- A description of the nature and amount of charges a client will or may be expected to pay in relation to the product including, where relevant, any investment charges within the product. If applicable a description of the nature and amount of adviser charges a client has agreed may be taken must also be included;
- An effect of charges table;
- Reduction in yield information; and
- For a personal pension scheme, the amount of interest that the administrator or trustee retains in relation to cash held in the pension, if any.
If your client’s fund will be reduced to zero following crystallisation the effect of charges table and reduction in yield information do not need to be included, but the other elements of the ‘appropriate charges information’ do still need to be supplied.
Finally, in addition to the projection and charges information, a KFI for a personal pension must also include details of the rate of interest that will be earned on cash held in the scheme bank account.
What changes will we see in April 2020?
Having considered what goes into a KFI, let’s now take a look at the changes the FCA is introducing from April 2020 for drawdown and UFPLS KFIs.
The simplest way to explain the changes is by breaking them down into their impact based on either the point in time when the illustration has to be provided or on what makes up the contents of the illustration.
When information must be provided
As touched on above, current rules, require that when a client varies their personal pension either by starting to take payments from their drawdown fund or by taking a one-off, ad-hoc or regular UFPLS they must be provided with sufficient information to understand the consequences of that action.
This information can include, where relevant, the projection element of a key features illustration.
From April 2020 the FCA has expanded the number of events which will create a requirement to provide a client with projection/illustration-related content.
It will also require a full KFI to be required in a number of different circumstances, rather than allowing firms to rely on the “sufficient information to understand” requirement.
Going forward the list of events at which information will need to be provided with a KFI will include:
