UNDERSTANDING YOUR FUTURECREATE A PICTURE OF YOUR RETIREMENT

MY FUTURE

CONTENTS

My Future 2

Your Family 2

Your Property 3

Your Assets 3

Your Future Summary 4

Your Retirement 4

Your Future Income 5

Details & Events 5

Inheritance Plan 6

MY FUTURE

My Future is intended to provide you with a picture of whether your wealth including your current savings, investments and assets will provide for your needs in retirement.

However the value you have entered against your assets will not automatically increase by the growth rate you specified when you access the plan at a future date. You can update the value of your assets whenever you need to.

Not all of the assumptions will be applicable to you and will depend on the information you tell us.

YOUR FAMILYMy Future allows you to capture details about yourself and your family. My Future will focus around the first adult entered, but allows two adults to be represented per plan. You can create additional plans for up to two other individuals if you wish.

Date of Birth: Your date of birth is used to calculate your state retirement age. You can amend your desired retirement age later on.

Employment Status and Income: Your employment status and any employment income is used to calculate your current net income and make predictions about your expected net income at retirement.

Children: We capture details about your children so you can consider the impact that School Fees, University Fees and potential House Deposits could have on your income in retirement. We assume School Fees start in the year when the child becomes 5* years of age and are payable until the child is 18* years of age. Initially we have assumed Primary and Junior school fee costs £11,500* each year and Secondary school fee costs of £13,000* each year.

University fees start when the child reaches 18* years of age and are assumed to continue for 3* years. We assume University fees of £12,000* per year.

If you have considered assisting any children with a house deposit for purchasing their first home, we have assumed this will occur when the child reaches 25* years of age with a value of £50,000*. You can change any of these amounts and dates when viewing your retirement income graph by clicking the appropriate tabs on the chart.

The details of any children are included as possible beneficiaries when viewing your inheritance tax status.

2

My Future and the results generated rely on a number of assumptions contained in this document. These are also visible in My Future by using the ‘MORE’ tabs, please make sure that you read these carefully. Any plan you or your adviser make using My Future should not be relied on as a comprehensive retirement plan or to make retirement planning decisions.

The assumptions, results and plan provided should not be seen as any form of advice. You should seek appropriate guidance or advice in order to better understand your options.

7IM asked Technical Connection, a tax specialist business (engaged by financial planners and financial institutions), to create the underlying calculations of the My Future engine.

The calculations have been verified by a third party actuary as delivering reasonable outputs given the stated purpose of the engine.

Not all of the assumptions will be applicable to you and are dependent on the information you provide. A large majority of your assumptions can be edited within My Future and are highlighted below with an asterisk (*). The default inflation rate in My Future is 2%.

We will continue to update My Future with the aim of ensuring the calculations are based on current data/numbers concerning income tax bands, inflation rates, pension legislation and house price growth rates etc.

This helps us ensure that we provide you with as clear a picture as we can.

MY FUTURE

MY FUTURE

YOUR PROPERTY We provide the ability for you to capture up to 10 properties allowing for your main home, a holiday home and any investment properties to be included.

We assume that the value of each of your properties will grow at a rate of 3%* per annum. We assume that your rental income is a gross amount (i.e. before all costs

including mortgage payments) and that the stated rental income will continue to be received throughout your retirement unless you decide to sell the property. We will include the rental income when calculating your current net income and retirement net income.

A large majority of your assumptions are editable within My Future and are highlighted with an asterisk (*).

YOUR ASSETS We allow you to capture all of your, and your spouse/partner (if relevant), assets in the plan, and the net growth rate(s) you expect to receive. We assume any regular contributions or withdrawals will be in place until retirement.

GROWTHWe assume that the growth rate captured against each asset is the total net return (after income tax) before retirement. However, the total return (after income tax) in retirement may be higher as your tax rate may be lower at that stage. For Cash Bank Accounts we assume 100% growth.

PENSIONSAny pension contributions made by yourself and/or employer are assumed to continue until your retirement. We increase these contributions by 2% per annum.All personal pension contributions are assumed to be taken from your income pre-tax and benefit from at least basic rate tax relief.

ISAS, BONDS & INVESTMENTSIncome: Prior to retirement we assume any income from ISAs and Investments is reinvested, after retirement we assume 50% is received as an income and 50% is reinvested.

For single premium Bonds any income is assumed to be re-invested both before and after retirement.

If you tell us you are planning to utilise the full ISA allowance we will apply any known future increases.

YOUR OTHER ASSETSAs the taxation situation on ‘Other’ assets is unknown, the calculator assumes no tax is payable.

If we have assumed you are a higher rate tax payer we assume you are entitled to additional tax relief. However, if you are a non-taxpaying member of a final salary scheme or your contributions to that scheme exceed your taxable income, under current tax rules you may not be eligible to receive full basic rate relief.

Contributions into a Money Purchase scheme (Defined Contribution) do not take into account any restrictions that may be required as a result of triggering the Money Purchase Annual Allowance rules or Tapering of Annual Allowance with effect from April 2016.

How much tax you pay will depend on your personal circumstances and will be subject to tax rules which can change.

Please refer to the following website for further guidance concerning your Pension(s): www.pensionwise.gov.uk

3

YOUR FUTURE SUMMARYWe assume that any regular contributions or withdrawals input will continue until retirement and that no other withdrawals are made.

Your My Future summary combines all of the assets you entered and allows you to view the current and expected future values of those assets. The growth rate for each asset is based on the figures you enter, or those we have assumed as stated above.

YOUR RETIREMENTWe assume the net income you require to meet your lifestyle in retirement will increase in line with inflation* +1%, until your retirement date. We also assume the following personal allowance and higher rate tax thresholds:

If you are retired your current net income in My Future is your annual income requirement.

PENSION CHOICE AT RETIREMENTPlease refer to the following website for further guidance concerning your Pension(s): www.pensionwise.gov.uk

Depending on how you want to use your pension pot, we will make the following assumptions:

• Money Purchase (Defined Contribution): We have not taken account of any restriction that may be required as a result of triggering the Money Purchase Annual Allowance rules or tapering of the Annual Allowance in effect from April 2016.

• Final Salary: We assume your Final Salary Pension increases in line with inflation*. We assume the Commutation Factor* is 15.

Final Salary Pensions take no account of an Early Retirement Factor or other adjustments that could be made, should benefits be paid before your scheme’s normal pension age.

MY FUTURE

Retirement Age*: We calculate your retirement age using your date of birth and the Office of Budget Responsibility (OBR) central forecasting assumption.

Current net Income: If you are not retired your current net income is based upon your net earnings, dividends from any personal companies and any rental income you receive. It does not include any other investment income nor does it take into account any Benefits in Kind.

We calculate your net earnings using the personal allowance and UK (ex Scotland) higher rate tax thresholds. You can choose within the assumptions to calculate your net earnings using the Scottish higher rate tax thresholds or choose not to include income tax at all. We use the personal allowance and higher rate tax thresholds defined by the HMRC. For future years, we expect allowances and bands to increase in line with inflation.. We do not take into account any child benefit received or the ability to transfer any personal allowance.

Income at Retirement: If you are not retired your current net income is your annual income requirement.

4*From tax year 2021/2022 we expect allowances and bands to increase in line with inflation.

You can get further help with final salary and career average pensions at: www.pensionsadvisoryservice.org.uk

• Annuity: We assume an annuity income of 4% of the total value of the pension.

• Draw Down: Income received from a draw down pension is either a fixed cash amount per year (doesn’t increase with inflation) or a fixed percentage of the remaining fund value. This is taken as normal taxable income, so will have income tax applied the same as other types of pension income.

• Pension Lump Sum: We have enabled you to take up to 25% as a tax free lump sum. Any money you choose to take as a tax free lump sum we will assume that you spend, and will not be used to fund your retirement. How much tax you pay will depend on your personal circumstances and will be subject to tax rules which change.

• Lifetime Allowance: My Future does not take into consideration the Standard Pension Lifetime Allowance which should your fund exceed it, may affect you.

YOUR FUTURE INCOME

DETAILS & EVENTSEVENTS We allow you to create events to show the effect that significant withdrawals or deposits will have on your income. You can Add, Withdraw or Transfer money between your assets (e.g. releasing equity from a house or selling a second property to fund your retirement income).

drawdown income, final salary (excluding state pension) and any rental income.

• Savings Withdrawn: If there are insufficient funds to meet your retirement needs, we will generate the income from assets in the following order:

1. Bonds

2. Investments

3. Other investments as we assume no tax deducted

4. ISAs

5. Bank

6. Pension Fund

• Pension: Income will only be taken from an individuals pension from the point the individual retires.

We don’t use the value of your properties to generate any retirement income. You can release equity from your properties to fund your retirement by creating an event and transfer equity from a property to another account type.

MY FUTURE

Your My Future Income provides you with a picture of how your wealth may meet your retirement expectations, based on the data provided and the assumptions made. Please be aware these values are indicative only and could be higher or lower depending on your personal circumstances.

Your income is split into the following categories and represented separately.

• State Pension: We assume you and your partner/spouse (if applicable) are entitled to and will receive a full single tier state pension on retirement. We assume your State Pension will increase in line with earnings (i.e. Consumer Price Index (CPI) +1%). This does not include any additional state pension you may be entitled to.

You can obtain an individual projection from the Department of Work and Pensions by visiting: www.gov.uk/government/organisations/department-for-work-pensions

• Salary Income: We assume you or your partner will continue to receive salary income until their retirement.

• Savings Income: This is the income generated from your investments including pensions income e.g. annuity,

FULL DETAILSFor each year in your retirement we display how much income we have calculated you will receive and how that income is generated from your assets.

5

• Income Surplus: If the income generated exceeds your income requirement in retirement.

FUNDING A SHORTFALLAny additional withdrawals are assumed to be tax free. The exception is pension funds – any additional draw down from a pension to fund a shortfall is grossed up based on your marginal rate of tax, this is because you will be liable for income tax on this amount. If you have not taken tax free cash from your pension at retirement, then any amount withdrawn from your pension to fund your shortfall will be 25% tax free with the remaining 75% subject to income tax. How much tax you pay will depend on your personal circumstances and will be subject to tax rules which can change.

When transferring or withdrawing monies from one asset to another, we calculate the value of the asset at that specific point in time using the growth rate entered.

Any new monies added will increase as per the growth rate entered by you for the new asset type.

INHERITANCE PLAN Business and Agricultural Assets: We assume any business or agricultural assets qualify for 100% Business Property Relief (BPR) or Agricultural Property Relief (APR). On death we assume assets transferred to a beneficiary will also receive 100% BPR/APR.

Inheritance Allowance: We apply the current allowance of £325,000, after April 2020 we increase this annually by the rate of inflation*.

Main Home Allowance: Beginning in tax year 2017/2018, we apply the following rates.

From tax year 2021/2022 we assume that the values will increase in line with the default rate of inflation* set in My Future (currently 2%).

On calculating your main home allowance on death we have assumed the value of any properties have increased in line with the house growth rate* (currently set to 3%).

MY FUTURE

TAX YEAR MAIN HOME ALLOWANCE

2019/2020 £150,000

2020/2021 £175,000

If you would like further information regarding any of our services, please contact us on numbers@7im.co.uk 020 3823 8678

Seven Investment Management LLP is authorised and regulated by the Financial Conduct Authority, the Jersey Financial Services Commission and the Guernsey Financial Services Commission. Member of the London Stock Exchange. Registered office: 55 Bishopsgate, London EC2N 3AS. Registered in England and Wales number OC378740.

Our inheritance plan allows you to see how much money you may be able to leave to your beneficiaries based on the assets entered. This is based on the current government rules and stated future changes, as below.

We assume you have a Will and therefore will not die ‘Intestate’, and that all of your assets will pass to a surviving spouse/civil partner or any children (if applicable). Any assets held jointly are assumed to be owned equally (i.e. 50/50).

From April 2016/2017 onwards, if you pass away on or after the age of 75, we will apply a basic rate of 20% to any pension lump sum death benefit.

We assume that if you have a Final Salary Pension there will be no lump sum death benefit payable to your beneficiaries.

Any assets held jointly are assumed to be owned equally.

6March 2020