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IMI Retirement Savings Plan Booklet
your future
Building for
Find outmore inside
It is important that you read all of the documents that have been provided. The information we have given in this document is based on our understanding of law and the practice of HM Revenue & Customs in September 2018. Tax and legislation often change.
IMI Retirement Savings Plan
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Your pension is a valuable benefit Please take time to read this guide to find out how to get the most out of it.
We recommend you visit the IMI pensions website at www.imipensions.com/rsp for more information on the RSP, and to make use of the online support tools to help with your decision making.
Trust Deed and Rules Please keep in mind that this booklet is designed to provide you with a summary of the IMI Retirement Savings Plan Trust Deed and Rules.
Whilst every effort is made to ensure the accuracy of the information in this guide, in the event of a discrepancy the Trust Deed and Rules will override this guide.
It is not intended to replace the Trust Deed and Rules, a full copy of which is available on the IMI pensions website www.imipensions.com.
Seek financial adviceNot everyone feels comfortable making financial decisions, so we recommend you seek financial advice if you are unsure about the choices you should make. There may be a cost for this advice.
More information can be found on pages 33 – 34.
Welcome to the IMI Retirement Savings Plan Booklet IMI has put the IMI Retirement Savings Plan (“RSP”) in place as an opportunity for you to prepare for retirement.
The aim of the RSP is to build up an account that you can use to help provide you with an income in retirement. This account is built up using contributions paid in by yourself and IMI, and the return on the assets these contributions are invested in. You can choose the contribution rate that suits you. Your employment with IMI means that IMI will also make a contribution of up to 6% of your Pensionable Pay (or as agreed by IMI).
If eligible, you will be automatically enrolled into the RSP three months after joining IMI. (Please see “What type of employee am I?” on page 5 to find out if you are eligible for the RSP). If you are automatically enrolled, you will start by paying the Minimum Contribution Rate (see page 9), but this might not be enough.
In addition to employer contributions into the RSP, all IMI’s eligible UK employees receive a Death in Service benefit of five times their Pensionable Pay. On death in service, a lump sum will be paid to your beneficiaries, in addition to the value of your RSP account.
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Contents
Understanding the RSP 4What type of employee am I? 5 How does the RSP work? 6
Contributions 8What to think about 8 Smart Pay – salary sacrifice 10
Retirement 27 Retirement support 29
Death benefits 30
Next steps 31
Other sources of help and information 33Resolving issues 33 Jargon buster 35
Planning for the future is importantThe RSP aims to help you do this. We have split this guide into six parts to help you understand how the RSP works and the options you have.
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Understanding the RSP
The role of the TrusteeThe RSP is a trust-based occupational pension plan registered with The Pensions Regulator and HM Revenue & Customs (“HMRC”). IMI Pensions Trust Limited (The “Trustee”) is responsible for running the RSP in the members’ best interests but in line with current law and the Trust Deed and Rules.
Copies of the Trustee’s annual report and Plan Trust Deed & Rules can be obtained at www.imipensions.com.
The RSP is administered by Willis Towers Watson and its contributions are invested via a platform provided by Legal & General.
Am I eligible to join the RSP?You can join the RSP if you are an eligible employee (see flowchart on page 5) of an IMI UK-based company. Any new employee can join from their first day of employment by completing and returning the contribution commencement form, included in your Offer of Employment pack. On this form you can select the rate at which you wish to contribute.
Alternatively, eligible employees will be automatically enrolled after being employed for three months. If you are automatically enrolled, you will be joined at the minimum contribution level required by current legislation. You can increase your contribution to benefit from additional contributions from IMI (see page 8 for more information).
What if I do not want to join the RSP?On joining the RSP you will receive a letter from Willis Towers Watson confirming your membership, and setting out the steps to opt out of membership of the RSP. This involves contacting Willis Towers Watson by telephone or online and following the procedure given. Willis Towers Watson can only accept contact from you. Your employer is not permitted to instigate the statutory opt-out process. If you opt out within one month of joining the RSP, Willis Towers Watson will unwind the record and return any paid contributions via your employer who in turn will return them to you less tax. You will be treated as never having been a member of the RSP.
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“ You can join the RSP on your first day of employment by completing a contribution commencement form. ”
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Do you work, or usually work,
in the UK?
Do you earn less than
£5,876 per year?
Do you earn less than
£10,000 per year?
No entitlementWorkers overseas will not be auto-enrolled until working, or predominantly working, in the UK.
Entitled jobholderEntitled jobholders will not be auto-enrolled. You can choose to join the RSP and you will receive company contributions.
Eligible jobholderAll eligible jobholders will be auto-enrolled into the RSP after a three month postponement period. You can choose to join the RSP before the end of the postponement period by completing a contribution commencement form. All eligible jobholders will receive company contributions.
What type of employee am I?
Correct as at September 2017
Are you aged between 22 and State
Pension Age?
Non-eligible jobholderNon-eligible jobholders will not be auto-enrolled. You can choose to join the RSP before you become an eligible jobholder and you will receive company contributions.
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What if I want to opt out of the RSP after joining? As an active member, who has been contributing for more than a month, you can opt out by completing an opting out of membership after the one month window form obtained from your local pension or HR contact. This type of opt-out is not done through Willis Towers Watson – it is not a statutory opt-out. All contributions will stop at the payroll run following completion of the opt-out form. Your accrued fund will be held within the RSP until you retire, die or choose to transfer out. If you elect to terminate your active membership by opting out whilst remaining in service, you will not be re-admitted to active membership unless IMI agrees or, if sooner, when auto-enrolment assesses you as an eligible jobholder.
You should think carefully about opting out as it means you will miss out on contributions from IMI and tax benefits from the Government.
What happens if I leave IMI?If you leave IMI you will have the choice of leaving your account invested in the RSP or transferring its value to another pension arrangement. If you leave your account invested in the RSP, you will continue to benefit from the charges negotiated by the Trustee (see page 24 for details). The administration team will write to you to confirm the options available to you.
How does the RSP work?
These contributions are used to buy units in the funds you have chosen to invest in.
Which, with any potential investment return and less
any charges, aims to build up your RSP account. You can
then choose how to take your retirement benefits from your account.
IMI contributes
YOU contribute
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5x life coverRegardless of your joining option above, if you are a qualifying UK employee you will be covered for
five times life cover whilst employed by IMI.
IMI RSP Journey
Make sure you benefit from IMI, because if you do, so do your dependants.
Opt out If you opt out, you
will miss out on IMI’s contributions.
LaterYou may be auto-enrolled if you do not opt out.
NowSimply complete the Joining Form.
You will get immediate and long-term benefits Flexible access to your pension via the IMI Drawdown;
Protection for your dependants should you die; and
You may be able to continue working for IMI after drawing your RSP account.
You can join...
Investment options
Self-Select; or
RSP Lifestyle.
More details about these options can be found on page 11.
Contribution choices
IMI matches up to 6%.
If you do not make a choice, you will pay the minimum contribution rate (see page 9 for details).
Target Retirement Age (TRA)
Unless you advise us otherwise, we will assume this is 65.
You do not need to leave employment with IMI to draw your RSP pension, but you will need IMI’s permission.
You have the flexibility to choose your...
What happens if...
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You die in service If you are eligible for a Death in Service benefit, a lump sum of five times your pensionable salary will be paid to your beneficiaries, alongside the value of your RSP account.
You die before drawing from your RSP accountYour beneficiaries will receive the value of your RSP account.
You die after drawing your RSP accountYour beneficiaries could receive payment of any remaining guaranteed annuity payments or uncrystallised elements of your account. The Fund Administrators can advise if a final payment is due.
5% 5% 10%
6% 6% 12%
6+% 6% 12+%
If you contribute (% of Pensionable Pay)
IMI contributes (% of Pensionable Pay)
Total
ContributionsWhat to think about
Some questions to ask yourself are: How long until I retire?
What lifestyle will I want?
What commitments will I have?
What pension can I expect from the State and any other pension plans I have?
How will IMI’s contribution help?
How much should I put in?
Is this affordable?
Do I Self-Select my investments or choose the RSP Lifestyle?
When is my State Pension Age?
When do my other pension arrangements assume I will retire?
Why not try the RSP’s online planning tools?
You can estimate income or check what happens if you contribute more or retire at a different age. For more details visit www.imipensions.com/rsp and select the Willis Towers Watson ePA icon.
From IMIIMI will also make contributions into your RSP account up to a maximum of 6% of your Pensionable Pay (or as agreed with IMI).
When you become a member you can choose to pay more if you
want to.
Your contribution should be
affordable and you need to think about
your long term plans.
Your pension contribution will
be deducted from your salary before
tax has been calculated.
The Pensions Regulator has announced that from April 2019, the minimum total contribution will be increasing to 9% under auto-enrolment. The minimum employee contribution will be increasing to 5%. However, the Trustee, along with the Company, has decided to increase the minimum Company contribution to 5% as well, meaning the total minimum RSP contribution will become 10% with effect from 1 January 2019.
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HMRC has an Annual Allowance for the total payments that you, IMI and any third party can make, tax-efficiently, to all your pension plans (excluding transfer payments).
The actual value of this allowance may depend on your taxable income and whether or not you have drawn money (not transferred) from one of your pension pots. More information can be found at www.hmrc.gov.uk/tools/pension-allowance.
You may have to pay a tax charge on any payments that exceed this allowance. If the total payments to all your plans are less than the allowance in one tax year, you may be able to carry forward the unused allowance for up to three tax years.
You can get more information on the tax laws for pensions at www.gov.uk/tax-on-your-private-pension.
Minimum Contribution Rate If you are enrolled automatically your contribution will start at the minimum level, and therefore may not maximise the amount IMI will put into your account in addition to your contribution.
From 1 January 2019, the RSP’s minimum contribution you can make will increase to 5%, and will increase gradually over time (subject to changes in auto-enrolment legislation).
1 2 3 4JAN JAN JAN JAN
Can I change my contribution?Once you are a member of the RSP you can change how much you contribute by completing a contribution change form. The form is available from your local pensions contact. Changes will be actioned in the following payroll run.
It is good to be involved with your pension. This means giving it a regular check to make sure it is on track to meet your future needs. Take some time to consider:
Am I contributing enough?
Am I invested in the right funds?
Is my Target Retirement Age appropriate for me?
Think of it as, what do I need to do now to better target my needs?
If you know what you want in the future, start planning now to help make it happen.
Increasing your contributionIf you increase your contribution, the IMI matching contribution will also increase (up to a maximum of 6%, or as agreed with IMI).
Decreasing your contributionIf you decrease your contribution, the IMI matching contribution (up to a maximum of 6%, or as agreed with IMI) will decrease at the same time.
If you want to continue contributing into the RSP, you must contribute at least at the minimum contribution rate as set out by the Government (see above).
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Smart Pay – salary sacrificeThe RSP uses a salary sacrifice arrangement for pension contributions called Smart Pay. You will be entered into Smart Pay upon joining unless you choose to opt out by completing the opt-out form included in your Offer of Employment pack.
The member gives up an amount of pay equal to their pension contribution (i.e. sacrificed pay). The employer pays that sacrificed pay into the member’s RSP account as an employer pension contribution, as well as their own matching employer contribution.
The member’s gross pay is reduced by an amount equal to the employer’s contribution and, therefore, both the member and the employer pay lower National Insurance (NI) contributions. The majority of members will benefit from an increase in their take-home pay as a result of paying less NI contributions. Full details about Smart Pay can be found on your pension website www.imipensions.com/rsp.
“ The majority of members will benefit from an increase in their take-home pay as a result of paying less NI contributions. ”
It is important to remember that Smart Pay is not right for everyone. It is a change to your terms of employment and could affect your state benefits or your ability to borrow. There are circumstances where IMI will not allow you to pay by Smart Pay; for example, if your earnings are close to the National Minimum Wage. If this affects you, IMI will let you know.
Additional or higher tax payers will not have to claim tax relief through their annual self-assessment tax return or tax coding, because all pension contributions will be made by the employer unless they make a one-off contribution. One-off contributions are not made via Smart Pay.
If you are not sure whether Smart Pay is right for you, you should speak to IMI or ask an Independent Financial Adviser (IFA) for guidance. Full details about Smart Pay can be found on your pension website www.imipensions.com/rsp. For information on financial advice, please visit www.pensionwise.gov.uk.
1010
InvestmentsAs well as the level of contributions paid into your RSP account, the manner in which your money is invested can help it to grow over time.
The Trustee has selected a lifestyle option (RSP Lifestyle) and 14 Self-Select options for you to choose from. When you get within five years to retirement, the RSP Lifestyle offers three pre-retirement pathways depending on how you wish to take your RSP account at retirement.
The RSP offers a range of funds designed to meet different member needs.
The RSP Lifestyle option invests in funds that aim to help your money grow when you have many years until you are due to retire. Depending on how you wish to take your RSP account at retirement, this option offers you three retirement pathways you can choose from.
The lifestyling option may be suitable for members who do not want to make an active investment choice. In the RSP the lifestyling option automatically changes the investments the member’s account is invested in as the member gets closer to retirement.
See page 19 for details.
RSP LifestyleSelf-Select
There are two main choices you need to consider:
If you are familiar with investments and would like to select your own funds, then you can choose where you invest your RSP account.
The Trustee has made available funds from a variety of different investments (Equities, Bonds, Property, etc.) and different management styles (passive and active funds). There are 14 self-select funds available that offer varying amounts of risk versus reward.
See page 15 for more information.
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12
Considerations
Investment approaches
Capital risk is the risk that a member may lose all or part of the principal amount invested. If you are in doubt about which investment(s) you should choose (you can change your investment choices at any time), you can get advice by speaking to an IFA. For information on financial advice please visit www.pensionwise.gov.uk.
How much capital risk you are comfortable with.
The balance between this risk and opportunity
for growth (return on your investment).
What your needs are and how much involvement
you would like in your investment decisions.
When choosing which options are best for you, consider...
Active investmentActive investments aim to achieve returns that are above average, using fund manager analysis. The fund manager will try to outperform the market by investing in companies that they believe will provide higher than average returns. However, returns are not guaranteed, and there is a chance of poor performance. These investments can have more risk than passive investments, and are usually more expensive.
Passive investment‘Passive’ investing is the opposite of active whereby instead of stock picking and trying to out-think the market, the fund will aim, before charges, to match the performance of an index. For example a passive FTSE 100 fund may aim to matching the return of the FTSE 100 Index by investing in companies that make up the index.
Low High
12
13
The risk ratings for funds are kept under review and may change. The risk rating is not the only factor you should consider when selecting a fund.
Opportunity for growthFund values will move in line with the assets in which the fund(s) invests. The movement of these assets will depend on a number of factors such as the economy and market confidence. Different funds will carry different levels of risk. Usually, funds that have a higher potential for growth also carry higher risk that the value of your investment could fall. This is why it is important to get the right balance between risk and potential return.
Think about your personal circumstances, the amount you will invest and the time you have until you retire. Remember, your attitude to risk may change as you get nearer to retirement. For example, you may no longer wish to invest as much in funds that carry higher risks.
Funds can fall as well as rise in value, and may be worth less than you put in. Past performance is not a reliable guide to future performance.
Risk ratingsThe risk rating of a fund indicates how much the fund price might move compared to other funds. The higher the risk rating, the less stable the fund price is likely to be. You can use this to help you decide how much risk you are comfortable taking with your investments.
The Trustee regularly reviews risk ratings for funds, and these may change based on:
How the fund price has varied from month to month in the past, compared to other funds available; and
How investments in similar asset classes vary from month to month and the investment policy of the fund.
Typically, higher risk ratings mean greater potential investment returns over the longer term, but high risk funds are more likely to suddenly fall or rise in value. The risk ratings for funds are kept under review and may change. The risk rating is not the only factor you should consider when selecting a fund.
More risk
Less risk
Basics of investing
13
If you do not make an investment choice, both your and IMI’s contributions to the RSP will be automatically invested in the RSP Lifestyle (page 19).
Unless you tell us otherwise, your default Retirement Age will be assumed to be 65 and your pre-retirement pathway will be the Stay Invested option (page 21).
This may well be the right choice for you, but you should be aware of the other options available. The Trustee in no way wishes to imply that the RSP Lifestyle is a better investment option than any other. The suitability of any investment option for you will always depend on your individual circumstances.
ChargesThere are two types of charges that will apply to your funds: an Administration Charge and an Investment Management Charge. The Trustee has agreed a flat Administration Charge, and the Investment Management Charge will depend on the types of funds you are invested in (see page 24 for more information).
The current fees can be found on www.imipensions.com.
After you have joined the RSP you will be able to track and change your investment choices. It is important to review your choices on a regular basis as your circumstances change. For example, as you get nearer to retirement you may no longer be prepared to invest as much in higher risk funds. Instead you may wish to invest more in funds that prepare your RSP account for your pension benefits at your Target Retirement Age. You can find out more about tracking your pension and changing your investment choices online at www.imipensions.com/rsp.
“ Can I change my investment choice in the future? ”
“ I want to be in the RSP but I do not want to make an investment choice. ”
You can invest in:
RSP Lifestyle; or
Choose your own investment(s) from the range offered.
You can invest in a mix of investment funds but you cannot combine them with the RSP Lifestyle.
Please see pages 15 to 23 for details on all of the options available. These have been selected by the Trustee and cover most of the major types of assets, with different levels of risk.
“ I want to join and make an investment choice. ”
Investments
14
Equities (otherwise known as shares)What are they? Equities are part ownership in a company, usually known as stocks or shares.
What is the potential return? The return on equities comes from growth in the value of the shares, plus any income from dividends. For overseas equities, changes in the foreign currency exchange rates could also significantly affect returns.
What are the risks? Equities are one of the more risk asset classes – although they can offer good growth potential, their value can rise or drop sharply at any time. Equities, because of this volatility, should normally be viewed as a long-term investment.
Fund Name Objective Capital Risk
Inv Mgmt
Fee
Admin Fee Total
Global Equities – Passive
To provide long-term capital growth in excess of UK price inflation by investing in global listed shares. The fund aims to perform in line with the benchmark as closely as possible.
0.12% 0.20% 0.32%
Global Equities – Active
To provide long-term capital growth in excess of UK price inflation by investing in global listed shares. The fund aims to outperform the benchmark over the long term.
0.92% 0.20% 1.12%
Emerging Market Equities – Passive
To provide long-term capital growth in excess of UK price inflation by investing in shares predominantly listed in developing countries. The fund aims to perform in line with the benchmark as closely as possible.
0.20% 0.20% 0.40%
UK Equities – Passive
To provide long-term capital growth in excess of UK price inflation by investing in UK listed shares. The fund aims to perform in line with the benchmark as closely as possible.
0.07% 0.20% 0.27%
Shariah Law Equities – Passive
To provide long-term capital growth in excess of UK price inflation by investing in global listed shares in a Shariah compliant manner. The fund aims to perform in line with the benchmark.
0.35% 0.20% 0.55%
Sustainable & Responsible Equities – Passive
To provide long-term capital growth in excess of UK price inflation by investing in global listed shares in companies that operate in a sustainable and responsible manner. The fund aims to perform in line with the benchmark.
0.15% 0.20% 0.35%
The Trustee has made available a range of 14 Self-Select options for members to choose from a variety of different asset classes (Equities, Bonds, Property, etc.) and management styles (passive and active funds).
An asset class is a category of assets or investments, such as equities or bonds. Normally assets in the same class have similar characteristics. They can, however, have very different returns or risks. The risk rating of a fund indicates how much the fund price might move compared to other funds. The higher the rating, the less stable the fund price is likely to be. Use the risk rating below to help you decide.
The value of the investments in all asset classes can go up as well as down in value, and may be worth less than what was paid in – there are no guarantees. Past performance is not a reliable guide to future performance.
Your Self-Select investment options
15
BondsWhat are they? Bonds, also known as fixed interest securities, are essentially loans to a government or company. These loans are often for a set time period and the bond owner usually receives regular interest payments. Bonds issued by the UK Government are called “gilts” and those issued by a company are called “corporate bonds”. Most bonds pay a fixed rate of interest, but some are linked to an index, such as a market index or inflation.
What is the potential return? The return is a combination of any interest received and any change in the bond’s value. For overseas bonds, changes in the foreign currency exchange rates could also significantly affect returns.
What are the risks? A bond’s return will be affected if:
The interest or capital cannot be paid back in full or on time;
The credit worthiness of the company or government reduces; or
Interest rates or foreign currency exchange rates change.
Bonds can be traded on the stock market, so their value can go up and down at any time. Some bonds are riskier than others, e.g. bonds issued for a longer time period or by companies which are viewed as risky.
Investment options
Fund Name Objective Capital Risk
Inv Mgmt
Fee
Admin Fee Total
Global Bonds – Active
To provide long-term capital growth in excess of UK price inflation by investing in global bonds. The fund aims to outperform the benchmark over the long term.
0.25% 0.20% 0.45%
UK Corporate Bonds (High Grade) – Passive
To provide long-term returns higher than would be available from Government-backed bonds. The fund aims to perform in line with the benchmark as closely as possible.
0.10% 0.20% 0.30%
UK Fixed Income Gilts (Long duration) – Passive
To provide long-term returns by investing in fixed-interest bonds issued by the UK Government with maturities longer than 15 years. The fund aims to perform in line with the benchmark as closely as possible.
0.04% 0.20% 0.24%
UK Inflation Linked Gilts – Passive
To provide long-term returns by investing in index-linked bonds issued by the UK Government. The fund aims to perform in line with the benchmark as closely as possible.
0.04% 0.20% 0.24%
Annuity Purchase FundTo mitigate against pension conversion risk (for non-increasing and fixed increase annuities).
0.15% 0.20% 0.35%
16
Property What are they? Property investing includes direct investments in buildings and land, as well as indirect investments such as shares in property companies.
What is the potential return? The return from a direct investment in property is a combination of rental income and any change in the property value. In comparison, the return on property securities can be similar to equities (see the equities asset class description for potential returns and risks).
What are the risks? The value of direct property is generally based on a valuer’s opinion and is not fact. Property can take a lot longer to sell than other types of investment. Property securities, like equities, can have sharp changes in value at any time.
The values of different types of property do not necessarily move in line with each other. For example, commercial property could be losing value even if house prices are going up.
Diversified asset fundsDiversified asset funds invest in a wider range of asset classes than traditional managed funds do. Typically, they will aim for some sort of targeted return over a particular period of time; for example, a return above inflation or interest rates, and will often significantly vary the types of assets they invest in based on market conditions. However, the strategies used to try to achieve these aims may vary widely from manager to manager.
Investment options
Fund Name Objective Capital Risk
Inv Mgmt
Fee
Admin Fee Total
Diversified Asset Fund
To provide long-term capital growth in excess of UK price inflation. The fund aims to have less capital risk than an equities based-fund by investing in a broad range of asset classes including equities, bonds, and a range of alternative assets. The fund aims to perform in line with the benchmark, over the long term.
0.74% 0.20% 0.94%
Fund Name Objective Capital Risk
Inv Mgmt
Fee
Admin Fee Total
Property – Active
To provide long-term capital growth in excess of the UK price inflation by investing in commercial property, directly and/or indirectly via property companies listed around the world. The fund aims to outperform the benchmark over the long term.
0.50% 0.20% 0.70%
17
Money market instruments (including cash)What are they? Money market instruments include deposits with banks and building societies, as well as governments and large corporations. They also include other investments that can have more risk and return than standard bank deposits. There are circumstances where money market instruments can fall in value.
What is the potential return? The return comes from any interest received and any change in the value of the instrument.
What are the risks? Investments in these assets are riskier than cash deposit accounts – in some circumstances their values will fall. The return may also be lower than inflation.
Investment options
Fund Name Objective Capital Risk
Inv Mgmt
Fee
Admin Fee Total
Cash – Active
To protect the absolute value of the investment by investing in deposits and other short-term money market instruments. The fund aims to perform in line with the benchmark.
0.11% 0.20% 0.31%
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With the RSP Lifestyle, the funds you are invested in at any point will also depend on the length of time until your Target Retirement Age. When you have a longer time to your Target Retirement Age the RSP Lifestyle aims to provide growth by investing in funds that offer growth potential over the longer term. If you are at least 15 years from your Target Retirement Age your RSP Account aims to invest in the following funds and proportions:
At 15 years from your Target Retirement Age the RSP Lifestyle starts to reduce the exposure to equities by gradually increasing the allocation to the IMI Retirement Fund (page 23) and a Diversified Asset Fund, with the aim of reducing volatility whilst still targeting investment returns in excess of inflation. This will happen through automatic switching of your funds. This process continues until 5 years from your Target Retirement Age where the RSP Lifestyle will be invested:
40%22%
5% Global Equities – Passive
Emerging Market Equities
IMI Retirement Fund
Diversified Asset Fund
33%
Global Equities – Passive
Emerging Market Equities
10%
90%
The RSP Lifestyle
Years to go
Years to go
1919
Key
The Pre-Retirement Pathways With your retirement approaching, this would be a good time to think about how you would want to use your RSP account in retirement, be it as a lump sum payment, a series of payments via Drawdown or a pension for life via an annuity. The RSP Lifestyle aims 5 years before your Target Retirement Age, to move away from providing growth to preparing your account for retirement. The RSP Lifestyle has three pre-retirement pathways for you to choose from, each one linked to a retirement option.
You should choose your Target Retirement Age based on when you think you will retire. You should always keep your Target Retirement Age under review and keep Willis Towers Watson up to date with any changes as this may affect the suitability of the funds the RSP Lifestyle has choosen for you.
If you make no choice your Target Retirement Age will be 65.
The RSP Lifestyle has three pre-retirement pathways (Cash Lump Sum, Annuity and Stay Invested). Unless you choose differently you will be defaulted into the “Stay Invested” option. The Trustee has created a pre-retirement guide, which will be mailed out to you (it is also available on the RSP website) as you approach the 5 years to go point to help you decide which pathway may be most suitable for you.
5 Years to go
Before you make any decisions please make sure you read the further information on page 25.
The RSP Lifestyle
Diversified Asset Fund
0
20
60
40
80
100
% o
f inv
estm
ents
Years to retirement
25 5 020 15 1030
Selected Pathway
See page 21
Start switching to lower risk investments
Pre-retirement pathwayIn the last 5 years before a member’s Target Retirement Age - the RSP Lifestyle has three different lifestyling options or “pathways”, which adjust the member’s investments depending on the member’s preferred retirement option. See page 21 for details.
Global Equities Passive
Emerging Market Equities Passive
IMI Retirement Fund
20
The RSP Lifestyle has three different pre-retirement investment pathways: “Cash Lump Sum”, “Annuity” and “Stay Invested”, which reflect the differing nature of options available.
010
50
30
70
20
60
40
8090
100
% o
f inv
estm
ents
Years to retirement
30 28 26 24 22 20 18 16 14 12 10 8 6 4 2 0
The Cash Pathway moves the account out of growth-seeking assets into a very low volatility cash fund, for those members who intend to take their RSP pot in a lump sum payment (which can be paid in one go or over two tax years). One quarter of the lump sum would be tax free the remainder taxed at the member’s marginal rate in that tax year.
Cash Lump Sum
010
50
30
70
20
60
40
8090
100
Years to retirement
% o
f inv
estm
ents
30 28 26 24 22 20 18 16 14 12 10 8 6 4 2 0
The Annuity Pathway gradually moves the account to be 25% invested in cash funds and 75% invested in the IMI Retirement Fund for those members thinking of taking the maximum amount of tax-free cash (25%) and the remainder as an annuity.
Annuity
30 28 26 24 22 20 18 16 14 12 10 8 6 4 2 00
10
50
30
70
20
60
40
8090
100
% o
f inv
estm
ents
Years to retirement
Key
The Stay Invested Pathway creates a blended portfolio with a mix of global equities, the diversified asset fund and the IMI Retirement Fund to continue to offer growth potential but with some protection against moves in annuity pricing. This option is for those who wish to utilise the IMI Drawdown by taking their retirement pot over a period of time or for those who remain flexible regarding the date of their retirement.
This is the default option in the RSP Lifestyle unless members select another pathway.
Stay Invested
The RSP Lifestyle
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Global Equities Passive IMI Retirement Fund
CashEmerging Market Equities Passive
Diversified Asset Fund
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The contributions you pay into your RSP account, and when you choose to access it, have a big impact on how much money you will have in retirement. The table below provides examples of how much you could receive in retirement depending on which pre-retirement pathway you select.
Take control of your RSP journey
For example, if your final RSP pot is £200,000 you could:YR
1YR
2YR
3YR
4YR
5YR
5+
IMI DrawdownTake £50k tax free in the first year and then take the remaining £150k over the following five years.
£30k£30k£30k£30k£30k
£50kTAX FREE
Your annuity is taxable. Regular income for a fixed period / the rest of your life
AnnuityPurchase a larger annuity without an initial tax-free lump sum.
Cash Lump Sum (UFPLS)Take £50k tax free and receive the remainder as a taxable lump sum.
£150k
£50kTAX FREE
AnnuityTake £50k tax free and purchase an annuity with the remainder.
Your annuity is taxable. Regular income for a fixed period / the rest of your life
£50kTAX FREE
Cash Lump Sum Take £25k tax free over two years and receive the remainder as two taxable lump sums.
£25k £25k
£75k £75k
TAX FREE
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The IMI Retirement Fund is a wrapper for a blend of passive bond funds selected by the Trustee for the pre-retirement phase of the RSP lifestyle, to give greater certainty to members by moving in line with factors that affect the value of annuities (long term interest rates and inflation expectations). The funds selected aim to:
Have lower risk than the investments in the growth phase, giving greater certainty of the final value of the RSP account;
Maintain purchasing power by keeping up with inflation;
Move in line with long term interest rates; and
Move in line with inflation expectations.
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The individual funds in the IMI Retirement Fund are also available for members wishing to Self-Select:
High Grade UK Credit – Passive
UK Inflation Linked Gilts – Passive
40%
60%
IMI Retirement Fund
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Administration ChargeThe Trustee has negotiated a fixed percentage fee of 0.20% p.a. of your account balance with the Fund Administrator, Willis Towers Watson, to assist in covering the costs of administering members’ accounts. This cost is already reflected in the unit price of your funds.
Investment Management ChargeLegal & General, in addition to the Administration Charge, apply a charge to your funds to cover the cost of investment management. This will be a headline Annual Management Charge, plus potentially a small amount for “additional expenses”. The Investment Management Charge quoted by the Trustee will be these two numbers combined.
Additional expenses may be deducted from some funds These include items such as custodian, third party administration, Trustee, registrar, auditor and regulator fees. Where a fund invests in other underlying funds, they may also include the underlying management charges.
As the additional expenses relate to expenses incurred during the fund management process, they will regularly increase and decrease as a percentage of the fund, sometimes significantly.
The additional expenses figure shown is the annual rate of the charge, but where additional expenses apply, they are taken into account when the fund’s unit price is calculated each day.
All additional expenses figures shown are rounded to two decimal places. This means that although additional expenses may apply to some funds, they may show as 0.00% as we have rounded to two decimal places.
Charges
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The return on each fund depends on the performance of the assets it invests in and the charges on the fund.
The price of units depends on the value of the fund’s assets after charges. This can go down as well as up, and your investment in the fund may be worth less than what was paid in.
The Trustee reviews risk ratings regularly and they can change over time.
Some funds invest in overseas assets. This means that exchange rates and the political and economic situation in other countries can significantly affect the value of these funds. The value can go down as well as up, and your investment in the fund may be worth less than what was paid in.
The asset mix that each fund invests in is continuously reviewed. It may be changed in line with developments in the relevant markets. Part of each fund may be held in cash and other money market instruments – see page 18 for more information.
You will probably be one of many investors in each fund you choose. Sometimes, in exceptional circumstances, we may have to wait before we can transfer or switch your investments. This is to maintain fairness between those remaining in and those leaving the fund. This delay could be for up to a month.
For some funds, the delay could be longer:
It may be for up to six months if it is a property-based fund, because property and land can take longer to sell.
If our fund invests in an external fund, the delay could be longer if the rules of the fund allow this.
If we have to delay a transfer or switch, we will use the fund prices on the day the transaction takes place – these prices could be very different from the prices on the day you made the request.
Some funds invest in property. The valuation of property is generally a matter of a valuer’s opinion rather than fact.
You can change the mix of your investments as it suits you. In some situations there may be a delay in carrying out your fund switch requests.
Some funds invest in funds managed by external fund managers. In these cases, the description of the fund is provided by the external fund manager, so Legal & General Investment Management (L&G) cannot guarantee that it is accurate.
External fund managers are in charge of managing their own funds, including what they invest in. This means that L&G is not responsible for these funds’ performance or continued availability.
Continued on next page
Further information
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.
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The investment performance of the L&G version of a fund will be different from what you would see if you invested in the underlying fund directly. There can be several differences, due to charges, cash management, tax and the timing of investing.
Some fund managers may look to get a better return by lending some of the assets from our funds to certain financial institutions. This involves some risk and, in certain circumstances, the fund could suffer a loss – for example, if the institution encountered financial difficulties and was unable to return the asset. The fund manager will use some controls to manage this risk, such as obtaining security from the borrower and monitoring their credit rating. External fund managers may also lend assets, and are responsible for their own controls.
Funds can sometimes use derivatives to improve portfolio management and to help meet investment objectives. A derivative is a financial instrument – its value is derived from the underlying value or movement in other assets, financial commodities or instruments, like equities, bonds, interest rates, etc.
There is a risk that a counterparty will fail, or partially fail, to meet their contractual obligations under the arrangement. Where a counterparty fails, the fund could suffer a loss. As part of the management of a fund, a number of controls can be used to reduce the impact of this risk, such as holding collateral and monitoring credit ratings.
Depending on how it is used, a derivative can involve little financial outlay but result in large gains or losses. L&G has control over the use of derivatives in its funds, and external fund managers are responsible for their own controls.
Charges and rebates are not guaranteed and can be altered in the future.
The funds listed here were correct when this document was published. We cannot guarantee that all funds will be available when you make an investment.
Further information
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What happens when I want to take my pension?You can use your RSP account to help provide you with an income in retirement. The Normal Retirement Age for the RSP is 65, although you may retire at any time after the minimum retirement age (set by the Government, currently 55).
If you wish to continue working for IMI after ‘drawing’ your RSP account (i.e. taking a lump sum, using the Drawdown option etc.) you will need IMI’s consent. Please see your HR / local pension contact.
When you reach retirement, you will have a number of options available to you when deciding how to take your RSP account, including:
Flexible access to your pension via the IMI Drawdown;
The ability to secure an annuity appropriate to your specific requirements, at a competitive open market rate; and
The option to take all your benefits as a one-off cash sum or as a cash sum split over two tax years (UFPLS).
More information on each of these options is outlined on page 28.
Retirement
“ ...you may retire at any time after the minimum retirement age (set by the Government, currently 55).”
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IMI DrawdownThe IMI Drawdown is a “flexi-access drawdown” option which allows you to withdraw your RSP balance over a pre-defined period (for example split evenly over a period of five years). This means that you would be able to plan the amount of income you receive and the tax payable.
Any member taking an IMI Drawdown will have a restricted Annual Allowance going forward (known as a Money Purchase Annual Allowance or MPAA), which may limit the amount the member can contribute to other pension accounts in the future.
An annuityThis gives you a regular income for a fixed period or for the rest of your life and will be taxed as pension income (taxable but not subject to National Insurance Contributions).
The Trustee currently offers members an Open Market Option at retirement to enable you to shop around to get the best annuity for your circumstances. Members of the RSP have access to the AON Retirement Service which allows members to get personalised indicative quotes, more details can be found at www.imipensions.com/rsp.
A tax-free lump sum Alongside the IMI Drawdown and an annuity, you can normally take up to 25% of your RSP account as a tax-free cash lump sum. However, this will mean that the money remaining in your RSP account will buy you a smaller taxable income.
Uncrystallised Funds Pension Lump Sum (UFPLS)Since 2015, if you are above the minimum retirement age you have been able to take the whole of your RSP account as a lump sum payment.
As above, 25% of your RSP account would be paid tax free (like with an annuity) and can be split across two tax years, with the remainder taxable as pension income.
Any member taking an UFPLS will have a restricted Annual Allowance going forward (known as a Money Purchase Annual Allowance or MPAA), which may limit the amount the member can contribute to other pension accounts in the future.
“ More time with family and friends
would be nice. Having the time to take more regular
holidays and possibly do some travelling would be great. ”
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View it online on your
computer or tablet
Retirement supportAon Retirement ServiceAs a member of the RSP, you have free access to the Aon Retirement Service platform, which provides access to:
Pension education guides and videos;
Budgeting tools;
Tax calculators;
A freephone call centre offering pensions guidance (financial advice consultations can also be arranged – a separate fee may be chargeable by Aon); and
Whole of market comparison tools on standard and enhanced annuities.
More information can be found at: www.imipensions.com/rsp.
Pre-retirement guideFor members thinking about their retirement options a guide has been created to support your preparation for retirement. The RSP pre-retirement guide is available at: www.imipensions.com/rsp, hard copies will be sent to members as they approach retirement.
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Whilst you are still with IMIAll of IMI’s qualifying UK employees are covered for a Death in Service benefit of five times their Basic Salary.
The value of your RSP account will also be paid to your dependants in the event of your death.
The Death in Service benefit is separately insured and is paid by the Trustee through the RSP. In some circumstances it may be necessary to restrict the amount of lump sum Death in Service benefit applying to you if the Trustee cannot obtain suitable insurance cover at an acceptable cost to IMI. You will be told separately if this affects you.
After you have left IMIIf you die after you have left IMI, and you still have an RSP account, the value of your RSP account would be paid out as a lump sum death benefit at the discretion of the Trustee.
Tell the Trustee about your family and dependantsThe Trustee decides who should receive your Death in Service benefit and the value of your RSP account if you die. Potential beneficiaries can include your family or dependants, anyone you have been in a longstanding relationship with, anyone with an interest in your estate and anyone specifically nominated by you in writing.
As payment is made under Trustee discretion it is not liable to incur inheritance tax.
You can help the Trustee make their decision by completing an Expression of Wish form, which is available from your pensions contact and at www.imipensions.com/rsp.
You are free to nominate anyone and can nominate more than one person. The Trustee will take into account who you put on the form, but cannot simply follow your wishes. This is because your circumstances may change after you complete the form – for example, you could marry or divorce – and the Trustee will take into account any changes of this nature of which it becomes aware before making its decision.
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Death benefits
What happens when I die?
It is important to keep your Expression of Wish form up to date as your personal circumstances change.
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I am not sure and still have some questionsIf there is anything you do not understand please visit www.imipensions.com/rsp or call the RSP Administrator, Willis Towers Watson, on 01737 788 145.
You should read all of the information that the Trustee has given you about the RSP.
What do I need to do now?
Next steps
I want to be in the RSPMake your investment choice from the options made available to you by the Trustee. If you do not want to choose your own investments, your RSP account will be automatically invested in the RSP Lifestyle (see page 11 for more information).
Once you are enrolled in the RSP, you will receive your membership documents. These documents should be read carefully and kept in a safe place for future reference.
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Keeping track of your RSP account onlineIt is easy to manage your RSP account online. You will receive a user name and password to log into your own secure online account. Go to www.imipensions.com/rsp and select the Willis Towers Watson ePA icon to find out more about tracking your RSP account online.
Keeping your account up to dateYou can keep your account up to date via ePA or by speaking directly with Willis Towers Watson to update your personal information, including any change to your:
Name
Address
Target Retirement Age (TRA) (between 55-75)
Investment choice
Expression of Wish form
Contact Willis Towers Watson on 01737 788 145 or email at [email protected].
Can I transfer other pensions into the RSP?If you have any pensions from former employers, a personal pension or any other pension arrangement in your own name, you can ask the Trustee to accept a transfer value into your RSP account.
The acceptance of a transfer is at the discretion of the Trustee and must meet the conditions set by HMRC for transfer payments. If a transfer is accepted by the Trustee it will be applied to your RSP account.
If you are interested in transferring benefits into the RSP, in the first instance please contact Willis Towers Watson on 01737 788 145. Pension transfers can be complex and may not be suitable for everyone. There may be charges and you could be giving up valuable benefits. If you are considering a transfer and are unsure if it is in your interests, we strongly recommend that you seek financial advice. There may be a cost for this.
Remember, should you need any help please call
01737 788 145
Next steps
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Internal Dispute Resolution ProcedureStage 1You must submit your complaint in writing on a standard form that can be obtained from your HR/pensions contact. If you prefer, you may appoint a representative to make and progress your complaint for you, in which case the representative would need to attach to the written complaint your signed authority to act on your behalf.
IMI’s Director of Group Pensions, as the first stage decision maker, will investigate your complaint and will attempt to notify you of a decision in writing within two months of the date of receipt of your complaint form. If it is likely to take longer than two months for the complaint to be investigated thoroughly, you will be notified accordingly, together with the date by which you should expect a full response.
Stage 2If you are not satisfied with the decision made by the Director of Group Pensions and wish to take the matter further, you will then have six months within which to apply to the Trustee for your complaint to be considered by the full Trustee Board. Your application should be in writing.
You must give reasons why you are dissatisfied with the initial decision. This written application should be sent to: The Chairman, IMI Pensions Trust Limited, Lakeside, Birmingham Business Park, Birmingham, B37 7XZ
You should expect a written decision from the Trustee Board within two months of the date of receipt of your application. You will be notified in writing if it is likely to take longer than two months for the Trustee Board to prepare its decision (e.g. this date may be determined by the date of the next full Trustee Board meeting).
The Pensions Advisory Service (TPAS)If your complaint is not settled through the procedure outlined above, you can consult The Pensions Advisory Service (TPAS). TPAS is available at any time to assist members and beneficiaries of the RSP in connection with any pensions query they may have.
TPAS is a free and confidential service set up to assist pension plan members in connection with any pension queries they may have or any difficulty which has not been resolved through the pension plan’s usual channels.
The Pensions Advisory Service
11 Belgrave Road
London SW1V 1RB
T: 0300 123 1047 W: www.pensionsadvisoryservice.org.uk
The Pensions Tracing ServiceIf you have lost track of previous pension benefits, you can contact the Pension Tracing Service. It will give you an up-to-date address of the Trustee of a pension scheme.
The Pension Service 9
Mail Handling Site A
Wolverhampton WV98 1LU
T: 0345 6002 537 W: www.gov.uk/find-pension-contact-details
Other sources of help and information
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The Pensions RegulatorThe Pensions Regulator regulates pension schemes in the UK. Its priorities include protection of the benefits of members of work-based pension schemes and the promotion of good administration of work-based pension schemes. The Pensions Regulator is able to intervene in the running of a scheme where the trustee, employers or their professional advisers have failed in their duties. The RSP is registered with The Pensions Regulator as well as with HM Revenue & Customs.
The Pensions Regulator
Napier House, Trafalgar Place, Brighton BN1 4DW
T: 0845 600 0707 W: www.thepensionsregulator.gov.uk E: [email protected]
HM Revenue & Customs (HMRC)HMRC is the Government department that handles the taxation of pension contributions and benefits. HMRC will be able to explain to you the details of the various allowances, such as Lifetime and Annual Allowance, as well as tax bands.
HM Revenue & Customs
Pay As You Earn, PO Box 1970, Liverpool L75 1WX
T: 0300 200 3300 W: www.gov.uk/government/organisations/hm-revenue-customs
Pensions OmbudsmanThe Pensions Ombudsman can investigate any complaint or dispute of fact or law relating to occupational pension schemes.
Pensions Ombudsman Service
11 Belgrave Road, London SW1V 1RB
T: 020 7630 2200 W: www.pensions-ombudsman.org.uk E: [email protected]
Pension Wise A free and impartial Government guidance service about your defined contribution pension options.
W: www.pensionwise.gov.uk
Money Advice Service A free and impartial money advice service, set up by Government, with educational guides and tools which can help you find financial advisers in your area.
W: www.moneyadviceservice.org.uk
Financial Services Compensation Scheme (FSCS)The funds offered for you to invest in are currently provided through an insurance policy with Legal & General Assurance (Pensions Management) Limited (L&G). The Trustee does not invest in the assets directly, but L&G arranges this. In practice, the investment funds provided through L&G are managed by another company in the L&G group (called Legal & General Investment Management Limited) or third-party managers. This is a common way of investing by UK pension schemes and helps the Trustee give you easy access to a range of investment funds.
The Trustee’s policy with L&G is currently covered by the Financial Services Compensation Scheme (FSCS). The FSCS is a compensation fund of last resort for customers of financial services firms. In the unlikely event that L&G is unable to meet its financial obligations the Trustee would be able to make a claim to the FSCS. The claim would be for at least 90% of the value of the policy with L&G, although the FSCS rules do not set out how they would value the policy in these circumstances. As an alternative, the Trustee would also expect the industry Regulator to seek to find another provider to take on the policy.
In addition, the underlying investment funds are subject to strict financial regulation.
Other sources of help and information
Resolving issues If you have a pension problem or enquiry in relation to the RSP you should first speak with Willis Towers Watson. If it cannot be resolved by Willis Towers Watson, or if you are not satisfied with the response you receive, you can use the RSP’s dispute resolution procedure.
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Laws and tax rules may change in the future. The information here is based on our understanding in September 2017. Your personal circumstances also have an impact on tax treatment.
2017
Annual Statement is what we will send you every year to show you how your account is doing.
Company is IMI plc and its UK subsidiary companies.
Normal Retirement Age (NRA) is your 65th birthday.
Pensionable Pay means your Basic Annual Salary or Notional Basic Annual Salary (if you participate in Smart Pay).
The RSP means the IMI Retirement Savings Plan.
The RSP Year runs from 1 April to 31 March.
Prescribed changes as defined in the Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006, and the Occupational Pension Schemes (Consultation by Employers) (Modification for Multi-employer Schemes) Regulations 2006.
Smart Pay is the name of the salary sacrifice arrangement for pension contributions.
Trustee is the IMI Pensions Trust Limited.
State Pension Age is the date, if you are entitled, you can start to receive your UK State pension. You can calculate your date at www.gov.uk/state-pension-age.
Target Retirement Age (TRA) is the date Willis Towers Watson will assume you want to retire on. Unless you tell us to the contrary it will be assumed to be on your 65th birthday.
Minimum Contribution Rate is the minimum total contribution rate that must be paid into your pension.
Jargon buster
Questions or assistance? If there is anything more about the RSP you need help with, just call Willis Towers Watson or visit the RSP website. Call charges will var and your call may be recorded or monitored to help improve service.
Telephone: 01737 788 145
Website: www.imipensions.com/rsp
Changes and termination of the RSP
Please note that IMI plc reserves the right to terminate and/or amend the RSP, though you will not lose your RSP value.
Current regulations provide that employers should enter into consultation at least 60 days prior to any prescribed change or termination.
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