Policy DocumentStakeholder Pension Plan – BC/CA

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Contents

1. Introduction

2. Payments

3. Transfers-in

4. Policy schedules

5. Fund options

6. The Lifestyle Option

7. Units, ownership of assets, changes to funds and restriction on Prudential's liability

8. Using payments to buy units

9. Change of investment instructions for future payments

10. Switching between funds

11. Selling units for benefits or a transfer-out

12. Delays in buying, selling or switching units

13. Arrangements

14. Benefits payable to you

15. Benefits payable on your death

16. Life cover

17. Transfers-out

18. Charges

19. General

AppendixA. Charges

B. Minimum amounts

C. Notices, instructions and requests from you to us

D. Maximum number of funds

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1. Introduction

1.1 About the PolicyCertain words, expressions and abbreviationsused in the Policy are shown in bold print.The meanings of these words, expressionsand abbreviations are given in section 1.4.

Where the words:

> “Prudential”, “we”, “us”, and “our”are used, they refer to The PrudentialAssurance Company Limited (theProvider, Stakeholder SchemeManager and Scheme Administratorof the Scheme).

> “you” and “your” are used, theyrefer to you, as a member of theScheme, and the planholder named on each Policy schedule.

Because the Scheme has been set up by aDeed Poll, you, as a member, have a directlegal relationship with us.

The Policy has no effect unless one ormore Policy schedules have been issuedin respect of it.

Payments to the Scheme are acceptedunder the Policy and are used to providecertain benefits for you.

All payments to the Scheme will be madeto us.

Any options or provisions in the Policywill be exercised only in such a mannerand to the extent permitted by the Rulesand in the form and at the time permittedby the Rules.

Your benefits under the Scheme areprovided through the Policy. We will payall the benefits due under the Policy directto the person entitled to the benefits underthe Rules.

The Policy offers a variety of investmentoptions in respect of the payments acceptedunder it. The investment options consist of arange of fundsmanaged by companieswithin M&G plc, and a number of fundslinked to external companies. Details ofthe investment options available to you canbe found in the Fund Guide. We also produce a document called a"Statement of Investment Principles". Thiscontains information about the investmentrationale of the Scheme and a copy isavailable from us on request. Prudential'sdecision is final as to whether anyinvestment option will be made availableunder the Policy.

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If you are self-employed or not employed,references in the Policy to employerpayments and to any other specialconditions which apply to employeeswill not be relevant.

The Policy reflects some of the terms setout in the Rules. Where the Policy reflectsthe terms set out in the Rules, every efforthas been made to ensure that the Policyreflects those terms as accurately aspossible. However, in the event of anyconflict between such information, theRules (being the governing document) willin most circumstances override the Policy.An example of a circumstance when theRules may not be overriding is when theGovernment makes changes (eitheroverriding legislation which we mustimplement or optional changes which wecan make available if we so choose) whichdo not have to be reflected in the Rules inorder for them to be operative. In suchcases, we may reflect the up-to-dateposition in the Policy before we changethe Rules.

Any reference to an Act of Parliamentincludes any new legislation by which it isreplaced or changed. It also includes anyregulations or orders made under the Actor under the replacement Act.

Prudential will administer the Scheme sothat it meets the requirements for anautomatic enrolment scheme in relationto you, where your employer has chosento use the Scheme to comply with itsobligations to you under the automaticenrolment legislation.

We produce a yearly declarationconcerning the operation of the Scheme. A reporting accountant appointed for thepurposes of the Scheme thenindependently audits this declaration.

1.2 Important points aboutinstructions and items sent to us(a) There are a number of references in thePolicy to notices and instructions youmust give us. In some cases, these mustbe in writing and we will give you formsto use. You can obtain any forms bycontacting us (see section 1.3). In someinstances, you will be able to give usnotices and instructions by telephone orvia the Prudential StakeholderWebsite. More information about thiscan be found in sections 1.2(b), 19.11and the appendix.

(b) In the case where you use thePrudential Stakeholder Website tosend us an instruction or to carry out atransaction, we cannot be held to havereceived the instruction or carried outthe transaction if for any reason ourelectronic platform is not operational.When you successfully send us anelectronic instruction or carry out atransaction, we will give youconfirmation. If you do not receive thatconfirmation within three hours, it isstrongly recommended that you sendthe instruction or request thetransaction by alternative means, forexample in writing or by telephone, toensure that we get it.

(c) In some circumstances, there may be adelay in buying or selling units. This isexplained in section 12.

(d) A number of sections of the Policy referto the unit price dates used fortransactions once we have all of theinformation and other items we needfrom you and others, to enable us tocarry out the transaction. If the day wereceive all of the information and itemswe need is not a working day, we willtreat them as being received on thenext working day.

Similarly, if we receive information,instructions or items after 5.00 p.m.(London time) on a working day, wewill normally treat the information,instructions or items as being receivedon the next working day, except that:

> information or instructions receivedthrough the PrudentialStakeholder Website after 5.00p.m. (London time) on a workingday, will normally be treated asbeing received on that sameworking day; and

> cheques received after 3.30 p.m.(London time) on a working day,will normally be treated as receivedon the next working day.

1.3 Contact detailsIf you wish to contact us, you can do so by:

> telephoning the PrudentialStakeholder Customer Service Centreon: 0345 070 3333; or

> sending an e-mail to:stakeholder@prudential-pensions.co.uk;or

> writing to: Prudential StakeholderCustomer Service Centre, Lancing,BN15 8GB; or

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> visiting the Prudential StakeholderWebsite.

You should always quote your NationalInsurance number.

Telephone calls may be monitored orrecorded for security, quality purposes, staff training and/or dispute resolution.

1.4 Meaning of certain words,expressions and abbreviationsCertain words, expressions and abbreviationsin the Policy have specific meanings. Whereany of these words, expressions orabbreviations are used they are shown inbold print. The meanings of these words,expressions and abbreviations are as follows:

“appendix”. This is at the end of the Policy;it contains details of charges, minimumpayments and any other restrictions.

“arrangement”. Payment types aregrouped into one or two separate benefitpackages as described in section 13. Thesepackages are called "arrangements".

"automatic enrolment legislation". Thelegislation in Part 1 of the Pensions Act2008 and regulations made under that Part,which provides for pension schememembership for jobholders.

"automatic enrolment scheme". Apension scheme which meets therequirements set out in section 17 of thePensions Act 2008 and regulations madeunder that section.

“chosen pension date”. This is the dateon which you expect to take your benefitsfrom the Scheme.

If the Scheme is being used as anautomatic enrolment scheme, youremployer will notify us of the chosenpension date for your plan.

If the Scheme is not being used as anautomatic enrolment scheme, you selectthe chosen pension date for your plan.

“dealing cycle”. This is the timeframewithin which Prudential or an externalcompany carries out a valuation of a fund,buys and sells units, and then (if applicable)makes the proceeds of a sale ready forreinvestment in another fund and/or forpayment of benefits. Different companieshave different dealing cycles, largely due tothe different times at which they carry outtheir fund valuations. The dealing cycle – or the combination of two dealing cycles, in the case of a switch between funds –affects the timescales for buying and selling units for whatever purpose.

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“default fund”. This is the investmentoption to which payments will beautomatically applied in the event that youdo not state your own choice from amongthe funds available. Details of the defaultfund can be found in the Fund Guide. Thedefault fund does not represent arecommendation by Prudential and youshould consider and choose funds to suityour needs. When considering youroptions you should seek financial advice.A financial adviser can assess your personalcircumstances, talk you through youroptions and make a recommendation basedon this information.

“employer”. Your current employer, if youare employed.

“external companies” and “externally-linked funds”. External companies arecompanies or other entities that are either:

(a) managers of collective investmentschemes (such as unit trusts and OEICs)operating outside M&G plc; or

(b) life assurance companies outside M&G plc.

Prudential (or other companies withinM&G plc) has entered into agreementswith certain external companies so thatfunds that invest in externally-managedcollective investment schemes and fundswith investment performance linked tofunds of external life assurance companies,may be offered under the Policy. Thesefunds are called externally-linked funds.

“fund”. This means one of the pension fundswe make available for investing payments.The funds include Prudential funds and anumber of externally-linked funds.

The funds available under the Policy are setout in the Fund Guide and are subject tochange from time to time.

“HMRC”. Her Majesty's Revenue &Customs.

“life cover amount”. If life cover applies toyou, this is the amount of life cover that youhave. The life cover amount will be shownon the Policy schedule(s).

“M&G plc”. M&G plc and its subsidiariesas defined in the Companies Act 2006.

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"opt-out period". This is the periodspecified in regulation 9 of the Occupationaland Personal Pension Schemes (AutomaticEnrolment) Regulations 2010, during whichyou may elect to stop payments to theScheme and receive a refund of anypayments you have made to the Scheme.

“payment due date”. This is the date bywhich any regular payment must bereceived by the Scheme. For personalpayments deducted by your employer, thepayment due date is the 22nd of the monthfollowing the month in which the paymentwas deducted from your earnings. Foremployer payments, the payment duedate is a date agreed between theemployer and us, normally the 22nd of themonth following the month to which thepayment relates. In any other case, thepayment due date is the date agreedbetween you and us.

“pension credit” and “pension creditrights”. If you become divorced or your civilpartnership is dissolved and you are awardeda pension credit in respect of your ex-spouse’s or ex-civil partner’s benefit under aregistered pension scheme, you cantransfer this pension credit to the Scheme. If on divorce or dissolution your ex-spouse or ex-civil partner is awarded a pension credit

in respect of your benefits under theScheme, he or she may become a memberof the Scheme in order to benefit from thepension credit. In either case, moneysrepresenting the relevant pension credits areinvested under a policy for the individual andhe or she will then have pension credit rightsunder the Scheme.

“plan”. The stakeholder pension plan thathas been set up for you under the Scheme.

“plan charge”. This is the charge wemake under the Policy. It is explained inthe appendix.

“plan year”. A period of 365 or 366 days,commencing on a date normally agreedbetween the sponsor or employer and us.

“Policy”. This document together with theappendix and Policy schedule(s). ThePolicy is issued to you. The Policy containsterms providing for the receipt andinvestment of payments and for thepayment of your benefits.

“Policy schedule”. A document whichforms part of the Policy. Among otherthings, it sets out details of the payments tobe made to your plan and the investmentoptions selected. It is a very importantdocument because it provides evidence ofthe contract.

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"Prudential". The Prudential AssuranceCompany Limited, which is a member ofM&G plc. It should be noted that in thecontext of the Policy, "Prudential" does not include "Prudential Financial Planning",which is an advice service providedthrough another company from within M&G plc.

“Prudential funds”. These are funds thatare managed within M&G plc.

"Prudential Stakeholder Website". Thewebsite at: www.pru.co.uk/stakeholder.

"qualifying scheme". A pension schemewhich meets the requirements set out insection 16 of the Pensions Act 2008 andregulations made under that section.

"reasonable notice". This means that wemust tell you before we make a change andwe must give you a reasonable amount oftime, given all of the circumstances, to takeany action or make any decisions which areneeded, or which you may wish to take, onaccount of the proposed change. Whengiving reasonable notice, we will takeaccount of all the circumstances of thechange: for example, the length of noticethat we can give may be influenced bylegislative or regulatory requirements, or by an external entity such as an external company.

“registered pension scheme”. A pensionscheme registered in accordance withsection 153 of the Finance Act 2004, ordeemed registered in accordance withparagraph 1 of Schedule 36 to the FinanceAct 2004.

“Rules”. The Rules of the Scheme, asamended from time to time.

“Scheme”. The Prudential StakeholderPension Scheme.

“sponsor”. The employer or othersponsoring organisation which set up thegrouped membership through which youhave joined the Scheme and taken out yourplan. If you change employment after joiningthe Scheme, you may not necessarily haveany further connection with the sponsor.

"Stakeholder Regulations". TheStakeholder Pension Schemes Regulations2000 (SI 2000/1403) as amended.

“Technical Guide”. The explanatory guideissued to you once you are accepted tomembership of the Scheme.

“unit”. The value of each fund is divided intoequal parts, and each part is called a unit.

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“unit price”. This is the price at whichunits are bought and sold. The unit pricewhich applies on any particular day will bethe price which is calculated by referenceto the valuation (or adjusted valuation)made on that day.

“unit price date”. This is the date onwhich the unit price used in relation tobuying and selling units as part of anyparticular transaction is set. The unit pricedate which applies is determined byreference to the date on which we receiveall of the information (and the payment ifapplicable) necessary to carry out thetransaction.

The unit price date used may vary betweenthe different funds due to the differentdealing cycles of the companies to whichthe funds are linked. This is explainedfurther in the Unit Price Dates Leafletavailable from us.

"working day". This is any day thatPrudential is open for business. It doesnot include:

> Saturdays;

> Sundays;

> Bank Holidays; and

> any other public holiday and days thatwe, or any other organisation thatperforms any administrative orinvestment function on our behalf, arenot open for business (for example,around public holidays).

2. Payments

2.1 Types of paymentsThe following payments to the Scheme canbe accepted under the Policy:

(a) payments by you or on your behalf. Ingeneral, payments made on your behalfby a third party are treated as paymentsmade by you;

(b) payments by your employer, if you are employed;

(c) payments representing rebated basicrate tax relief on your personalpayments;

(d) transfer payments in respect of you(including transfers-in of pensioncredit rights) from other pensionschemes and policies allowed underthe Rules;

(e) any other payments that HMRC allowsand we agree.

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All payments to the Scheme will be madeto us.

Payments from you or your employer maybe a series of regular payments or specifiedsingle payments. Regular payments may befor a specified amount or may in somecircumstances be a percentage of yourearnings (see section 2.4).

2.2 Applications (a) If the Scheme is being used as anautomatic enrolment scheme, you will not be required to complete anapplication form before you join theScheme.

If the Scheme is not being used as anautomatic enrolment scheme, you willbe required to complete an applicationform (and whatever other forms weneed) before you join the Scheme. Wewill accept your application, provided youare eligible and the application complieswith all regulatory requirements. If theseconditions are not met, we are not underany obligation to accept your application,and we can return any money sent to usin respect of your application.

(b) You may be required to complete aseparate application form for each newtype of payment that is made. Oneapplication form can cover several typesof payment made at the same time.

(c) Applications may be made via thePrudential Stakeholder Websiteor by telephone (see section 1.3).Paper application forms are alsoavailable from us.

2.3 Required informationDepending on whether or not the Schemeis being used as an automatic enrolmentscheme, we cannot accept payments untilwe receive all the information andcompleted forms we require. Someinformation may be received by us directfrom your sponsor or employer.

2.4 Regular payments as a percentageof earnings(a) If your regular payments are described

as a percentage of earnings, then yourpayments will be based on a definitionof earnings already agreed with us byyour sponsor or employer for yourgrouped membership.

(b) The definition of earnings may bebased on basic earnings or may includefluctuating amounts such as bonusesand overtime.

(c) You can obtain details of the definitionof earnings selected for your groupedmembership from your sponsor oremployer.

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(d) If you cease to be employed by anemployer connected with the sponsorand decide to continue making regularpayments, you will not normally be ableto continue to link regular payments to earnings.

2.5 Payment due date(a) Where payment is made through youremployer, all payments (whetherregular or single payments) made byyou or your employer must bereceived by us on or before thepayment due date. In order to helpensure that the payments are receivedon time, we will normally agree anexpected payment date with youremployer which will be some daysbefore the payment due date.

(b) Where payment is being made by directdebit mandate from your own account,or by other means agreed with us, thereis no requirement for payment to bemade by the payment due date.However, we will inform you of non-receipt of such payments.

Where payment is being made bydirect debit mandate, we will buyunits in anticipation of receipt of yourpayment. If the payment by direct debit

mandate is subsequently not received,we will sell the units that had beenbought in advance.

(c) The non-receipt of regular paymentsmade by your employer may haveserious consequences for any life coverfor you. Section 16.8 contains furtherinformation on this.

2.6 Increasing, reducing, stopping orsuspending payments(a) You can at any time increase or reduce

your regular payments, stop makingregular payments or suspend paymentsfor a period specified by you. Youshould give us at least 30 days’ notice ofyour intention to increase, reduce, stopor suspend payments, so we can makethe necessary arrangements.

(b) Your employer can also increase,reduce, stop or suspend regularpayments, subject to your contract of employment. This may affect any lifecover you have taken out.

(c) If the Scheme is being used as anautomatic enrolment scheme, youcan decide to stop making paymentswithin the opt-out period. Specialrules apply. Your employer will tell you

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what you need to do. If your opt-out isvalid, you will receive a refund of anypayments you have made to theScheme and your employer willreceive a refund of any payments it hasmade to the Scheme in respect of you.You will be treated as if you had nevermade any payments to the Scheme.

(d) If you wish to resume regular paymentsafter a period of suspension, you willhave the following options:

(i) maintain your current investmentinstruction for future payments; or

(ii) change your investment instructionfor future payments (see section 9); or

(iii) change your investment instructionfor future payments and switchsome or all of the units held underyour plan and use the value realisedto buy units in a different fund orfunds (see sections 9 and 10).

Note: If you redirect future payments tothe Lifestyle Option or if payments arebeing allocated to the Lifestyle Optionas the default fund relevant to yourplan, all existing units allocated to yourplan will be included in the automaticswitching when this is carried out (see section 6.3).

2.7 Payment limits Minimum payments are covered in theappendix.

There is no maximum payment that can bemade to the Scheme. There is, however, alimit set by the Government above which atax charge will apply. This is covered inmore detail in the Technical Guide.

2.8 Payments by you(a) While you remain employed by anemployer connected with thesponsor, that employer will normallydeduct your personal payments fromyour salary via payroll. Your employerwill send the payments to us, normallyby direct transfer from its own bank orbuilding society account.

(b) If you cease to be employed by anemployer connected with the sponsor(or if you are self-employed or notemployed), then regular payments byyou or payments made on your behalf,must normally be made by bank orbuilding society direct debit mandate.Other payment methods are possiblebut not cash, credit card or debit card.

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(c) If the Scheme is being used as anautomatic enrolment scheme, youwill make payments to the Scheme thatwill, as a minimum, equal the differencebetween the payments made by youremployer and the minimum paymentsrequired under the automaticenrolment legislation. This does notprevent you from increasing, reducing,stopping or suspending payments inaccordance with section 2.6.

2.9 General(a) Payments under an arrangement

are used to buy units under yourplan in the funds selected.

(b) The final regular payment payable toyour plan is normally the last paymentdue immediately before the chosenpension date.

(c) If you have not taken benefits from anarrangement by the chosen pensiondate, you can continue to makepayments (subject to choosing a newchosen pension date).

(d) Once all the units under anarrangement have been sold to providebenefits or a transfer-out, no furtherpayments can be accepted to thatarrangement. Any further paymentswill be held under a new arrangement.

(e) Subject to section 2.9(f), in the casewhere you are phasing benefits (see section 11.2), further payments can be accepted to any remainingarrangement until the units under thatarrangement are sold (or further sub-divided) to provide benefits.

(f) No payments can made be to your planafter your 75th birthday.

3. Transfers-in

You can arrange to have benefits fromother pension schemes or policies underwhich you have rights to be transferred tothe Scheme. We will ensure that wecomply with the Rules and we meet allregulatory requirements before acceptingthe transfer payment. Any such paymentwill be accepted under your plan as asingle payment.

On the date that all of the necessary formsand requirements have been completedand satisfied and the transfer-in has beenreceived by us, we will use the money tobuy units under your plan, using the unitprice(s) described in section 8.

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4. Policy schedules

4.1 Content of Policy schedule We issue one or more Policy schedules inrespect of your plan. Between them all, thePolicy schedules issued will contain thefollowing information:

> your chosen pension date for your plan;

> details of any regular payments and ofany single payments that you haveagreed will be made into your plan;

> details of any transfers-in from otherpension schemes and policies receivedby your plan;

> how payments will be split betweenthe funds selected;

> details of any life cover that you havetaken out.

4.2 Issuing Policy schedules A Policy schedule is issued when:

> you or your employer start regularpayments for the first time;

> you or your employer change the rateof existing regular payments;

> you add life cover to the Policy or theexisting level of life cover is changed;

> you or your employer make a singlepayment;

> we receive, on your behalf, a transfer-infrom another pension scheme or policy.

You should keep all in-force Policyschedules together with the Policy.

We will issue a replacement Policyschedule if for any reason a previousPolicy schedule was incorrect or needs tobe updated.

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5. Fund options

5.1 Constitution of fundsPrudential funds are established by us butmay be linked to similar funds establishedby other companies within M&G plc. ThePrudential funds available and thecompany to which they are linked maychange from time to time.

Externally-linked funds are establishedby us (or another company within M&G plc) but are either:

(i) invested in units or shares ofexternally-managed collective schemesby means of agreements between therelevant external company and us(or another company within M&G plc);or

(ii) linked to funds of external companieswhich are life assurance companies.These links are made available by meansof agreements between the relevantexternal company and us (or anothercompany within M&G plc).

This means that although all payments inrespect of you are invested in the Policy,the investment return will reflect theperformance of the corresponding externalfund, subject to deduction of charges.You do not have any contract with theexternal company.

Section 7.3 describes how funds can beclosed or withdrawn and how new fundscan be added.

5.2 Valuation of fund assetsFunds may be valued on each workingday, but may at the relevant company’sdiscretion, be valued at longer intervals.Assets may be valued in different ways andthe decision of the relevant company,whether us (or another company withinM&G plc) or an external company, on allvaluation issues is final.

The value of each Prudential fund isdetermined by us or another companywithin M&G plc. We base the value of theexternally-linked funds on the valuesthat the external companies decideupon in respect of their owncorresponding funds. In all cases, thevaluation used must be demonstrably fair.

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5.3 Fund values and unit prices(a) Prudential funds

The value of a Prudential fund is eitherbased on the value of the assets relatingto it, or, where the Prudential fund isinvested solely in funds operated byanother company within M&G plc (forexample, unit trusts or OEICs operatedby another company within M&G plc),on the unit price supplied to us by theother company. Certain adjustments arethen made to that value. Any suchadjustments must be permissible withinthe terms of the StakeholderRegulations.

In some cases, there will be a range ofvalues that can be placed on assets andtherefore on the value of a Prudentialfund. A number of factors will berelevant. The main factor when decidinghow to value an asset is whether the totalamount being paid into a Prudentialfund (including any underlying fund) ismore or less than the total amount beingpaid out. If more money is being paid in,we, or the relevant company from withinM&G plc, may need to buy more assets.In such a case, the purchase price of

assets will normally be used in valuingthe Prudential fund (or underlyingfund). If, however, more money is beingpaid out of the Prudential fund(including any underlying fund), the saleprice of assets will normally be used invaluing the Prudential fund (orunderlying fund). We, or the relevantcompany from within M&G plc, alsohave complete discretion to choose tobase the value of the Prudential fundon asset values that lie between thepurchase and sale prices.

Because of the potentially daily switchesbetween purchase and sale valuationbases, there may be day-to-dayfluctuations in the unit price, eventhough the market appears to berelatively stable.

(b)Externally-linked fundsExternal companies value their ownunderlying funds.

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We base the value of each externally-linked fund on the unit price or pricessupplied to us by the relevant externalcompany. Where the externalcompany provides unit prices based onboth purchase and sale valuations oftheir underlying fund, we have discretionto choose the unit price on which to basethe value of the externally-linked fund(including a unit price that lies betweenthe values supplied by the externalcompany). Otherwise, the value of theexternally-linked fund is based uponthe single unit price supplied by theexternal company.

(c) GeneralOther methods of valuation may beused. In choosing any other method we(or another company within M&G plc)or the external company, will act in afair and reasonable manner.

Asset valuations and unit pricecalculations are carried out with care, buton some occasions mistakes may occur.If this happens, the unit price willnormally be corrected once the mistakehas been detected and it is our practiceto do so in relation to the Prudential

funds. If, however, the mistake is dueto an error outside our control and weare unable to obtain compensation forthe mistake (for example, an error inpricing the fund underlying anexternally-linked fund due to factorsoutside the external company'scontrol), we reserve the right not tocorrect the mistake retrospectively.

5.4 Calculation of unit prices The unit price is the value of the funddivided by the number of units in issue(subject to any rounding).

If, for any reason, the value of a fundcannot be obtained by valuing the assets,the unit price may be calculated by makingan adjustment to the previous day’s unitprice. This adjustment will reflect the wayin which the values of the underlying assetsmay have changed.

When calculating unit prices forPrudential funds, we:

> round our calculations up by one tenthof a penny or less, if we decide to valuethe relevant Prudential fund on thebasis of the purchase price of assets; and

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> round our calculations down by onetenth of a penny or less, if we decide tovalue the relevant Prudential fund onthe basis of the sale price of assets.

When calculating unit prices forexternally-linked funds, we round ourcalculations in accordance with therounding methods used by the relevantexternal company.

Irrespective of the basis of the fundvaluation and/or rounding methods, thesame unit price will be used for bothbuying and selling units on any day.

In some circumstances, a charge called a“dilution levy” may be applied to a fund.This type of charge covers the cost of eitherbuying assets (where more people areinvesting than disinvesting) or selling assets(where more people are disinvesting thaninvesting). If such a charge applies, it willnormally be collected via the unit pricingprocess. A dilution levy is not designed tomake a profit, but to cover expenses. Anydilution levy will be in line with reductionsin members’ rights permitted by theStakeholder Regulations.

6. The Lifestyle Option

6.1 General(a) The Lifestyle Option is an investment

option that uses a combination of thefunds available under the Policy. It:

> links investment under the Policy inearly years to funds which aim toprovide growth ahead of inflation,but which carry a relatively highdegree of volatility risk; and then

> gradually changes the investmentunder the Policy to funds designedto provide a lower degree ofvolatility risk and greater stability as you approach your chosenpension date.

(b) The Lifestyle Option changes investmentsunder the Policy automatically, withoutthe need for you to request switches orchange your investment instructions forfuture payments.

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6.2 Profiles(a) The Lifestyle Option uses a combination

of funds known as a "profile".There arestandard profiles designed by us. Theremay also be profiles specificallydesigned for your grouped membership.Details of the profiles available underyour plan are set out in the Fund Guide.

(b) Certain funds may not be used underthe Lifestyle Option. Conversely, theremay be certain funds that areaccessible only via the Lifestyle Option.

6.3 Selection and coverage of theLifestyle Option(a) You can select the Lifestyle Option at

any time.

(b) You can cancel or override the LifestyleOption at any time (see section 6.7).

(c) If you select the Lifestyle Option, it mustapply to all arrangements and allpayments to your plan. This means thatall payments to your plan will be appliedto the funds specified by the relevantprofile, and all units allocated to yourplan will be included in the automaticswitching when this is carried out.

(d) When you select the Lifestyle Option,all existing units allocated to yourplan at that date will be switchedimmediately to the funds specifiedby the relevant profile. You will not beable to select any other funds outsideof the relevant profile.

6.4 Automatic switches and fundselection for payments(a) The Lifestyle Option works by making

automatic switches for a set period upto your chosen pension date. Unitsalready allocated to your plan areautomatically switched in pre-setproportions into the pre-selectedfunds at regular intervals; under thestandard profiles designed by usswitches are always carried out monthly.

(b) We choose the days on which theautomatic switch and redirection ismade. Switching will normally takeplace over the same dates each month,except where the usual dates are notworking days.

(c) On the day selected by us, we sell either:

> all the units then allocated to yourplan under the Lifestyle Option; or

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> the amount needing to be switched.

The value realised is used to buy newunits in line with the relevant profile.

(d) The sale of existing units and thepurchase of new units cannot normallytake place on the same day, but we willeffect all transactions as soon as reasonably possible.

For example, the new unitsmay bebought on a date and using the relevantunit price(s) some days later than thedate the original unitswere sold. This isbecause there is a lead-time involved inmaking unit prices available and the newunits cannot be bought until the valuerealised by the sale of the existing unitsis known. Where external companiesare involved, transmission of data to andfrom these companies may extend thelead-time. The prices of units can, asalways, go up or down during that timeand this risk is borne by you. No interestwill be payable during the periodbetween the sale of the existing unitsand the purchase of the new units.

(e) The exact unit price dates and thetime lapse between the sale andpurchase of units will depend on the

funds involved and the dealing cyclesof the companies involved. Details canbe found in the Unit Price Dates Leafletavailable from us.

(f) The proportions are not monitored orrealigned in the period between thedates on which the automatic switchestake place.

(g) Payments made to your plan areautomatically split between the pre-selected funds at the relevant stage ofthe profile.

6.5 Delay in selling and buying unitsSection 6.4(d) explains that there willnormally be a time lapse between selling and buying units under the Lifestyle Option.In addition to this time lapse, there may onoccasions be a delay in selling and/orbuying units in the circumstances describedin section 12. If a delay under section 12applies at the time we expect to carry outautomatic switches and redirections underthe Lifestyle Option, we will process theswitches and redirections at the end of theperiod of delay (unless in our opinion thiswould not be fair and reasonable), using therelevant unit price(s) then applicable.

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6.6 Change to chosen pension date –effect on the Lifestyle Option(a) If your chosen pension date is

changed (see section 14.1), we willadjust the pre-set switches and theinvestment of future paymentsaccording to the relevant profile, so thatthey are scheduled around your newchosen pension date.

(b) A change to your chosen pensiondate may require an adjustment to theway your plan is then split between thefunds. Except where a delay undersection 12 applies (and subject tosection 1.2), we will make any requiredswitches at the next date(s) on whichautomatic switching is due to takeplace. Future payments will immediatelybe directed to the funds in the newproportions according to the profile.

6.7 Cancelling or overriding theLifestyle Option(a) You can, at any time, cancel the Lifestyle

Option by requesting us to remove it orby removing it yourself via thePrudential Stakeholder Website. Ifthis happens, all automatic switching will

cease and we will stop allocatingpayments to the Lifestyle Option. If youcancel the Lifestyle Option, you need togive us new investment instructions forfuture payments. Unless you request aswitch of existing units when youcancel the Lifestyle Option, your existingsavings will remain invested in thefunds to which they were allocatedunder the Lifestyle Option.

(b) You can temporarily override theLifestyle Option by requesting a switchunder section 10. The Lifestyle Optionwill then be overridden until the nextdate on which automatic switching isdue to take place. At that time therelevant profile will be reinstated.

6.8 Changes to the Lifestyle OptionWe can change the terms of the LifestyleOption. We will give you (if you haveselected the Lifestyle Option) at least onemonth's notice of any intention to changethe terms of the Lifestyle Option. We will actfairly and reasonably in the way that we doso, having regard to our duty to protect yourinterests and those of other policyholders.

22 Policy Document

Section 7.3(d) explains that we can decidethat certain fundswill no longer be available.We will, where reasonably possible, give you(if you have selected the Lifestyle Option) atleast one month's notice of any proposedfund changes that may be relevant.

6.9 The Lifestyle Option and yourpersonal circumstancesWe are unable to accept any responsibilityfor the appropriateness of any of the fundselections and pre-set switches andredirections under the Lifestyle Option, toyour own particular circumstances. Thisapplies irrespective of whether you haveselected the Lifestyle Option as yourinvestment choice or whether paymentshave been allocated to it as the defaultfund relevant to your plan.

7. Units, ownership of assets, changes to funds and restriction on Prudential's liability

7.1 UnitsUnits are not property capable ofownership. They are our method ofrecording the amounts and dates ofpayments and they enable us to calculatethe value of your benefits.

7.2 Ownership of assets(a) Prudential funds

We, or another company within M&G plc, own all the assets of thePrudential funds in our own right andnot as trustee for policyholders. But when we make decisions relating tothe investment and valuation of assets,we will always act in good faith inattempting to protect the interests of allaffected policyholders and shareholders.We aim to strike a fair balance betweenthe interests of:

(i) our policyholders and ourshareholders;

(ii) different classes of policyholder;and

(iii) individual policyholders.

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(b)Externally-linked fundsAll the assets of the underlying funds ofexternal companies are owned bythose companies. Any policies issuedby them to enable us to offerexternally-linked funds are owned byus. Any contracts involving externalcompanies are with us. There is nocontractual relationship between theexternal companies and you.

7.3 Changes to funds(a) Changes to units

We can change the way we recordunits and change the number of unitsissued in the case of any particular fund (for example, we may combine or divide the existing units) and makecorresponding changes to the unitprice, but we will not do so in any waythat disadvantages you. If we makesuch a change, we will notify you at anappropriate time, taking into account allthe circumstances of the change.

(b)Changes to investment objectivesThe investment objectives of any oneor more of the funds can be changedat any time. We will give youreasonable notice, if we make amaterial change to the investmentobjectives of a fund and there areunits of that fund then held underyour plan. The investment objectivesare outlined in the Fund Guide.

(c) New fundsWe can, at any time, introduce newfunds. Any new funds may be subjectto different terms.

We may also introduce new fund optionsthat are linked to or invest in assets otherthan collective investment schemes andlife assurance company funds.

We do not give you notice when weintroduce new funds or new fundoptions.

Information about the current fundsis available in the Fund Guide.

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(d)Closing, merging, winding-up,changing and withdrawing funds orinvestment optionsWe can also:

(i) close any one or more of the fundsto future investments (includingswitches under sections 6.4 and 10);

(ii) merge or wind-up any one or moreof the funds;

(iii) change the default fund;

(iv)withdraw the option to invest in anyone or more of the funds;

(v) withdraw or close to futureinvestments (including switchesunder section 10) investmentoptions such as the Lifestyle Option.

(e) Notice to you and replacement fundWe will exercise our power to close,merge, wind-up, change or withdraw afund or an investment option only forimportant legal or commercial reasons(for example, if a fund becomes toosmall for it to be cost-effective for us tooperate that fund). We will act fairlyand reasonably in the way that we doso, having regard to our duty to protectyour interests and those of other

policyholders. Before we exercise thispower, we will give you reasonablenotice, if at that time:

> there are any units of the affectedfund held under your plan; or

> your plan is invested in the affectedinvestment option; or

> the affected fund or investmentoption is one of the principalfeatures of the Scheme.

A fund would, for example, beconsidered a principal feature if it wasthe only fund of its type available underthe Scheme.

We will seek your instructions for anyamounts that need to be disinvestedfrom the relevant fund. If we do notreceive instructions within the time-scale specified in the notice, we willswitch the units in the relevant fundand redirect future payments either:

(i) to units of the fund that has themost similar investment objectives to the closed, merged, wound-up or withdrawn fund; or failing that

(ii) to the Prudential Cash Fund (or anysuccessor fund having the same orsimilar investment objectives).

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If we change the default fund, we willat the end of the notice period (unlessyou instruct us otherwise) switch unitsand redirect future payments to thenew default fund.

Where the fund to be closed, merged,wound-up or withdrawn is used underthe Lifestyle Option, we reserve theright not to give any notice if we areproviding a replacement fund and thisreplacement fund has broadly similarinvestment objectives to the closed,merged, wound-up or withdrawn fund.

7.4 Restriction on Prudential's liability

Prudential's liability under any fund that itmakes available under your plan cannotexceed the value of the units allocated toyour plan as derived from the assetsunderpinning that fund, whether theseassets be real assets, an interest in anotherfund or an interest in a reinsurance policyeffected by Prudential to reinsure itsliability under a fund.

In particular, for an externally-linked fundor a fund that is provided by, or investssolely in funds operated by, anothercompany within M&G plc (a "GroupFund"), Prudential's liability under yourplan is limited to the value of the units ofthat externally-linked fund or GroupFund that are allocated to your plan, asderived from the assets underpinning thatexternally-linked fund or Group Fund.So, for example, if the external company,or the other company within M&G plcproviding or operating the Group Fund,was to become insolvent and as a result thevalue of the units of the externally-linkedfund or Group Fund allocated to your planwas significantly reduced, Prudentialcould only pay out under your plan up tothe reduced value of those units.

In addition, we are not liable for any lossescaused by the acts and omissions of anexternal company in respect of its ownfund and/or the externally-linked fund.

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8. Using payments to buy units

8.1 GeneralWhen buying units, payments are allocatedto the funds in the way requested by you.

The maximum number of funds in whichyou can invest at any particular time is setout in the appendix.

The allocation between the funds that youhave selected is set out in the relevantPolicy schedule.

If you do not make a choice, payments areused to buy units in the default fund.

8.2 Unit price dates We will buy units once we receive therelevant payment together with all of theinformation and forms we require. Theinformation and forms may be sent via thePrudential Stakeholder Website.

Irrespective of the means that are used tosend the information and forms, our decisionon whether we have received all of theinformation and forms we need is final.

The unit price dates used depend on thefunds selected. Details can be found in theUnit Price Dates Leaflet available from us.

A later unit price date may be used ifthere is a delay under section 12, or if wedo not have all of the information and formswe need to buy units when we receive thepayment as explained in section 8.3.

Section 1.2 explains how we treat itemsreceived on a day which is not a workingday or after a certain time on a working day.

Where payment is being made by directdebit mandate, we assume that the paymenthas been received by us on the paymentdue date and buy the units on the relevantunit price date. If the direct debit mandatefails, we will make an appropriate adjustmentto your unit holding.

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8.3 Missing informationIf we do not have all the information andforms we need when we receive thepayment, we will either:

> hold the money in a separate accountoutside the Scheme. In such a case, the units will be bought once wereceive all the items we require, using the unit price date(s) inaccordance with section 8.2; or

> return the money to the person whopaid it.

No interest is paid on money held orreturned in either of these circumstances.

9. Change of investment instructionsfor future payments

If you want to change your investmentinstructions for future payments, you should either:

(a) instruct us by telephoning thePrudential Stakeholder CustomerService Centre (see section 1.3); or

(b) instruct us using the PrudentialStakeholder Website.

The next payment we receive after carryingout your change of investment instructionswill be invested according to your newinstructions.

The maximum number of funds in whichyou can invest at any particular time is setout in the appendix.

10. Switching between funds

10.1 InstructionYou may instruct us to sell some or all of theunits held under your plan, and to use thevalue realised to buy units in a differentfund or funds. We call this "switching".

You should either:

(a) instruct us by telephoning thePrudential Stakeholder CustomerService Centre (see section 1.3); or

(b) instruct us using the PrudentialStakeholder Website.

The maximum number of funds in whichyou can invest at any particular time is setout in the appendix.

Where there is more than onearrangement under your plan, the newunits will be allocated to the samearrangement as the original units.

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Once a switch instruction has beenreceived by us, you cannot withdraw itunless we agree. We may allow you torevoke a switch instruction if we haveinvoked our powers to delay buying andselling units under section 12.

10.2 Unit price dates and dealing cycles(a) When we receive an instruction to

switch, we will sell and buy the relevantunits on the relevant unit pricedate(s), unless a delay applies asdescribed in section 12.

(b) The exact unit price dates used forselling and buying the units depend onthe funds selected. The unit pricedateswill be determined by us basedon the dealing cycles of the relevantcompanies. Details can be found in theUnit Price Dates Leaflet available from us.

(c) The sale of existing units and thepurchase of new units cannot normallytake place on the same day, but we willeffect all transactions as soon asreasonably possible.

For example, the new unitsmay bebought on a date and using the relevantunit price(s) some days later than thedate the original units were sold. This isbecause there is a lead-time involved inmaking unit prices available and thenew units cannot be bought until thevalue realised by the sale of the existingunits is known. Where externalcompanies are involved, transmission ofdata to and from these companies mayextend the lead-time. The prices of unitscan, as always, go up or down duringthat time and this risk is borne by you.

No interest will be added to the valuerealised from the sale of units for the interim period between sale and purchase.

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11. Selling units for benefits or a transfer-out

11.1 Selling all or part of unit holding (a) If your units are to be sold to provide:

> benefits under section 14; or

> death benefits under section 15; or

> a transfer-out under section 17,

then the units that form anarrangement must all be sold on thesame day (subject to any delay undersection 12) and used immediately inproviding the benefits or making thetransfer-out.

(b) A partial sale of units held under anarrangement can be made in thefollowing circumstances:

> as part of a switch (see section 10);or

> where some of the units under anarrangement are to be sold inorder to phase your benefits (seesection 11.2).

11.2 Selling units to phase benefitsYou might not have to take all of yourbenefits at the same time. You may be ableto phase benefits over a period of time. Thisis achieved by sub-dividing anarrangement into two new arrangements.The units under one of the newarrangements will then be sold and thevalue realised used to provide the benefit, atwhich time this arrangement will beautomatically extinguished to ensure that themaximum permitted number ofarrangements under section 13 is notexceeded. The units under the otherarrangement then remain subject to thePolicy. The remaining arrangement cannormally be sub-divided again in order tophase benefits. You must specifically requesteach encashment as and when it is required.There is no facility for automatic phasing ofbenefits.

When selling units to phase benefits, theminimum encashment at any one time is£2,000. Following the sale of units to phasebenefits, there must be at least £5,000remaining under the Policy. We maychange the limits to take account ofinflation or other factors which affect therunning of our business. We will give you atleast three months' notice of our intentionto change the limits.

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11.3 Information and authorityBefore we sell units to provide benefitsor a transfer-out, we must be providedwith all the items, information and authoritywe require under section 14, 15 or 17. Wewill not sell units unless and until we haveall the necessary items, information andauthority. Our decision on whether wehave received all the items, information andauthority we need is final.

11.4 Unit price dates The unit price dates used to providebenefits under sections 14 and 15, or atransfer-out under section 17, depend onthe funds selected. Unless there is a delayunder section 12, we will sell units on therelevant unit price date once we receiveyour instructions to sell units or receive thenotification of your death (or treat them ashaving been received as explained insection 1.2). Details can be found in theUnit Price Dates Leaflet available from us.

11.5 Amount of benefits or a transfer-outThe value realised from selling your unitswill be used to provide benefits undersections 14 and 15, or a transfer-out undersection 17. The value realised is based onthe number of units to be sold and therelevant unit price(s) then applicable.

12. Delays in buying, selling orswitching units

12.1 Reasons for delaying transactionsThere may be a delay in buying, selling orswitching units in any fund. This will onlyhappen in special circumstances which wewill tell you about at the time. There may becircumstances outside our control whichprevent us from effecting these transactionsimmediately, and equally we may need toeffect a delay where we believe thatotherwise the remaining policyholderswould suffer an unfair reduction in the valueof their policy, or would suffer some otherform of unfair treatment. Examples include:

> where we are unable to realise sufficientinvestments to satisfy demand, or whereto do so would mean we have to sell atprices significantly below the valuereflected in the then current unit price;

> where we are unable to sell unitsin an externally-linked fund dueto restrictions imposed by theexternal company;

> where the need to make paymentsquickly could only be satisfied byselling a disproportionate amount ofone type of asset, leaving too low aproportion of what is left invested inassets of that type.

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This is not meant to be an exhaustive list,nor do we mean to limit delays to problemsspecifically of this type.

For the avoidance of any doubt, we will not use assets or cash from funds of othercompanies within M&G plc, including anyshareholder funds, to finance the sale ofunits. Such sales will instead be delayeduntil they can be carried out on termswhich are fair to all policyholders investedin the fund.

12.2 Delay periodsOther than in very exceptionalcircumstances, we would not expectdelays to be longer than:

(a) six months in the case of units in funds:

(i) which hold investments in buildingsor land; or

(ii) the value of whose investments isdependent on, or linked to the valueof, buildings or land; or

(b) one month in the case of units in other funds.

However, while we will not delaytransactions for longer than reasonablyrequired, we cannot guarantee that we willnever delay transactions beyond thetimescales set out in (a) and (b) above.

12.3 NoticeWe will notify you if a transactionrequested by you is affected by a delayunder this section 12. Our notice willset out any options open to you. Ifappropriate, we will seek your alternativeinstructions for the transaction when wenotify you of the delay.

12.4 Processing transactions affectedby delaysThe alternative instructions sought undersection 12.3 will relate only to the funds towhich the delay relates.

Where the transaction involves units ofmore than one fund and some units areaffected by the delay and others are not,we will carry out any part of the transactionwhich is unaffected by the delay inaccordance with the usual terms andconditions set out in the Policy.

Where there is a delay in buying units inany fund, we will treat the request to investin that fund as a request to investtemporarily in the Prudential Cash Fund (orany successor fund having the same orsimilar investment objectives). In that way,we will be able to carry out the entire

32 Policy Document

transaction. We then switch the value ofthe units temporarily allocated in thePrudential Cash Fund to the requestedfund when the delay has ended, unless wereceive alternative instructions.

Where there is a delay in selling units, wewill take no action on the affected unitsuntil the delay has ended.

12.5 Unit pricesThe unit prices for the deferredtransaction will be those applying at theend of the period of deferment, unless,again, we believe that in the particularcircumstances that would not be fair topolicyholders in general.

12.6 Impact of delay on value of unitsAs the percentage of units to be sold isdetermined at the start of the delay whenwe receive the request to sell units, thevalue actually sold at the end of the periodmay vary from the amount that youexpected and/or requested.

13. Arrangements

You can have up to two arrangementsunder your plan at any time:

(a) Payment arrangementYour payments, any employer’spayments and any transfers-in (exceptany part of a transfer-in which includespension credits) are grouped togetherin one arrangement.

(b) Pension credit rights arrangementAny pension credit rights are groupedtogether in a second arrangement.

You might not have to take all of yourbenefits at the same time. You may be able to phase benefits. This is achieved bysub-dividing an arrangement (see section11.2). You should contact us if you want tophase benefits.

14. Benefits payable to you

14.1 Chosen pension dateYou can start to take your benefits on thechosen pension date, but there is nocompulsion to do so.

You do not have to retire from work to takebenefits from your plan.

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You can ask us to change your chosenpension date at any time before you startto take your benefits.

Both the chosen pension date and thedate you actually select for the start of yourbenefits, must normally be between theages of 55 and 75.

You must take your benefits from theScheme on or before your 75th birthday. If you want to take your benefits after your75th birthday, you will need to transfer to aregistered pension scheme that offersthat option.

If you become permanently incapable ofcarrying out your normal occupation, youmay be able to take your benefits beforeage 55. You, at your own expense, willneed to provide us with written evidencefrom a registered medical practitionerconfirming that you have become incapableof carrying out your occupation and areunlikely to return to it.

The chosen pension date is also relevantto the operation of the Lifestyle Option asdescribed in section 6.

The requirements around when you canstart to take your benefits are covered indetail in the Rules and Technical Guide.

14.2 Instructions from you to us(a) You must normally give us at least one

and no more than six months' notice ofyour intention to take benefits.

(b) We will issue you with documentationdetailing the benefit options available to you.

(c) Before we can pay the benefits, you will need to provide us with all theinformation we require under section 14.4.

(d) We will make every effort to ensure thatthe benefits are paid on your chosenstart date, but we reserve the right todelay paying the benefit if we receiveinformation so close to your chosenstart date that it is not practicable to putthe benefit into effect.

14.3 Choice of benefits – pension andlump sum(a) Unless a delay applies under section 12,

we sell all the units then allocated tothe relevant arrangement in order toprovide your benefits from the date youselect under section 14.4(a). The unitprice dates will depend on the dealingcycles of the relevant companies. We

34 Policy Document

use the value realised to provide thebenefits you select under the Rules.Section 11 provides more informationabout selling units for benefits.

(b) You may choose that the value realisedis used to buy a pension from aninsurance company. As an alternative,you may choose to take some of thevalue realised as a lump sum with thebalance used to provide a pension. In certain circumstances, you may beable to take all of the value realised as a lump sum.

You may be able to phase benefits overa period of time (see section 11.2). Thiscan be organised at the time you wantto start taking your benefits. You shouldcontact us if you want to phase benefits.

(c) Any benefit that is payable will besubject to the limits and requirementsset out in the Rules. The benefitsavailable and the requirementssurrounding their payment are coveredin detail in the Technical Guide.

(d) You can choose various options whendeciding on the type of pension to buy.

14.4 Benefit informationYou must provide us with the followinginformation:

(a) the date you want to take your benefits;

(b) in the case where you have chosen tobuy a pension from an insurancecompany, all the details we requestabout that insurance company;

(c) the extent to which you want to takeyour benefits as a lump sum (subject tothe limits and requirements set out inthe Rules and Technical Guide);

(d) the extent to which you want to phase benefits.

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15. Benefits payable on your death

15.1 Notification of deathBefore we pay any death benefits, we mustreceive notification of your death in a formand from a source acceptable to us.

15.2 Payment of death benefit(a) If you die before taking all of your

benefits, we will (subject to section15.1) sell the units which are thenallocated to your plan, in accordancewith sections 11 and 12.

The value realised will be added to anyamount realised from selling units whichtook place before death but which hasnot by then been applied to providebenefits. The total will be applied in linewith the rest of this section 15.2.

(b) If we do not have sufficient informationto pay the benefit, we will sell the unitsand switch the total value realised intounits of the Prudential Cash Fund (orany successor fund having the same orsimilar investment objectives).

(c) Once we have sufficient information topay the benefit, we will sell all therelevant units in accordance withsection 15.2(a). The value realised willthen be used to provide death benefits.

(d) Any benefit that is payable will besubject to the limits and requirementsset out in the Rules. The benefitsavailable and the requirementssurrounding their payment are coveredin detail in the Technical Guide.

16. Life cover

Note: With effect from 14 December 2006,new life cover can only be taken out underthe Scheme by a member who is part of agrouped membership set up before thatdate and whose employer is making regularpayments from which the life cover paymentcan be deducted. Such a member canincrease his or her life cover providing thecost of this increase is also deducted fromhis or her employer's regular payment.

16.1 Required information (a) If life cover is required for you, you

must first supply all the informationwe require, together with satisfactoryevidence of your state of health. Youare required to supply and not withholdany information that may be relevant toour decision to offer life cover and tothe terms on which we offer it (seesection 16.9). We decide whether togrant life cover on the basis of thisinformation and evidence.

36 Policy Document

(b) We will not grant any new life coverafter you reach age 75.

16.2 ApplicationsYou will need to complete the appropriateapplication forms required by us, if youwant life cover to be added to your planor if you want the life cover amount tobe increased.

The application can normally be made viathe Prudential Stakeholder Website orby telephone (see section 1.3).

16.3 Life cover amount(a) The life cover amount applicable to

you will be shown on the Policyschedule.

(b) The life cover amount must be a fixed amount.

16.4 Increases in the life cover amount(a) If we agree, the life cover amount

for you can be increased by a fixedamount. Another Policy scheduledescribing the extra life cover will beissued to you.

(b) Before we agree to any increase in thelife cover amount, we may requireyou to provide satisfactory evidence ofyour state of health.

16.5 Payments for life cover(a) Payments for life cover are part of youremployer's regular payments madeunder the Policy. We collect paymentsfor life cover by deducting them fromthese regular payments before we usethe balance to buy units.

(b) The payments will normally increaseeach year for a given amount of lifecover. At the end of each plan year,the payment for the agreed life coveramount will be recalculated andadjusted by reference to our life coverrates in force at that time and your ageat that date.

(c) Payments for life cover must bereceived by the payment due date(see section 16.8).

(d) If regular payments are reduced, itmay be necessary for the payment forlife cover to be reduced. This willresult in a corresponding reduction inthe life cover amount.

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16.6 Date life cover starts(a) Subject to section 16.6(b), life cover will

normally start when we receive the firstpayment for life cover following ourdecision to grant life cover.

(b) If we are prepared to offer life cover butsubject to special terms or subject to apayment that is higher than our normallife cover rates, we will notify youbefore the life cover is put into force.The life cover will not be put into forceuntil it has been confirmed in writingthat the special terms or the increasedpayment have been accepted and wehave received the payment for lifecover. We will also notify you if:

> we cannot grant life cover on anyterms; or

> we can offer life cover subject toexcluding death due to a particularhazardous pursuit.

16.7 Payment of the life cover amount (a) The life cover amount is payable by us

if you die while life cover is in force (butsee sections 16.8 to 16.10).

(b) Payment of the life cover amount willbe made under our discretionarypowers as Scheme Administrator inaccordance with the Rules and asdescribed in the Technical Guide.

16.8 End of life cover(a) Life cover will end on the earliest of:

> the date you die;

> the date on which the last of theunits held under the Policy is soldand no further regular payments aremade;

> 50 days after the payment duedate of the first unpaid life coverpayment;

> cancellation under section 19.13;and

> when you and we agree it will end,

but in any event prior to your 75thbirthday.

(b) If regular payments are suspended undersection 2.6 and those regular paymentsinclude life cover payments, then the lifecover in respect of those life coverpayments will lapse at the end of 50 daysfollowing the payment due date of thefirst unpaid life cover payment.

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16.9 Life cover void or restricted(non-disclosure of information)The life cover may be void or the life coveramount restricted, if we find out thatinformation has not been disclosed aboutyour health or lifestyle that would havematerially affected either our decision togrant life cover or the terms we offered.

16.10 Life cover void (suicide)The life cover is void and we are not liableto pay the life cover amount, if youcommit suicide within one year of the dateon which life cover begins. If you commitsuicide within one year of any increase inthe life cover amount, the life cover willbe void to the extent of the increase.

16.11 Minimum life cover amountThe minimum life cover amount is set outin the appendix.

17. Transfers-out

At any time before you take benefits undersection 14, you can instruct us to sell theunits held under any arrangement andhave the value realised transferred out ofthe Scheme to another registeredpension scheme or to an overseaspension scheme that meets certain HMRC requirements.

In all cases, the money must be transferredto provide you with benefits under thereceiving scheme.

Before we can make the transfer-out, wemust have received all of the completedforms and information we request and allregulatory requirements for making thetransfer payment must have been satisfied.Subject to sections 1.2 and 12, we will sellthe relevant units once we are satisfied thatall of these requirements have been met.

The units will be sold in accordance withsection 11. We will pay the value realisedto the trustees or administrator of thereceiving scheme.

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18. Charges

18.1 Details in appendix and othermaterialThe charges we make for managing yourplan and the ways in which they can beincreased are explained in the appendixand in other documents we give to you.

18.2 Effect shown in illustrations Any personal illustration you may havereceived from us should help youunderstand how the charges affectyour benefits.

18.3 Compensation schemesIf a charge is imposed on us under theFinancial Services Compensation Scheme(or any other investor compensationscheme), we may pay it by imposing on ourpolicyholders whatever additional chargesare necessary and reasonable, subject tocomplying with restrictions contained in theStakeholder Regulations.

19. General

19.1 Yearly statementEvery year we will send you a statementthat will, among other things, set out:

> the payments made during theprevious plan year and the dates wereceived them;

> the value of your plan at the start andthe end of the plan year;

> an illustration of the benefits you mightget, given a certain set of circumstances;and

> the amount then available under your plan as a death benefit or as atransfer-out.

19.2 Payments from the Policy by usAll payments from the Policy in respectof benefits or transfers-out will be bycheque (crossed “account payee only”)or by direct transfer into a bank or buildingsociety account. Before making payment,we may need to carry out a number ofchecks to ensure that we are paying to thecorrect person.

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19.3 Deducting taxWe will deduct tax (where appropriate)from any payments made from the Policyand we will make the deduction at the rateand in the way required by HMRC. We willpay the tax deducted to HMRC.

19.4 Information to be provided byyou to usYou must provide us with any informationwe may from time to time reasonably requireto administer your plan. If your employerholds the information, you are responsiblefor obtaining it free of any expense to us. If appropriate, we may obtain informationdirect from your employer.

19.5 Divorce and dissolution(a) Legislation requires that pension plans

are taken into account in divorcesettlements and settlements made onthe dissolution of civil partnerships.

The pension plan can be “set-off”against other matrimonial and civilpartnership assets – the pension plan isleft intact, but the split is allowed for byadjusting the shares in other assets.

Alternatively, particularly where thepension value is disproportionatelyhigh in relation to other matrimonialand civil partnership assets, the Courtcan instruct that:

> part of a pension plan is“earmarked” for payment to aformer spouse or civil partner atretirement or on earlier death; or

> the pension is “split” under a pensionsharing order – with a transfer beingmade to a plan in the ex-spouse’s orex-civil partner's name.

(b) There are rules on compliance withCourt earmarking and pension sharingorders, to ensure that the termsspecified in the order are met. Inaddition, a copy of an earmarking ordermust be passed on, if the pension plancovered by the order is surrendered andtransferred to another pension plan.

(c) We may charge for providinginformation needed in the discussionsleading to earmarking and pensionsharing orders, to comply withimplementation of the orders. We will

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tell you (and/or your representatives) if any such charge is to be applied,before we take any action on a requestfor information in relation t o adivorce/dissolution settlement or whenwe get an order. Any such chargewould normally be payable separatelyby cheque from one of the parties tothe divorce/dissolution.

(d) When considering your options youshould seek financial advice. A financialadviser can assess your personalcircumstances, talk you through youroptions and make a recommendationbased on this information.

19.6 Benefits not to be cashed,transferred or mortgaged(a) The value realised when units are sold

can only be used in the ways describedin the Policy and the Rules.

(b) Units cannot be sold in exchange for acash payment from the Policy unlessthe payment is to be used:

> for a cash benefit of up to themaximum allowed under the Rules;

> to buy a benefit from anotherinsurance company; or

> for a transfer-out under section 17.

Where the cash payment from the Policyis to buy a benefit from another insurancecompany or for a transfer-out, we willmake the payment direct to the newinsurance company or receiving scheme.

(c) Benefits payable under the Policycannot be transferred or paid to anyother person except:

> as described in section 19.10;

> in accordance with any pensionsharing order as described in section 19.5;

> in accordance with sections 342A to342C of the Insolvency Act 1986; or

> as permitted by sections 273 to 278of the Proceeds of Crime Act 2002.

(d) No pension can be exchanged for acash payment from the Policy except asdescribed in section 14.3.

(e) The Policy (including any benefitpayable under it) cannot be mortgagedor charged.

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19.7 BankruptcyLegislation has been passed on the effect ofbankruptcy on pensions. In broad terms,pensions from registered pensionschemes will not form part of the assets tobe taken into account in bankruptcy, if thebankruptcy petition is presented to theCourt on or after 29th May 2000, and thebenefits are not at that time in payment.

However, where the benefits are inpayment, a Court has the right to order thatpart or all of a pension in payment to thebankrupt, and/or a lump sum from apension scheme or arrangement, beincluded in a bankrupt's estate (and,therefore, available to the trustee inbankruptcy) for a specified period, if it finds that the bankrupt's total income isin excess of what the bankrupt and his orher family reasonably need to live on.

Legislation also limits the scope for pensioncontributions where the money should,instead, have been available to creditors.

19.8 Production of documents andother evidenceFrom time to time and before making anypayment from the Policy, we may require to see:

(a) the Policy (including all in-forcePolicy schedules);

(b) proof of the identity and right of anyapplicant for payment from the Policy;

(c) proof that a person has died, if paymentfrom the Policy is due on his or her death.

19.9 Proof of age Before we pay any benefit, we may requireevidence of your age. If the age previouslynotified to us proves to have beenincorrectly stated, we will adjust thebenefits to those that would have applied ifthe correct age had been given. We willmake any further adjustments that arerequired to collect any underpayment orrepay any overpayment made before themistake was put right.

19.10 Legal incapacityIf for any reason any beneficiary becomesunable to look after his or her own affairs,we may accept notices, instructions andrequests under the Policy from anotherperson. We may also pay benefits to

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another person. Before we do so, we must,in either case, be satisfied that this personis responsible for the beneficiary, andwhere benefits are payable, will look afterthe money for the beneficiary or will use itfor the benefit of the beneficiary. Thissection must be applied in accordance with the Rules.

19.11 Notices, instructions andrequests from you to us(a) You can give all notices, instructions and

requests to us in writing; in some caseswe will give you forms to use. Some ofthese notices, instructions and requestscan also be made by telephone and/orvia the Prudential StakeholderWebsite. Full contact details can befound in section 1.3.

(b) Details about which type ofcommunication you should use for eachtype of notice, instruction or request areset out in the appendix.

(c) All notices, instructions and requests inwriting or by telephone will normallytake effect when we receive them unlesswe receive them after 5.00 p.m. (Londontime) on a working day, or we receivethem on a day which is not a working

day. In either of these cases, they willtake effect on the next working day.

Notices, instructions and requestsreceived through the PrudentialStakeholder Website after 5.00 p.m.(London time) on a working day, willnormally be treated as being receivedon that same working day.

(d) You cannot (unless we agree otherwisein any particular case) give notices andinstructions to us by e-mail or fax. Youcan, however, request some items ofliterature via e-mail or fax.

19.12 Notices to you from usYou must give us an address (and ane-mail address, if that is your preferredcommunication method) to which we willsend any notices. Unless exceptionalcircumstances apply, where posted, noticesfrom us will be treated as having beenreceived by you two postal days afterposting (excluding Sundays and BankHolidays). Where e-mailed, notices from uswill be treated as having been received byyou within one working day, unless wereceive an error message to indicate thatthe e-mail has not been delivered.

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You are responsible for ensuring that wehave up-to-date home and e-mail addressesfor you.

We will not give any notices by telephoneand we will not give any notices of aconfidential nature or which containpersonal data, by e-mail.

19.13 Failure to comply with the termsin the Policy(a) If you fail to comply with any of the

terms and conditions described in thePolicy, then we can send you a noticetelling you what must be done toremedy the breach or, if the breachcannot be put right in any reasonablemanner, stating that fact.

(b) If the breach is not or cannot be putright, we can refuse to accept furtherpayments of the type affected by thebreach, and we can make appropriateand reasonable changes to the benefitsaffected. If the breach is sufficientlyserious, we can refuse to accept anymore payments of any kind.

19.14 Amendment of the Policyand/or your plan(a) We can make changes to the Policy

providing we obtain your consent. Wedo not, however, need to obtain yourconsent in any of the circumstancesdescribed in (c) below.

(b) You can ask for your plan to beamended. Any such amendment issubject to our agreement.

We can make changes to your planproviding we obtain your consent. Wedo not, however, need to obtain yourconsent in any of the circumstancesdescribed in (c) below.

(c) We do not need to obtain consent inthe following circumstances:

> where we give reasonable noticeand the amendment is reasonable(for example, the amendment mustbe justifiable and either be to youradvantage or have little or no adversefinancial effect on your plan);

> where we give you notice under theappropriate section of the Policy;

> where a change in legislation,regulations or otherwise requires a change to the Policy and/or your plan;

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> if we discover that payments to yourplan do not relate to pensionbusiness in the way described insection 58 of the Finance Act 2012.See also section 19.16; or

> if we do not have a current addressfor you.

19.15 Withdrawal of SchemeregistrationThe Scheme is a registered pensionscheme. If HMRC withdraws theregistration of the Scheme, we will returnall payments made under section 2 (orthose made after the effective date fromwhich registration is withdrawn). This doesnot apply to payments for life cover undersection 16; these are non-returnable. In theevent that registration is withdrawn asdescribed above, all payments made undersection 2 will stop.

19.16 Pension businessAll payments made to the Policy mustrelate to pension business in the waydescribed in section 58 of the Finance Act2012. If we discover that any payments donot meet this requirement, we may modifythe Policy in whatever way is necessary toensure HMRC does not tax any of the

funds or does not impose any otherpenalty on us. If such modification isnecessary, we will notify you and providefull details of the changes.

19.17 Governing law Your planwill be governed by the laws of England and Wales and any disputesconnected with your planwill be settled inthe Courts of England and Wales. The partiesagree irrevocably to submit to the jurisdictionof the Courts of England and Wales.

19.18 Contract of long-term insuranceThe benefits arising under your plan relateto a "contract of long-term insurance" withinthe meaning of the Financial Services andMarkets Act 2000 (Regulated Activities)Order 2001.

19.19 Contracts (Rights of ThirdParties) Act 1999You have directly enforceable rights againstus in respect of the benefits under thePolicy to which you are or becomeentitled. Subject to this, nothing in thePolicy confers or purports to confer on anythird party any benefits or any right toenforce any term or condition set out in thePolicy pursuant to the Contracts (Rights ofThird Parties) Act 1999.

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Appendix

The special words and expressions set outin section 1.4 apply to this appendix. Thisappendix is split into four parts, as follows:

A. Charges

B. Minimum amounts

C. Notices, instructions and requestsfrom you to us

D. Maximum number of funds

A. Charges

A.1 The plan charge(a) The plan charge is subject to a

maximum set in legislation.

(b) There are separate plan chargeson each of the funds. Details of theplan charge relating to the fundsrelevant to your plan are set out inthe Fund Guide.

(c) The plan charge is a percentage of thevalue of the units under your plan. Foreach day, we deduct a maximum of1/365th of 1% of the value of the unitsheld under your plan on that day.

(d) The plan charge is calculated on a dailybasis. It is, however, accumulated andwe normally deduct it from your planon one day every calendar month byselling units of our choice. We willselect the date that units are sold tocollect the charge.

Units may, however, in somecircumstances be sold to collect theplan charge on more than one dayeach month. For example:

> where units are switched betweenfunds, that part of the plan chargewhich relates to the units thenbeing sold may be deducted at thetime the units are switched; or

> where units are sold to providebenefits or a transfer-out, part or allof the plan chargemay be deductedat the time the units are sold.

A.2 Increases to plan chargesWe may increase our plan charges fromtime to time, but we will keep increases toreasonable amounts. We will take intoaccount all relevant factors including the

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48 Policy Document

B.2 Minimum payments(a) Subject to complying with restrictions

contained in the StakeholderRegulations and to the requirements ofthe automatic enrolment legislation,where the Scheme is being used as anautomatic enrolment scheme or aqualifying scheme, we can impose aminimum amount on the payments thatcan be made under the Policy.

(b) Subject to complying with restrictionscontained in the StakeholderRegulations and to the requirements ofthe automatic enrolment legislation,where the Scheme is being used as anautomatic enrolment scheme or aqualifying scheme, we can impose aminimum investment in each fundand/or minimum amount of increase ordecrease to payments under the Policy.

(c) We will notify you of any minimumpayment under the Policy.

B.3 Changes to restrictions(a) Subject to complying with restrictions

contained in the StakeholderRegulations and to the requirements of

need to respond to matters we cannotcontrol, such as changes in legislation,taxation and inflation. We will give you atleast three months' notice of our intentionto increase our plan charges.

We cannot increase our plan chargesabove the levels specified from time to timein the Stakeholder Regulations.

A.3 Additional stakeholder chargesIn addition to the charges described above,the Stakeholder Regulations allowcertain other charges to be deducted.These additional charges may be deducted,where appropriate. One such charge is thedilution levy described in section 5.4.

B. Minimum amounts

B.1 Minimum life cover amount(a) The minimum life cover amount

is £10,000.

(b) You can ask us to reduce your lifecover amount with effect fromthe next payment due date, subjectto any remaining cover being for atleast £10,000.

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C.2 Notices, instructions and requestsby telephone or the PrudentialStakeholder WebsiteYou can give the following types of notices,instructions and requests to us bytelephone or via the PrudentialStakeholder Website:

> switches between funds;

> changes to investment instructions for future payments;

> changes to your personal details whichdo not require documentary evidence;

> increases and decreases to regularpayments;

> stopping regular payments;

> suspension of regular payments;

> requests to add or stop life cover;

> requests for the current value of your plan.

the automatic enrolment legislation,where the Scheme is being used as anautomatic enrolment scheme or aqualifying scheme, we can increaseany minimum payment under the Policyby a reasonable amount.

We will give you reasonable notice, if we increase any minimum paymentunder the Policy.

(b) We can change the minimum life coveramount, except where you havealready been accepted for life coverunder the Policy.

C. Notices, instructions and requestsfrom you to us

C.1 GeneralThis section gives full details about whichtype of communication you should use foreach type of notice, instruction or request.

Full contact details can be found in section1.3. You should always quote your NationalInsurance number when giving notices,instructions and requests in writing.

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C.4 Notices, instructions and requestsin writing onlyAll other notices, instructions and requestsmust be given in writing. This includes thefollowing types of notice and instruction:

> notification of death;

> authorisation for transfer-out;

> acceptance of benefit quotations;

> notification of change of employment;

> notification of changes to your personaldetails which require documentaryevidence;

> notification that you are moving abroad.

D. Maximum number of fundsUnits can be held in a maximum of 10funds at any particular time.

C.3 Requests by telephoneIn addition to the notices, instructions andrequests listed in C.2, the followingrequests may be made to us by telephone(they cannot be made via the PrudentialStakeholder Website):

> requests for benefit quotations;

> request to start to take benefits;

> requests for transfer value quotations;

> requests to increase life cover;

> requests for any forms or literature;

> requests for illustrations of what yourplan might be worth in the future.

“Prudential” is a trading name of The Prudential Assurance Company Limited (PACL) which is registered in Englandand Wales. Registered Office at 10 Fenchurch Avenue, London EC3M 5AG. Registered number 15454. Authorisedby the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the PrudentialRegulation Authority. PE

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9www.pru.co.uk