In today’s world the notion of working for a single company all your life and retiring at 65 is redundant. Career changes are frequent and many people ease themselves into retirement by going part-time. Which is why a pension today needs to be flexible enough to cope with shifting saving and retirement patterns.

At Scottish Life we’re confident we have such a pension.

Introducing Pension Portfolio

Pension Portfolio is the most flexible pension we’ve ever designed. It brings together all our best retirement planning ideas, including:

• ‘3-in-1’ design – personal pension, self investment options and an income drawdown option combined in a single product.
• Clear, pay-as-you-go charging structure – competitive and transparent charges, where customers only pay for the services they use.
• Complete investment solution – offering customers all the choices they could possibly want and allowing IFAs to be as hands-on or hands-off as they like. Our robust governance framework allows advisers to offer clients a compliant investment proposition – helping them to meet their Treating Customers Fairly (TCF) obligations.
• Menu of commission options – allowing IFAs to tailor remuneration according to the work done for clients. This includes our Financial Adviser’s Fee (FAF) which is consistent with the Adviser Charging proposals in the FSA’s Retail Distribution Review1.
• Five star service – from our online new business tracker and named contacts to clear customer documentation and visible service standards, customer service is central to everything we do.

A compelling investment proposition

Pension Portfolio provides a menu of investment options from ‘off-the-shelf’ solutions to fully bespoke options tailored to individual clients.

For IFAs looking to pick individual funds our fund range comprises over 90 funds; carefully selected in conjunction with fund research company Old Broad Street Research (OBSR).

For IFAs without the time/expertise to build and regularly review investments we have a collection of ready-made options that help IFAs ensure their clients’ money is invested in a way that reflects their attitude risk, and which remains suitable all the way to retirement. This includes:

• Governed Portfolios – a suite of nine risk-graded investment portfolios designed for specific risk categories and investment time horizons. These come with regular governance reviews and auto rebalancing at no extra charge.
• Risk graded governed lifestyle strategies – these lifestyle through the Governed Portfolios, gradually moving customers into lower risk investments as retirement approaches.
• Custom Range – fully customised portfolios and lifestyle strategies.

All this is underpinned by a governance framework overseen by an Investment Advisory Committee (IAC). The IAC regularly monitor the performance of funds and review the Governed Portfolios each quarter to ensure the blend of assets remains appropriate for the specific risk category.

For those wanting even more investment choice, Pension Portfolio also offers an array of Self Investments including a fund supermarket, online share dealing and a panel of discretionary fund managers.

Integrated drawdown facility

Pension Portfolio comes with a fully integrated income drawdown facility – Income Release. This enables customers to withdraw money directly from their pensions at a time and in a way to suit their individual needs – whether as a lump sum, income or combination of both.

This facility is available to customers from age 50 (55 from 06/04/2010) with pension savings of at least £20,000. There is no minimum amount a customer must take – they decide how much to access – and they can make payments back into the plan to boost their retirement savings further.

Competitive charges

Pension Portfolio has a clear and simple charging structure. The basic management charge is 1% p.a. and is reduced by a discount of between 0.1% and 0.65% p.a. based on the value of the plan – meaning the charge can be as little as 0.35% p.a.

This charge covers the plan set-up costs, ongoing administration, investment in core funds and, depending on how the plan is set up, the cost of the advice.

There is no cost for Self Investment options until they are actually used, at which point there is an annual SIPP administration charge plus transaction charges.

If Income Release is used there is a one-off set-up charge of £150.

Attractive remuneration

We recognise the importance of the advice process and the need for IFAs to be adequately remunerated. We also believe the cost of advice should be uncoupled from the ongoing product charges and agreed in advance by the IFA and client.

This is the basis of our Financial Adviser’s Fee (FAF) option. FAF is an up-front remuneration deducted directly from the plan, at outset for single payments/transfers and over the first 12 months for regular payments, which has no impact on the ongoing product charges. Up to 75% of the first year’s regular payments and up to 7.5% of any single payments/transfers can be taken.

If a regular income is required, e.g. to cover the cost of ongoing advice, FAF can be combined with fund based renewal commission of up to 1% p.a.

Summary

Pension Portfolio has proven to be one of our most successful products ever. This success has been underpinned by our commitment to great service, investment flexibility and value for money – all of which make Pension Portfolio one of the most competitive products in the market.

1 Financial Services Authority, CP09/18 Distribution of retail investments: Delivering the RDR, June 2009.