Partnership Assurance Pension Annuity Key Features

Its aims

• To let you use your pension savings to guarantee a regular income from Partnership for the rest of your life
• To offer flexible, additional options to provide an inheritance in the event of your death
• To give you the option of increasing your income annually to help protect your income from the effects of inflation

Your commitment

• To make a single, lump sum payment from your occupational or personal pension scheme to purchase your annuity
• To give complete and accurate information on your application

Risk factors

• Your circumstances could change after your income payments start but you won't be able to change the terms of your annuity, even if annuity rates improve. You cannot transfer your annuity to another provider after the 30 day cancellation period.
• Failure to disclose all medical conditions may mean your income is not as high as it might have been, had there been full disclosure.
• Failure to disclose accurately your smoking habits may mean your income is not as high as it might have been
• Inflation will affect the buying power of the income payments you receive over time
• If you choose to link to the Retail Price Index (RPI) it could increase or decrease your payments over time: In the event of negative inflation (deflation), your income would be reduced and could be lower than it was at the outset of the policy.
• Unless you have selected one of the payment protection options there is no return of capital from your annuity regardless of when you die. This means that your income payments may be less than your original investment.

Your questions answered

How does Partnership Assurance's pension annuity work?

In return for a single payment, we will pay you a regular income for the rest of your life. Details of your income are contained in your illustration or quotation. The income is guaranteed and does not depend on the performance of any investments.

There will be no return of capital to your estate from your annuity when you die, regardless of when that happens, but there are additional options you can select that allow your estate or beneficiaries to receive an income or a lump sum payment after your death. These are explained in greater detail overleaf.

Partnership accepts most pension scheme sources apart from the Guaranteed Minimum Pension (GMP). If your pension fund includes Protected Rights, this will be incorporated into your annuity (see below).

What is Protected Rights?

If you have contracted out of the State Earnings Related Pension Scheme (SERPS) or Second State Pension (S2P), Protected Rights is the money that would have been paid to you had you not contracted out.

This sum must be used to purchase a Protected Rights Annuity. This type of annuity differs from standard annuities in that the rates are calculated on a unisex basis, rather than having separate rates for men and women. Also, if you are married or have a civil partner at the time of purchase, a 50% Dependant's Benefit is automatically provided. You can also choose a Guaranteed Period.

You can take your Pension Commencement Lump Sum from this amount, if you wish, and use the remainder to purchase a Protected Rights Annuity.

What additional options can I choose and how do they work?

Escalating income to mitigate inflation

In order to help protect the value of your income against the effects of inflation you can, when you buy your annuity, choose to increase - or 'escalate' the income you receive over time. Income can be escalated by a rate of between 1% and 10% per annum. If selected, your level of income will increase on your policy's anniversary date. Escalating your benefits will result in a lower annuity at the start of the plan.

Retail Price Index (RPI)

Linking your Pension Annuity to the RPI would mean that the income payments you receive would be based on the 12-month movement in the RPI as at three months prior to your policy's anniversary date, with the adjustments coming into effect on the anniversary date.

Guaranteed Period

Selecting this option guarantees that the income will be paid for between one and ten years from the start of your policy. This means that, should you die within this time, your estate or beneficiaries will continue to receive a regular income at the same rate as yours. This will be subject to income tax at their personal rate. The longer the Guaranteed Period selected, the lower the income amount will be.

Value Protection

Only available to people under 75 years of age, Value Protection cannot be taken with a Guaranteed Period and cannot include any Protected Rights element. Value Protection allows you to protect up to 100% of your initial investment for a given period of time. The Value Protected sum assured reduces at the same rate as the total gross payments, reaching zero when the total payments made equal the sum initially assured. It only covers you until you reach the age of 75 at which point the cover will cease.

If you have a single life policy and die before you are 75 with a Value Protected amount remaining, your estate or beneficiaries will receive a lump sum payment. This is subject to a 35% tax charge, which Partnership will deduct prior to paying out the lump sum. For joint life policies, if you die before you are 75, your income will continue to be paid to your partner and the Value Protected amount will continue to decrease in line with the gross income payments made. On the death of your partner, regardless of when that occurs, if there is a Value Protected amount remaining it will be paid as a lump sum to your estate or beneficiaries. The higher the amount you choose to protect, the lower your income payments will be.

Dependant's Benefit

You can choose for up to 100% of your annuity income to be paid to your dependant, in the event of your death, for the rest of their lives. Dependency will be assessed at the start of the policy. Eligibility for the Dependant's Benefit will depend on both your and your dependant's health at the time you apply. If you choose Value Protection as well as the Dependant's Benefit and die before you are 75 with a Value Protected amount remaining, the lump sum payment of this amount will be deferred until after the death of your dependant. This is because your dependant will continue to receive income payments for the rest of their life under the Dependant's Benefit entitlement. The Value Protected amount will therefore continue to decrease in line with all gross income payments made to your dependant. If there is any amount remaining when your dependant dies, regardless of when that is, it will then be paid out to your estate or beneficiaries as a lump sum.

How much income will I receive from my investment?

The income you will receive is based on a number of factors, chiefly the size of your investment and your age, gender and state of health at the time you apply. If you select any additional options such as escalation or any of the protection options, your income payments will be lower. Your income payments will commence when we have issued acceptance terms and have received your pension fund.

What payment options can I choose?

You can choose the frequency of your payments and whether to receive them in advance or in arrears. Choose from monthly, quarterly, halfyearly or annually. The frequency of payments will affect the amount of income you receive. Payments in advance will be lower than those in arrears. If you choose to receive your income in arrears and die between payments, there will be no payment made for the period between the last payment you received and your death. Payments will be made directly into your bank or building society account. For all of our annuities, Partnership will confirm your status from time to time and we may ask you to provide proof of identity, title and/or existence. Because of this we require you to inform us of any changes to your bank or contact details.

What are the charges?

All charges are factored into your pension plan at the start and we will not make any additional charges.

What are the tax implications?

A Pension Annuity is purchased with tax-free money and so Income Tax is deducted at source on the whole amount at your personal rate. Please also see the Value Protection section. Taxation is a complex matter and differs from person to person, so you should discuss your personal tax position with your Financial Adviser, who should be able to help you calculate your liability. The rules governing taxation are subject to review and can change.

What happens when I die?

Your estate must contact us immediately either by telephone or in writing to let us know. Contact us by telephone: 08701 971 446 Or write to us at: Partnership Sutherland House Russell Way Crawley West Sussex RH10 0UH

What happens if I want to cancel my plan?

A cancellation notice will be enclosed with your policy documents providing full details about the cancellation procedure which outlines the right to change your mind within 30 days. If you do decide to cancel within this 30 day period, we will refund your money in full. You can contact partnership using the details on the back page of this brochure.

Health conditions

If you have a health condition which may reduce your life expectancy, you may qualify for a higher retirement income. To benefit from these higher rates you should complete a full Pension Annuity Proposal Form. This will ensure that our underwriters have all the information they need to properly assess your case to give you the best possible quote. We may contact your doctor for a General Practitioner's Report (GPR) to verify the information provided on your application. We will not always apply for a GPR however, so it is essential that you answer the questions on the application as fully and accurately as possible.

Smokers

If you don't have a health condition but are a smoker, you could qualify for enhanced rates. To find out, you need only complete the Quotation Request for a Smoker Annuity and we can provide you with a quote. You will not be asked to undergo a medical examination. However we may ask you to undergo a simple non-invasive test to confirm the information you gave on your application about your smoking. The test, which we will arrange and pay for, is carried out by a qualified nurse in your own home. If you fail the test and you want to take it again we may charge you a small fee for doing so. Failure of the test will mean an automatic switch to potentially lower rates than those originally quoted. If at any time there is found to be any mis/non- disclosure of your health conditions and smoker status, Partnership reserves the right to amend the terms of the policy.