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Frequently Asked Questions

For internal use only - not to be shared with advisers or retail clients

Why have we chosen Investec as our fund management partner?

We have chosen to partner with Investec Asset Management due to their alignment with our investment philosophy and their broad and deep expertise in managing investments.

Established in 1991, Investec are a global specialist asset manager, committed to active asset management and its value to investors. They have an excellent investment track record and offer a diverse range of outcome-focused solutions and specialist investment funds.

With £104bn assets under management (at 31 March 2018), they are defined by an ‘owner culture’ which empowers their people to ‘do the right thing’ for the benefit of clients.

Investec’s people have equity participation in the firm and their culture results in employee stability and long-term client-focused thinking, driving a focus on long-term value for investors rather than short-term results.


What type of units are available for the funds?

All funds available today are currently accumulation units. This means that any income generated within the fund will be reinvested and reflected in the unit price.


Why is the annual management charge on the Vitality Risk Optimiser funds 0.40% when the underlying range of funds that they invest in have a lower cost?

The annual management charge of 0.40% covers both the costs of the underlying funds together with the activities which VitalityInvest undertake. VitalityInvest design and manage the Risk Optimiser funds to help them achieve their aim of optimising returns for each fund’s risk level.

The funds are carefully designed and managed, with three key steps to adding value versus simply investing directly in an index-tracking fund:

  1. Careful construction of the optimal asset allocation, including deciding which asset classes to include and exclude.
  2. Selection of the underlying index-tracking funds, selecting the most appropriate fund to obtain exposure to each asset class and monitoring the funds to ensure they closely track the index and keep costs low.
  3. Daily tracking of the fund’s exposure to each asset class and swift rebalancing whenever there is even a small deviation from the target asset allocation.

These steps ensure that the funds remain strictly within their risk targets, meeting all the requirements demanded by the DT “gold standard” to be risk targeted funds – and we are independently assessed by DT each quarter to certify that the funds remain on target and meet these high standards.

Many funds aim to stay in a risk profile, but in practice can take more or less risk depending on which way the markets are moving. The Risk Optimiser funds remain firmly on target, whatever way the markets might be moving.

In addition, the Risk Optimiser funds are eligible for the Boosters and the Healthy Living Discount.


Do you disclose the charges and details of the funds in line with the MFID II rules?

The unit-linked insurance policy and our underlying funds are classified as Packaged Retail Investment and Insurance-based Products (PRIIPs).

This means that we provide a PRIIPs Key Information Document (KID) disclosure with relevant information about the unit-linked insurance policy. We also provide a Supplementary Information Document (SID) for each of our Vitality funds with relevant information, including transaction cost disclosures.

The PRIIPs KID disclosures include similar information to that required by the Markets in Financial Instruments Directive II (MiFID II) disclosures for other collective investment schemes (such as OEICs).

This includes disclosures of the costs of investing in our unit-linked funds, as well as an explicit disclosure of transaction costs.

What are the initial minimum payment amounts?

  • ISA
    • Regular subscriptions of at least £100 a month; or
    • A one-off subscription of at least £1,500; or
    • Transfer the value of one or more existing ISAs totalling at least £1,500.
  • Junior ISA
    • Regular subscriptions of at least £100 a month; or
    • A one-off subscription of at least £1,500, or
    • Transfer the value of one or more existing Junior ISAs or Child Trust Fund accounts totalling at least £1,500.
  • Retirement Plan (accumulation)
    • Regular contributions of at least £200 gross a month (which is £160 net before we add tax relief); or
    • A one-off contribution of at least £5,000 gross (which is £4000 net before we add tax relief); or
    • Transfer the value of one or more existing pension plans totalling at least £5,000.
  • Retirement Plan (flexi-access drawdown)
    • Transfer the value of one or more existing pension plan totalling at least £25,000.

There is no minimum amount if an existing customer has a Retirement Plan in accumulation and wishes to crystallise all or part of their plan to start flexi-access drawdown.


Can regular payments made to a VitalityInvest plan be automatically increased in line with inflation?

Yes, regular payments can be linked to the increase in Consumer Price Index (CPI).


Can employers make contributions to the Retirement Plan, and is the plan suitable to be used for auto-enrolment purposes?

Employers can make contributions to the Retirement Plan, however the plan is not suitable to be used for auto-enrolment purposes.

Individuals who are classified as ‘workers’ can opt-out of their auto-enrolment scheme and request that their employer makes contributions to a VitaltiyInvest Retirement Plan. However, the employer is under no obligation to make those contributions. Alternatively, the individual could remain opted in to their auto-enrolment scheme and use the Retirement Plan as a top-up, by requesting any additional employer payments over the contractual amount be paid into their VitalityInvest plan. Again, the employer is under no obligation to do this.

There are specific requirements for pension schemes that are used for auto-enrolment purposes, for example, to have contracts regarding contributions in place between the employer and the scheme, having default investments and members not having to make an active decision to join. The VitalityInvest Retirement Plan has not been designed to meet the requirements for an auto-enrolment scheme.


Is there an early cash in penalty?

No, there is no early cash in penalty or charge for transferring. The transfer or cash in value is the same as the current plan value.


What is the interest rate on the Cash Account, and what charges apply to the Cash Account?

The interest rate is a variable rate set by HSBC. It is currently 0.7% (as of July 2018) and is paid at the end of each month based on any amount held in the Cash Account overnight during that month.

The product charge is calculated based on the total value of all VitalityInvest products that the customer holds (excluding Junior ISAs), and this includes any amount held in the Cash Account. The Cash Account is treated in the same way as a non-eligible fund for the purposes of determining the rate of the product charge (ie, the Healthy Living Discount does not apply to any amount held in the Cash Account).

Please see the Charges Schedule for further details.


What are the options for the customer when taking money out of their Retirement Plan once they have reached the minimum pension age?

Customers can take money out of their plan in the following ways:

  • Uncrystallised Funds Pension Lump Sum (UFPLS) This is a cash lump sum. The amount can be all or part of the value of the plan. 25% of the lump sum will be tax free and the remainder taxable at their marginal rate.
  • Flexi-access drawdown Customers can crystallise all or part of their plan, taking up to 25% of the crystallised amount as a tax free cash lump sum at the time they crystallise. They can then take regular and/or ad hoc withdrawals from the crystallised amount. If the customer only crystallises part of their plan, then they can crystallise further parts of their plan in the future on request at that time.
  • Annuity purchase Customers can use all or part of their plan to purchase an annuity with an annuity provider (VitalityInvest do not provide annuities). The customer can take up to 25% of the amount as a tax free cash lump sum, which we will pay to them, and use the rest to purchase the annuity. If the customer only uses part of their plan to purchase an annuity, they can purchase further annuities in the future on request at that time.

What are the benefits on death?

In the event of the death of the plan holder, 100% of the value of the policy will become payable. If their death meets the requirements for accidental death, then 105% of the value of the policy will become payable.

For Retirement Plans, the death benefit can be paid to one or more beneficiaries in the following ways:

  • A lump sum,
  • Beneficiaries drawdown (including nominee or successor drawdown) where we set up a new Retirement Plan in the name of the beneficiary, or
  • Through purchasing an annuity with an annuity provider (VitalityInvest do not provide annuities).

Who can be the registered contact for a Junior ISA?

This must be the child’s parent or legal guardian.


If one parent is transferring a Child Trust Fund into a Junior ISA, can the other parent be the registered contact on the Junior ISA?

No, the registered contact on the Child Trust Fund must be the same parent when transferring into a Junior ISA. However, once the transfer has taken place and the Junior ISA is set up, then the registered contact may be changed to the other parent or legal guardian.


If a parent sets up a Junior ISA for their child, will the child be added to the parents Vitality Plus plan if the parent has a qualifying VitalityLife or VitalityHealth policy?

No, in order to add the child to the Vitality Plus plan, the child will need to be insured on the Life or Health policy.


Who can make payments to a Junior ISA?

We currently only accept subscriptions paid by the registered contact. Transfer payments may be made from other UK Junior ISAs or Child Trust Fund accounts.


Why don’t we have a General Investment Account?

A General Investment Account (GIA) is a way to invest money outside of tax wrappers – they are generally flexible and allow investment in a wide range of asset types.

VitalityInvest has launched with a solutions based focus – our aim is to offer product solutions for retirement and other tax efficient savings.

The tax efficient nature of pensions and ISAs mean they are the building blocks of any financial plan. The annual allowance for pensions (up to £40k) together with the annual ISA allowance (£20k) meets the annual savings needs of large numbers of clients.

A GIA would require a separate legal entity with its own regulatory permissions.

In the future we will look to offer solutions for a wider range of savings options.

What are the qualifying VitalityLife and VitalityHealth plans that allow the client to benefit from the Healthy Living Discount and Retirement Booster?

The qualifying VitalityLife plans are:

  • Plans with Vitality Plus, excluding Vitality Lite and Vitality Core, for example:
    • VitalityLife Plan with Vitality Plus
    • VitalityLife Essentials Plan with Vitality Plus
    • Mortgage Plan or Mortgage Plus Plan with Vitality Plus
    • Business Protection Plan with Vitality Plus
    • Relevant Life Plan with Vitality Plus
    • Any plans with Vitality Optimiser which meet the minimum premium requirement for Vitality Plus (currently £30 for single life and £40 for joint life)

The qualifying VitalityHealth plans are:

  • Personal Health Care plans
  • Business Health Care plans
  • Corporate Health Care plans with Vitality Plus

For joint life plans, both lives assured will be able to have their Vitality status linked to their VitalityInvest plans.

For Junior ISAs, the Vitality status of the registered contact is used, provided that the registered contact has a qualifying VitalityLife or VitalityHealth plan.


What funds qualify for the Investment Booster, Retirement Booster and Healthy Living Discount?

The eligible funds for each benefit are listed in the Investment Booster Schedule, Retirement Booster Schedule and Charges Schedule. All Vitality funds are eligible funds.

For the Healthy Living Discount, there are some additional funds that are eligible, provided that at least 40% of the value of the plan is held in Vitality funds. These additional funds are listed in the Charges Schedule.

Please note that the Cash Account is not an eligible fund.


On what date is the Investment Booster calculated and when is it allocated?

The Investment Booster is calculated and added to the value of the policy on the first day of the policy year following the end of the continuous minimum investment period (five years).

Please see the Investment Booster Schedule for more details.


On what date is the Retirement Booster calculated and when is it allocated?

The Retirement Booster payment will be added to the policy in instalments over the following drawdown policy year. It is paid at the same frequency as the income payments the customer is taking at that time. The payments will be made into the Cash Account and will start one calendar month after the drawdown policy year starts. If the customer is not taking a regular income, then the full amount of the Retirement Booster will be paid into the Cash Account one calendar month after the drawdown policy year starts.

For further details, please see the Retirement Booster Schedule.


What happens to the Retirement Booster payments if they are being paid monthly and the customer dies part-way through the year?

If a customer dies during the year when they are receiving the Retirement Booster payments on a regular basis (which they would have qualified for over the previous year) then the remaining payments will be added to the value of the policy when we receive evidence of death, and the policy ends (as it’s a Life policy). If the beneficiary decides to keep the money invested with us, then we set up a new plan in their name and they will qualify for the boosters and discounts based on their own Vitality status, whether they have a qualifying plan and investment choice.


How can a customer or adviser see how much has been added to the plan in Booster payments?

Customers can view details of the plan, including any Booster payments and the next Boost payment date, by logging into Member Zone.

Customers can use the Investment Booster and Retirement Booster calculators in Member Zone to see the potential value of their Boosters and Discounts.

Advisers can view details of their clients’ plans once they log into the adviser site. Details include a breakdown of the Booster payments added and the next Boost payment date. The Adviser Hub also features an Investment Booster Modeller and Retirement Booster Modeller to estimate the value of potential future Booster payments, and show the impact of the Healthy Living Discount.


Are the Investment Booster rates guaranteed?

Yes, for money paid in that remains invested in eligible funds. The Investment Booster rates and continuous minimum investment periods for future investments may be different.

For further details, please see the ‘Investment Booster’, section of the terms and conditions for the Retirement Plan or ISA and Junior ISA.


Are the Retirement Booster rates guaranteed?

The Retirement Booster rates are guaranteed for 10 years following the start of the first drawdown policy year, or on becoming eligible for the Retirement Booster if later. After 10 years new rates will apply that may be higher or lower.


Are the Healthy Living Discount rates guaranteed?

These rates are not guaranteed. If we decide to change these rates, then we will provide customers with at least 30 days written notice.


Under what circumstances would Vitality change the rates for the Investment Booster, Retirement Booster or Healthy Living Discount?

We will review the rates for the Investment Booster, the Retirement Booster and the Healthy Living Discount periodically. When we carry out the review we’ll take account of the range of factors below:

  • Our existing and future estimated income and costs relating to the following and whether this affects our ability to provide the rewards and discounts sustainably at the current rates in a fair way to customers:
    • Providing the Investment Booster, Retirement Booster or Healthy Living Discount.
    • Providing the eligible funds.
    • Providing the Retirement Plan, ISA and Junior ISA, and whether we are continuing to offer these products to new customers or allow further investments.
  • Whether our existing and future estimated income and costs affects our ability to provide the Investment Booster, Retirement Booster and Healthy Living Discount sustainably at the current rates in a fair way to customers.

For further details, please see ‘The Vitality Commitment’ section of the terms and conditions for the Retirement Plan or ISA and Junior ISA.


Do the boosters count towards a client’s pension annual allowance or their ISA annual subscription limit?

No, the boosters are treated in the same way as an investment return.


When a child turns 18 and their Junior ISA becomes an adult ISA, will their Investment Booster rates and payment dates continue in line with the original investments?

Yes, the Investment Booster rates and payment dates will continue on based on the dates that the investments were originally made into the Junior ISA.

What is the standalone Vitality Plus plan?

The standalone Vitality Plus plan is designed for VitalityInvest customers who are in retirement and do not hold a qualifying VitalityLife or VitalityHealth plan. Standalone Vitality Plus gives these customers access to the Healthy Living Programme and allows them to be eligible for the Retirement Booster on the Retirement Plan.

Standalone Vitality Plus currently costs £3.80 per month (moving to £4.50 per month in Q1 2019).

Please note that standalone Vitality Plus does not qualify for cashback like a qualifying VitalityLife or VitalityHealth plan. It also does not allow the customer to become eligible for the Healthy Living Discount.


If a customer has Vitality Plus through a qualifying VitalityLife or VitalityHealth Plan, or through a standalone Vitality Plus plan, how would having a different anniversary date to their VitalityInvest plan affect their Healthy Living Discount or Retirement Booster?

The Healthy Living Discount and Retirement Booster are based on the client’s Vitality status at the date the benefit is being applied to the plan.

For the Healthy Living Discount, we’ll check the Vitality status each month when the charge is due to see if the discount should be applied.

For the Retirement Booster, we’ll check the Vitality status at the end of the drawdown policy year to calculate the boost payments for the following drawdown policy year.

When the Healthy Living Discount or Retirement Booster is calculated, we’ll use the higher of:

  • the member’s carried over Vitality status from the previous Vitality plan year, or
  • their current earned status.

In this way the status that we use will always be fair to the client regardless of when the anniversary date of their Vitality Plus falls.


How can a customer qualify for the Healthy Living Discount on their VitalityInvest plan if they have been declined for a Life cover with VitalityLife?

The customer can still qualify for the Healthy Living Discount if they have a qualifying VitalityHealth plan.


If a customer claims on their qualifying VitalityLife or VitalityHealth plan, will we maintain their Vitality status with regards to their VitalityInvest plan, and if so then how long for?

If a customer claims on their Life policy and that policy ends as a result, then we’ll freeze their status for five years. However, for a Health policy, the policy will not end on the claim, so we will freeze the status indefinitely provided they still maintain a qualifying policy and they fail 3 out of 6 Activities of Daily Living.

For further details, please see the section ‘Vitality Status and Ill Health’ in the terms and conditions for the Retirement Plan or ISA and Junior ISA.