossary of Terms
Lifetime AnnuityA plan that pays an income, for life, in exchange for a pension fund. The level of income will depend on a number of factors including the size of the fund and your current age.
Capped DrawdownA type of Drawdown arrangement where the Government limits the maximum amount of income that can be taken.
DrawdownA pension arrangement where retirement income is taken directly from a pension fund, rather than the fund being used to purchase an annuity.
Enhanced Lifetime AnnuityA Lifetime Annuity that pays a higher rate of income due to certain medical or lifestyle factors, for example if you smoke, take regular medication or have suffered a serious medical condition.
Financial Services Compensation Scheme (FSCS)A compensation fund of last resort for customers of authorised financial services firms. If a firm becomes insolvent or ceases trading the FSCS may be able to pay compensation to its customers.
Government Actuary’s Department (GAD)The Government department that calculates the maximum income levels that can be taken from Capped Drawdown arrangements. These limits also apply to income payable from the Primetime Retirement Plan and Primetime Retirement Plus Plan.
Self Invested Personal Pension (SIPP)A type of Personal Pension Scheme that allows a wider range of investments than a conventional personal pension.
Value ProtectionA death benefit equal to the initial investment less any income paid to date of death.
Trustee (pension trustee)A person or organisation whose job is to ensure the correct running of a pension scheme.
WrapperA tax efficient structure, like a SIPP, that can hold a range of investments.
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Awards won by Living Time Limited, the former name of Primetime Retirement Group Limited
Life and Pensions 2009 & 2010
Primetime Retirement Limited is registered in England with company number 06950170 and has its registered office at 89 New Bond Street, London W1S 1DA. Authorised and regulated by the Financial Conduct Authority, reference 505240. Primetime Retirement Group Limited (previously trading as Living Time Limited) is registered in England with company number 04750947.
Index provider disclosureThe plan is not in any way sponsored, endorsed, sold or promoted by FTSE International Limited (‘FTSE’) or by the London Stock Exchange Plc (‘LSE’) or by The Financial Times Limited (‘FT’) and neither FTSE nor the LSE nor FT makes any warranty or representation whatsoever, expressly or impliedly either as to the results to be obtained from the use of the FTSE 100 Index (the ‘Index’) and/or the figure at which the Index stands at any particular time on any particular day or otherwise. The Index is compiled and calculated solely by FTSE. However, neither FTSE not the LSE nor FT shall be liable (whether in negligence or otherwise) to any person for any error in the Index and neither FTSE nor the LSE nor FT shall be under any obligation to advise any person of any error therein. FTSE, FT-SE and Footsie are trade marks of the London Stock Exchange Plc and The Financial Times Limited and are used by FTSE under licence.
Pointon York SIPP Solutions Limited. Registered in England, No. 4356056. Registered Office: Pointon York House, Welland Business Park, Valley Way, Market Harborough, Leicestershire LE16 7PS. Pointon York SIPP Solutions Limited is authorised and regulated by the Financial Conduct Authority. FCA No: 309975.
Investec Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered under Financial Services Register reference 172330.
