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Important investment notes

General

  • The information on this website is not advice, it is provided solely to enable you to make your own investment decisions. The investments and/or investment services referred to may not be suitable for all investors. If you are unsure of the suitability of any investment, you should contact our Financial Practitioners for advice.
  • Unlike cash, stock market based investments are not guaranteed and fall in value as well as rise, we therefore believe you should only invest for the long term (5+ years). Ultimately you could get back less than you invest. Any yields will vary over time so income is variable and not guaranteed.
  • Cancellation rights may not be available. The investments featured do not provide capital guarantees like a deposit account and are not readily accessible.
  • Past performance should not be seen as an indication of future performance. Exchange rate fluctuations may have an adverse effect on the value of non-UK shares.
  • Tax rules referred to are those that currently apply, they can change over time and any benefit to you will depend on your circumstances. Within an ISA all gains will be free of capital gains tax and a tax credit will be reclaimed on interest from fixed interest investments.
  • In addition to any initial charge quoted there may be a bid/offer spread or dilution levy.
  • The FCA does not regulate any prize draw.
  • Non-investment grade bonds are contained in some funds which carry a risk that the capital value of the fund will be affected because they have an increased risk of default on repayment by the issuing companies compared to investment grade bonds.
  • Some investments (e.g. some AIM stocks) are less readily realisable than others and it may therefore be difficult to deal in or obtain reliable information about their value.
  • Before you decide to transfer an ISA, pension or unit trust please ensure you understand how the transfer will be made. Most groups will allow you to transfer as stock but not all stock can be held in Vantage. If you choose to transfer as cash remember you will be out of the market while the transfer takes place. This may work in your favour if the market falls but if it rises you will not benefit from any growth while you hold cash. A few groups levy exit fees, please contact us for more details.

Product Specific

  • AIM and penny shares: AIM and penny shares carry a higher degree of risk of losing money than other UK shares. It may be difficult to deal in these shares. There is a big difference between the buying price and the selling price of these shares. If they have to be sold immediately, you may get back much less than you paid for them. The price may change quickly and it may go down as well as up. It may be difficult to obtain reliable information about their value or the extent of the risks to which they are exposed.
  • Annuity rates: Although some annuity providers provide cancellation rights, these are only available for a limited time and once the annuity is set up you cannot normally cancel it or switch to another provider. Annuity rates may change from time to time and are only guaranteed for a limited time period. An annuity is a long term investment as it cannot be cancelled or transferred to another provider once set up. It does not have a cash-in value. Annuities are covered by the Financial Services Compensation Scheme. This can act as a safety net should an annuity company become unable to meet its annuity obligations.
  • Venture Capital Trusts (VCTs): VCTs are higher risk investments and although some VCTs may be viewed as less risky than others, investors should remember that VCTs as a whole are higher risk investments.
  • Term Assurance: If you are applying for replacement cover, please do not cancel any existing policy until a new proposal has been accepted and is in force.
  • ETFs, ETCs and ETNs: Investing in these products may expose you to additional risk, for instance you may be at risk if the product's counterparties fail. It's important you understand the specific risks associated with your investment. Find out more about ETFs, ETCs and ETNs including the risks
  • Pensions/Vantage SIPP: If your employer offers a pension you should consider using this first. The pension and tax rules are subject to change by the government. Tax reliefs and state benefits referred to are those currently applying. Their value depends on your individual circumstances.

Before transferring a pension you should find out if exit or initial charges will be levied, and then carefully consider whether you believe it will be beneficial for you to proceed, and whether the new benefits will be at least as good (ensure you will not be sacrificing guaranteed annuity rates or investment returns). You will be out of the market for a period of the transfer so you will not be affected by market rises or falls during this time.

If you are on a low income and may rely on state benefits in retirement a pension scheme may not be appropriate.

Pension contribution checklist

Read carefully if you have made, or plan to make, large pension contributions.

Most UK residents under 75 can contribute to a personal pension and benefit from tax relief. However there are restrictions of which you need to be aware:

  • Annual allowance (£40,000 in 2014/15): Could affect you if total contributions (including from employer) across two consecutive tax years exceed £40,000 or you are a member of a final salary pension. Any payments above the annual allowance may have a tax charge and cannot be refunded.

    Vantage SIPP contributions count towards the annual allowance for the tax year in which they were made. E.g. a contribution paid in the 2014/15 tax year will count towards the 2014/15 annual allowance of £40,000. Contributions to other pensions may count for the annual allowance in the following tax year. This may cause issues when switching pension schemes. You should check with your provider towards which tax year's allowance your contributions count. Retirement benefits built up in a final salary pension are given a value that also counts towards the annual allowance. You should ask your provider what that value is.

  • Carry forward: You may be able to pay in more than the annual allowance by carrying forward unused annual allowance from previous tax years.
  • Contributions after taking a flexible income: From 6 April 2015 taking flexible income (e.g. from a SIPP) will normally restrict future contributions to £10,000 a year.
  • Lifetime allowance: £1.25m in 2014/15. This is the total you can accumulate in pensions. It is measured when retirement benefits are taken and at age 75. It takes into account all private and work pensions, including those from which you already take an income. There may be a significant tax charge on any excess. This could affect those with a pension income of over £50,000 a year.
  • Enhanced or fixed protection: If you have applied to HMRC for enhanced or fixed protection against the lifetime allowance, further contributions will invalidate the protection. If you have joined, been enrolled, re-enrolled or opted in to your SIPP as an automatic enrolment scheme and do not opt out, this will invalidate the protection.
  • Recycling: If you significantly increase pension contributions in the year of taking tax-free cash from a pension or in the two years before or after, this may be deemed as recycling of tax-free cash and subject to a punitive tax charge.

This is a brief summary of the main rules, therefore it cannot cover every nuance. We have annual allowance & carry forward, and lifetime allowance factsheets available. Contact us for advice if you think you may be affected by these limits or don't understand them. If you have any questions please call our Pensions Helpdesk on 0117 980 9926 or email us.

This is based on our understanding of current legislation and proposed changes. Correct as at 29 August 2014. The government can and do change the rules.

Pensions transfer checklist

Read before transferring pensions.

You could enjoy many benefits when you transfer to the Vantage SIPP, but could also lose valuable features of your old pension(s). Give extra consideration to these factors if approaching retirement as you will have less time to make up for any losses.

The following factors commonly apply:

  • 'Market Value Adjustments or Reductions' or transfer penalties are applied by some providers. These could cause a significant reduction to your pension fund.
  • You could lose valuable guarantees on annuity rates, growth, bonuses, minimum retirement incomes, discretionary bonus rates or a potential demutualisation bonus.
  • It is rarely a good idea to transfer a final salary pension, including a Guaranteed Minimum Pension (GMP), and ‘Deferred Annuities’ as they promise to pay a hard-to-beat retirement income. An Additional Voluntary Contribution (AVC) linked to a final salary scheme could give a higher pension and/or tax-free cash if not transferred. We normally insist you take advice to confirm it is in your interests to transfer such pensions.
  • Your pension will be transferred as cash, unless otherwise arranged. While your pension is in cash you will not make investment losses or gains. This may not work in your favour.
  • You could lose benefits such as life insurance or waiver of premium insurance.

The following only affects a minority of investors:

  • If you are transferring from a pension with a Pension Input Period (PIP) not in line with the tax year, that PIP will still apply to any contributions you have already made. This may restrict your ability to contribute to your new pension. This is only likely to apply if total contributions are over £40,000 over a two-year period or you have been a member of a final salary scheme.

In some cases you could also lose:

  • Employer contributions or other benefits if transferring a work pension.
  • A tax-free cash rate higher than the usual 25%, if transferring some occupational pensions, or pensions that have received a transfer from them.
  • The ability to retire before age 55.
  • Enhanced or fixed protection against the lifetime allowance (this is rare).
  • Gender-specific annuity rates within some occupational pensions, which could benefit males.

We do not check what benefits you would lose or penalties you would incur. It is your responsibility to ensure a transfer is right for you. There is no guarantee any funds you choose will perform better than those transferred. If you are at all unsure whether a transfer is right for you, please contact us for advice before proceeding.

This is based on our understanding of current legislation and proposed changes. Correct as at 29 August 2014. The government can and do change the rules.

WIIN 08/14

Hargreaves Lansdown

One College Square South | Anchor Road | Bristol | BS1 5HL
Authorised and Regulated by the Financial Conduct Authority
www.hl.co.uk



Hargreaves Lansdown is authorised and regulated by the Financial Conduct Authority.

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