YOUR INVESTMENT OPTIONS

Transcription

1 BNP PARIBAS RETIREMENT SAVINGS PLAN YOUR INVESTMENT OPTIONS VISTA RETIREMENT SAVINGS PLAN V I S T A ENTER The bank for a changing world

2 CONTENTS DIFFERENT TYPES OF INVESTMENT...4 WHAT ARE THE MAIN RISKS?...5 LIFESTYTLE OR SELF-SELECT?...6 LIFESTYLE EXPLAINED...7 SELF-SELECT EXPLAINED SELF-SELECT FUND RANGE FURTHER INFORMATION CONTACT DETAILS This booklet is for members of the VISTA section of the PLPS LINKS 2 2

3 INTRODUCTION Making the right investment choice is important because it directly affects the value of your retirement benefits. But it doesn t have to be a daunting prospect if you follow the few simple guidelines in this booklet, taking into account how close you are to retirement and how you feel about managing investments. Please take the time to read this booklet carefully; it has been designed to help you think about the factors that might affect your investment decision. Information on the funds available can be found by logging on to PlanViewer. PlanViewer is the website where you can view and manage your Individual VISTA Account, and can be accessed at: planviewer.co.uk. You can also access PlanViewer via Echonet and on the home page on the Spectrum website. Although none of the Trustee Board, the Company or our Administrators can give you financial advice about what decisions you should make, further information can be obtained from our administrator (Fidelity The Administrator ) at: Fidelity Pensions Service Centre Beech Gate Millfield Lane Lower Kingswood Tadworth Surrey KT20 6RP You can also call Fidelity on

4 DIFFERENT TYPES OF INVESTMENT There are a number of investment types available in the Scheme: Equities These are shares in companies traded on stock markets in the UK or overseas. These are important as they can provide good long-term returns, but prices can go down as well as up. Bonds These are loans to a government or company that can be bought and sold, but are more stable than equities. Loans to the UK Government are known as gilts. Just like mortgages, the rate of interest paid on bonds or gilts can either be fixed or linked to an index (such as the Retail Price Index) and so their value can vary over time. Bonds are important as they can be used to broadly match the cost of buying a pension as you near retirement. Cash Cash investments work like building society or bank deposit accounts. You invest a sum of money and interest is paid on a regular basis for as long as you continue investing. Cash is important as it can be used to match the value of any tax-free cash sum you might take at retirement. Diversified Growth Funds (DGFs) DGFs invest in a variety of asset classes with the investment manager moving between asset classes as they see fit. They re designed to provide long-term growth, but with less volatility than some other growth-seeking assets such as equities. Property Property involves investing either directly in commercial property (like office blocks and shopping centres) or in the shares of property companies. Investment returns reflect either rental income and the value of the property held or the value of any shares held in property companies. Commodities Commodities are raw materials that are used in the manufacturing of products, such as grain and oil. Ethical Funds Ethical Funds are where the asset managers make investment decisions based upon an ethical code. Shariah Funds Shariah Funds are invested and adopt financial activities in accordance with Islamic law. There are a number of specialist funds. Each type of investment has different levels of risk and different potential returns. To help ensure that you make the choice that best reflects your situation, you need to understand the different types of risk you face at different stages of your career. 4

5 WHAT ARE THE MAIN RISKS? There are three main types of risk that you need to think about to make it easier to invest for your retirement. As you get closer to retirement, the importance of each kind of risk changes understanding why will help you make your investment decisions. Investment Risk This is probably the best-known kind of risk. It s the risk that is often talked about if you hear the phrase the value of investments can go down as well as up. Higher potential investment risk means that you would probably see larger peaks and troughs in terms of return. This is common with equities, so if you invest in these, adverse market conditions could cause a sharp fall in the value of your investment. This is particularly important as you approach retirement, but may not be important if you are not near retirement. Inflation Risk This risk comes with investments that are not expected to grow quickly enough to keep up with increases in prices. It is particularly important if you are a long way from retirement. If your investment goes up in value, but by not as much as prices, then the spending power of your investment is actually going down. This can happen with lower investment risk funds, which grow only gradually. For example, a fixed-interest bond or cashbased fund may not produce the returns required to provide the retirement income you need. Conversion Risk This is the risk that, as you approach retirement, the price of annuities (i.e. pensions) rises without a matching increase in the value of your investments. Bond investments of the right type can broadly match the cost of buying annuities. For example, bond prices might go and up down, but your expected pension might stay broadly the same. If you plan to take a tax-free cash sum, then a cash investment will help match this. Although some members will be comfortable with taking higher risks to seek higher potential returns over the long term, the nature of the risks change as you approach retirement. How you choose to invest your Individual Account between these asset classes is important as, like the level of contributions you may choose to pay, it will directly affect your account at retirement. 5

6 LIFESTYLE OR SELF-SELECT WHICH IS RIGHT FOR ME? Having considered the issues above, you should now think about how you wish to manage your investments. You have a choice of two different investment strategies under the Scheme. Lifestyle The Lifestyle Strategies available in VISTA are aimed to make your investment decisions as easy as possible and have been designed for those who do not want to play an active role in managing their pension investments. In the early years of your working life you can benefit from the growth potential of the stockmarket. As you get closer to retirement, however, you will be investing in diversified growth funds, equities, bonds and cash, so your pension won t be at such a risk from a sudden drop in the stockmarket. The strategies, including fund selection, have been designed by the Trustee Board and the BNP Paribas pensions committee. They also reflect the new retirement flexibilities and the possible outcomes you many wish to take in your retirement. Self-Select You take direct control of your investments by choosing which funds to invest your contributions in. It is your responsibility to manage your investments. If you do not make an investment decision, contributions will be invested in the default fund, which is the drawdown Lifestyle. The Scheme offers specialist ethical and Shariah Law funds under Self-Select, but these are not considered further in this booklet, although both invest in equities. 6

7 LIFESTYLES EXPLAINED Lifestyle strategies invest contributions in line with a pre-determined strategy and these are automatically switched between funds as you approach a predetermined retirement date. These options are most suitable for those who do not want to manage their own investments. Contributions are initially invested in equities and later DGFs for longterm growth, although in the short-term, share prices are volatile. As you move towards your Plan s normal retirement age or your own target retirement age (which you can select using PlanViewer), both ongoing contributions and existing investments are gradually moved depending on the retirement outcome you are looking to target. Within VISTA there are three Lifestyle options available and each strategy has been designed to target a specific retirement outcome, for example: Drawdown Annuity Cash Further details of each of these options is available in the following pages however here are the main advantages and disadvantages to help you to decide whether or not a Lifestyle strategy might be a suitable choice for you: Advantages Having selected a Lifestyle Strategy from the three available options, you do not need to manage your pension account actively. The switching process will be carried out automatically. There is nothing more for you to do unless you want to take a more active investment approach yourself (by investing in self-select funds). The Lifestyle Strategies aim to reduce the overall risk as, you approach your selected retirement age. There is no additional charge for investing in the Lifestyle Strategies. Please note that charges are levied on the funds used by the Lifestyle Strategies, as detailed in the Your Range of Funds section of this booklet. Disadvantages The Lifestyle Strategies are based on the expected greater stability provided by lower risk investments e.g. bond and cash funds. However, these funds can also suffer falls in value, and the effects of inflation could mean that cash funds produce negative returns in real terms. By moving out of equity funds you could potentially miss out on better growth, as equities have historically delivered higher returns than cash or bonds over the long-term. Please note that each Lifestyle Strategy is designed to target a certain form of benefit in retirement (i.e. drawdown, annuity or cash). As such you will need to consider the retirement benefit you wish to target and select the Lifestyle Strategy appropriate to that choice. Investment decisions are taken away from you. If you want a more hands-on approach to planning for your retirement, a Lifestyle Strategy is probably not for you. The strategies are automated and not based on, or reactive to, market conditions. 7

8 LIFESTYLES EXPLAINED Your assets will be invested as illustrated in the following tables, although the exact funds used, which can be seen on PlanViewer, may vary from time to time. The strategy, including fund selection, has been approved by the Trustee Board. Please note that the table is a simplified illustration of how fund switches occur. Actual switching may be on a more frequent basis; however Fidelity may not rebalance your account if changes in the values of the funds mean that the actual mix of funds is already very close to the intended target when a change is due. Drawdown Lifestyle You will be automatically invested in the Drawdown strategy as it is the plan s default strategy. The Drawdown Lifestyle strategy aims at providing you with an investment portfolio which will be appropriate if you want to take advantage of Income Drawdown in retirement. Income Drawdown means keeping your pension account invested and drawing an income which can be varied to suit your needs. Your pension account will be switched between the funds shown above as you approach your normal or selected retirement age to meet the requirement for taking an income from your pension fund. It is important to review the default Lifestyle strategy to ensure that it is suitable for your own retirement objectives. If you decide that it is not suitable you can select an alternative lifestyle strategy or funds from the self-select fund range. Fund Mix DRAWDOWN LIFESTYLE Fidelity BNP Global 30/70 Index Fund Fidelity BNP Diversified Growth Fund Fidelity BNP BlackRock Over 5 Year Index Linked Gilt Fund BlackRock Over 15 Year Corporate Bond Fund Under 3m Between 3m and 6m Between 6m and 9m Between 9m and 1y Between 1y and 1y 3m Between 1y 3m and 1y 6m Between 1y 6m and 1y 9m Between 1y 9m and 2y Between 2y and 2y 3m Between 2y 3m and 2y 6m Between 2y 6m and 2y 9m Between 2y 9m and 3y Between 3y and 3y 3m Between 3y 3m and 3y 6m Between 3y 6m and 3y 9m Between 3y 9m and 4y Between 4y and 4y 3m Between 4y 3m and 4y 6m Between 4y 6m and 4y 9m Between 4y 9m and 5y Between 5y and 5y 3m Between 5y 3m and 5y 6m Between 5y 6m and 5y 9m Between 5y 9m and 6y Between 6y and 6y 3m Between 6y 3m and 6y 6m Between 6y 6m and 6y 9m Between 6y 9m and 7y Between 7y and 7y 3m Between 7y 3m and 7y 6m Between 7y 6m and 7y 9m Between 7y 9m and 8y Between 8y and 8y 3m Between 8y 3m and 9y 3m Between 9y 3m and 10y 3m Between 10y 3m and 11y 3m Between 11y 3m and 12y 3m Between 12y 3m and 13y 3m Between 13y 3m and 14y 3m Between 14y 3m and 15y 3m Between 15y 3m and 16y 3m Between 16y 3m and 17y 3m Between 17y 3m and 18y 3m Between 18y 3m and 19y 3m Between 19y 3m and 20y 3m Between 20y 3m and 21y 3m Between 21y 3m and 22y 3m Between 22y 3m and 23y 3m Between 23y 3m and 24y 3m Between 24y 3m and 25y 3m Between 25y 3m and 26y 3m Between 26y 3m and 27y 3m Between 27y 3m and 28y 3m Between 28y 3m and 29y 3m Between 29y 3m and 30y 3m 30+ Years And months To Retirement 8

9 LIFESTYLES EXPLAINED Annuity Lifestyle If you invest in the Annuity Lifestyle strategy your pension account will be switched between the funds shown above as you approach your normal or selected retirement age to meet the requirement for purchasing an annuity. The aim of this Lifestyle strategy is to provide more certainty about the amount of pension that your retirement savings may provide at your selected retirement date. In the Switching Phase, the aim is to gradually increase the certainty of the cash lump sum and pension that your retirement savings may provide by moving your pension account into a mixture of bonds and cash. This aim is to track changes in annuity prices and so that 25% of your retirement savings are invested in the Cash Fund at retirement. Fund Mix ANNUITY LIFESTYLE Fidelity BNP Global 30/70 Index Fund Fidelity BNP Diversified Growth Fund Fidelity BNP BlackRock Cash Fund Fidelity BNP BlackRock Over 5 Year Index Linked Gilt Fund BlackRock Over 15 Year Corporate Bond Fund Under 3m Between 3m and 6m Between 6m and 9m Between 9m and 1y Between 1y and 1y 3m Between 1y 3m and 1y 6m Between 1y 6m and 1y 9m Between 1y 9m and 2y Between 2y and 2y 3m Between 2y 3m and 2y 6m Between 2y 6m and 2y 9m Between 2y 9m and 3y Between 3y and 3y 3m Between 3y 3m and 3y 6m Between 3y 6m and 3y 9m Between 3y 9m and 4y Between 4y and 4y 3m Between 4y 3m and 4y 6m Between 4y 6m and 4y 9m Between 4y 9m and 5y Between 5y and 5y 3m Between 5y 3m and 5y 6m Between 5y 6m and 5y 9m Between 5y 9m and 6y Between 6y and 6y 3m Between 6y 3m and 6y 6m Between 6y 6m and 6y 9m Between 6y 9m and 7y Between 7y and 7y 3m Between 7y 3m and 7y 6m Between 7y 6m and 7y 9m Between 7y 9m and 8y Between 8y and 8y 3m Between 8y 3m and 9y 3m Between 9y 3m and 10y 3m Between 10y 3m and 11y 3m Between 11y 3m and 12y 3m Between 12y 3m and 13y 3m Between 13y 3m and 14y 3m Between 14y 3m and 15y 3m Between 15y 3m and 16y 3m Between 16y 3m and 17y 3m Between 17y 3m and 18y 3m Between 18y 3m and 19y 3m Between 19y 3m and 20y 3m Between 20y 3m and 21y 3m Between 21y 3m and 22y 3m Between 22y 3m and 23y 3m Between 23y 3m and 24y 3m Between 24y 3m and 25y 3m Between 25y 3m and 26y 3m Between 26y 3m and 27y 3m Between 27y 3m and 28y 3m Between 28y 3m and 29y 3m Between 29y 3m and 30y 3m 30+ Years And months To Retirement 9

10 LIFESTYLES EXPLAINED Cash Lifestyle If you invest in the Cash Lifestyle strategy your pension account will be switched between the funds shown above as you approach your normal or selected retirement age to meet the requirement for withdrawing your fund as a cash lump sum. The aim of this Lifestyle strategy is to provide more security to the value of your pension fund at your selected retirement date. In the Switching Phase, the aim is to gradually increase the certainty of the cash lump sum that your retirement savings may provide by moving your pension account into a cash fund. Fund Mix CASH LIFESTYLE Fidelity BNP Global 30/70 Index Fund Fidelity BNP Diversified Growth Fund Fidelity BNP BlackRock Cash Fund Fidelity BNP BlackRock Over 5 Year Index Linked Gilt Fund BlackRock Over 15 Year Corporate Bond Fund Under 3m Between 3m and 6m Between 6m and 9m Between 9m and 1y Between 1y and 1y 3m Between 1y 3m and 1y 6m Between 1y 6m and 1y 9m Between 1y 9m and 2y Between 2y and 2y 3m Between 2y 3m and 2y 6m Between 2y 6m and 2y 9m Between 2y 9m and 3y Between 3y and 3y 3m Between 3y 3m and 3y 6m Between 3y 6m and 3y 9m Between 3y 9m and 4y Between 4y and 4y 3m Between 4y 3m and 4y 6m Between 4y 6m and 4y 9m Between 4y 9m and 5y Between 5y and 5y 3m Between 5y 3m and 5y 6m Between 5y 6m and 5y 9m Between 5y 9m and 6y Between 6y and 6y 3m Between 6y 3m and 6y 6m Between 6y 6m and 6y 9m Between 6y 9m and 7y Between 7y and 7y 3m Between 7y 3m and 7y 6m Between 7y 6m and 7y 9m Between 7y 9m and 8y Between 8y and 8y 3m Between 8y 3m and 9y 3m Between 9y 3m and 10y 3m Between 10y 3m and 11y 3m Between 11y 3m and 12y 3m Between 12y 3m and 13y 3m Between 13y 3m and 14y 3m Between 14y 3m and 15y 3m Between 15y 3m and 16y 3m Between 16y 3m and 17y 3m Between 17y 3m and 18y 3m Between 18y 3m and 19y 3m Between 19y 3m and 20y 3m Between 20y 3m and 21y 3m Between 21y 3m and 22y 3m Between 22y 3m and 23y 3m Between 23y 3m and 24y 3m Between 24y 3m and 25y 3m Between 25y 3m and 26y 3m Between 26y 3m and 27y 3m Between 27y 3m and 28y 3m Between 28y 3m and 29y 3m Between 29y 3m and 30y 3m 30+ Years And months To Retirement 10

11 LIFESTYLES EXPLAINED Choosing your retirement age The Lifestyle strategies specifically target the age you select to take your benefits (your selected retirement age ). If you choose one of these investment options, you should confirm your selected retirement age with Fidelity. It is important that you consider this carefully. You may want to ask yourself the following questions: Will I have enough to retire on by that time? How much should I be contributing now to be able to retire then? If you don t confirm your selected retirement age, Fidelity will assume that you plan to take your benefits when you are 65. You can choose an earlier retirement age, if you want to. This can be as early as 55. You can change your selected retirement age at any time by calling the Pensions Service Centre or through PlanViewer. Please note that your VISTA account is reviewed once each calendar year on your birthday (or the first working day thereafter). Where your term to selected retirement age has changed in accordance with the table, Fidelity will re-allocate the proportions invested in your selected Lifestyle Strategy. The adjustment will apply to both the accumulated value of your VISTA account and future contributions. The reallocation will take place as soon as possible after the review but Fidelity cannot guarantee the specific date and members will not be informed when their assets are to be rebalanced. It is very important that if your retirement plans alter, you review your target retirement age. However, if you intend to change this within the 8 year switching period, you should first consider whether this would result in a significant redistribution of assets. 11

12 SELF-SELECT EXPLAINED With Self-Select you choose your own funds in the proportion that you wish, and make switches as and when you wish. In doing so, you may wish to follow these steps. Step 1 Select Asset Classes Different assets classes have different risk profiles as explained previously. These risks can change depending on a member s age and so Step 1 is to decide how your assets should be split between the different asset classes. This is perhaps the most important decision. Step 2 Select an Index Tracker or Active Manager An index-tracking (or passive) manager simply seeks to follow the index in which they are invested (for example the FTSE All Share Index). There is no attempt to outperform the index and the investment fees are low. The index-tracking managers we currently use are BlackRock and Legal & General. An active manager seeks to out-perform the index or achieve a specific return by way of investment manager skill. That expertise comes with higher charges, which means the manager aims to outperform to both cover the extra costs and make additional returns. In essence, the choice between an active and index tracker manager comes down to whether you believe an active manager has the skill to outperform and you are prepared to take the risk that they may under-perform. Although active managers carry a higher risk than index tracker managers, the difference in risk between the two is normally far less than the differences in risk between asset classes. If you wish to concentrate your selection activities on a small range of funds, you could restrict your choice to the index-tracking funds and the DGFs (which by their nature are actively managed). There can be significant variations in returns across countries and regions over time. 12

13 SELF-SELECT EXPLAINED Step 3 Select Appropriate Funds Equities Equities Although broadly correlated in the short-term (generally stock markets around the world go up and down together) there can be significant variations in returns across countries and regions over time. The UK market is a relatively small part of the world market, and even in the UK a significant portion of the stock market earnings come from outside the UK. Further, the UK stock market is quite concentrated in that a few companies make up a substantial part of the market. Therefore, the Scheme offers funds that invest in one or more of the world s major stock markets and each fund will hold a range of stocks. Money invested overseas is exposed to some currency risk (i.e. changes in exchange rates can affect the value of your investment). Money invested in UK equities also carries currency risk as over half of the UK stock market s earnings come from overseas. The BlackRock Global equity 30:70 Fund has partial currency protection. Bonds Certain UK Bonds can be used to manage risk if used appropriately, but different Bond funds address different risks. For example if you want to match the cost of buying a pension with fixed or nil increases then fixed-interest bonds should be considered. Index-linked bonds should be considered if you want to match the cost of buying an inflation-linked pension. This matching is not exact, and pension costs can be affected by other factors such as changes in life expectancy. Cash The Scheme only operates one cash Fund. Other Diversified Growth Funds (DGFs) invest in many different asset types, but seek to achieve a targeted positive return over a defined period, in part by moving assets between asset types. Managed funds invest in several asset types (often mainly equities) but often with little variance. A Property fund will display some of the characteristics of equity but with lower expected returns and volatility (note that when property values are uncertain, you may not be able to sell your units for an extended period). Step 4 Review Periodically Equities You should regularly review where your Individual VISTA Account is invested, especially as you near retirement. 13

14 SELF-SELECT FUND RANGE The fund range covers the main investment types equities, bonds and cash and the major financial markets. There is a selection of active and passive funds. You can choose any combination of the funds to invest in you can invest in just one or split your VISTA account across several funds. FIDELITY INVESTMENTS LIFE INSURANCE LIMITED FUNDS Fund Name Risk Rating, Risk Factors and Fund Objectives Annual charge Other charges Total expense ratio Fund style BlackRock Cash Fund Risk rating: L1 Fund specific risk factor: 17 This life fund invests in an underlying fund managed by BlackRock Life Limited. The investment objective of the Fund is: This fund aims to achieve an investment return that is in line with wholesale money market short-term interest rates. Specifically, the Fund is benchmarked against 7 Day Sterling LIBID. The underlying investments of the fund are a diversified portfolio of money market instruments. The instruments are of a high quality and have a minimum credit rating A1 or an equivalent standing. The Fidelity fund invests in the underlying fund through a reinsurance policy with BlackRock Life Limited % 0.128% 0.216% Passive 14

15 SELF-SELECT FUND RANGE Fund Name Risk Rating, Risk Factors and Fund Objectives Annual charge Other charges Total expense ratio Fund style BlackRock Over 15 Year Gilts Index Fund Risk rating: L2 Fund specific risk factor: 3, 17 This life fund invests in an underlying fund managed by BlackRock Life Limited. The objective of the underlying fund is: This fund invests in UK government fixed income securities (gilts) that have a maturity period of 15 years or longer. The fund aims to achieve a return consistent with the FTSE UK Gilts Over 15 Years Index, which is widely regarded as the benchmark for UK pension fund investment in the longer dated end of the UK gilt market. The Fidelity fund invests in the underlying fund through a reinsurance policy with BlackRock Life Limited % 0.004% 0.122% Passive BlackRock Over 5 Years Index Linked Gilt Index Fund Risk rating: L2 Fund specific risk factor: 3, 17 This life fund invests in an underlying fund managed by BlackRock Life Limited. The objective of the underlying fund is: This fund invests in UK government index-linked securities (index-linked gilts) that have a maturity period of 5 years or longer. The fund aims to achieve a return consistent with the FTSE UK Gilts Index-Linked Over 5 Years Index, which is widely regarded as the benchmark for UK pension fund investment in the longer dated end of the UK index-linked gilt market. The Fidelity fund invests in the underlying fund through a reinsurance policy with BlackRock Life Limited % 0.004% 0.122% Passive BlackRock Corporate Bond Over 15 Year Index Fund Risk rating: M1 Fund specific risk factor: 3, 17 This life fund invests in an underlying fund managed by BlackRock Life Limited. The objective of the underlying fund is: This fund invests in investment grade corporate bonds denominated in sterling. The fund aims to achieve a return consistent with the iboxx Non-Gilts, Over 15 Year Index. This index consists of bonds with maturity periods of 15 years or longer. The Fidelity fund invests in the underlying fund through a reinsurance policy with BlackRock Life Ltd % 0.015% 0.153% Passive 15

16 SELF-SELECT FUND RANGE Fund Name Risk Rating, Risk Factors and Fund Objectives Annual charge Other charges Total expense ratio Fund style BlackRock Diversified Growth Fund Risk rating: M1 Fund specific risk factor: 2, 3, 4, 6, 17 This life fund invests in an underlying fund managed by BlackRock Life Limited. The objective of the underlying fund is: This fund targets a consistent investment return of 3.5% above the Bank of England base rate measured over rolling 3 year periods by utilising a multi-asset flexible investment approach. The focus on getting the asset mix right in order to achieve the target means this fund will generally hold a variety of different types of assets at any one time. The Fidelity fund invests in the underlying fund through a reinsurance policy with BlackRock Life Limited % 0.080% 0.918% Active Diversified Growth Fund Risk rating: M1 Fund specific risk factor: 2, 3, 4, 6, 8, 13, 14, 15, 17 The fund aims for long-term capital growth by investing or reinsuring into underlying funds managed by Fidelity or our Fund Partners, which invest in a range of asset classes in the UK and overseas including equities, bonds, cash/ currencies, real estate, commodities, hedge funds, high yield debt and private equity. The underlying fund(s) may use derivatives and forward transactions for investment purposes % 0.040% 0.878% Active Fidelity Schroder Diversified Growth Fund Risk rating: M1 Fund specific risk factor: 2, 3, 4, 6, 8, 13, 14, 15, 17 This life fund invests in an underlying fund managed by Schroder Pension Management Limited. The investment objective of the Schroder Life Intermediated Diversified Growth Fund is to invest in a broad range of asset classes to seek to generate a capital return of RPI +5% per annum over an economic cycle typically a five year period. However, there is no guarantee that this objective will be achieved and capital is at risk. Such asset classes may include equities, bonds, infrastructure, property, commodities and absolute return strategies. The Fund may invest in a wide range of investments including transferable securities, derivatives (for investment purposes and efficient portfolio ), deposits, collective investment schemes, warrants, money market instruments and cash. The Fidelity fund invests in the underlying fund through a reinsurance policy with Schroder Pension Management Limited % 0.07% 0.908% Blend 16

17 SELF-SELECT FUND RANGE Fund Name Risk Rating, Risk Factors and Fund Objectives Annual charge Other charges Total expense ratio Fund style Fidelity Standard Life GARS Fund Risk rating: M1 Fund specific risk factor: 2, 3, 4, 6, 8, 9, 17 This life fund invests in an underlying fund managed by Standard Life Investments. The objective of the underlying fund is: The fund is invested in the Standard Life Investments Global Absolute Return Strategies Fund which aims to provide positive investment returns in all market conditions over the medium to long term. The investment team who actively manage the fund have a wide investment remit to target a level of return over rolling three-year periods equivalent to cash plus five per cent per year, gross of fees. It exploits market inefficiencies through active allocation to a diverse range of market positions. The fund manager utilises a combination of traditional assets (such as equities and bonds) and investment strategies based on advanced derivative techniques resulting in a highly diversified portfolio. The fund can take long and short positions in markets, securities and groups of securities through derivative contracts. The value of investments within the fund can fall as well as rise and is not guaranteed you may get back less than you pay in. The fund may use derivatives for the purpose of efficient portfolio and to meet its investment objective. The sterling value of overseas assets held in the fund may rise and fall as a result of exchange rate fluctuations. The Fidelity fund invests in the underlying fund through a reinsurance policy with Standard Life Assurance Limited % 0.02% 0.908% Active Fidelity UK Corporate Bond Pensions Fund Risk rating: M1 Fund specific risk factor: 17 This life fund invests in an underlying fund managed by Fidelity. The Fund s investment objective is: To achieve both capital growth and income. The Fund will invest primarily in non-gilt fixed interest securities % 0.08% 0.468% Active 17

18 SELF-SELECT FUND RANGE Fund Name Risk Rating, Risk Factors and Fund Objectives Annual charge Other charges Total expense ratio Fund style Fidelity Threadneedle Pensions Property Fund Risk rating: M1 Fund specific risk factor: 2, 3, 7, 11, 13, 14 This life fund invests in an underlying fund managed by Threadneedle Pensions Limited. The objective of the underlying fund is: To invest primarily in direct UK commercial property. It aims to generate total returns (from income and capital appreciation) that are above its benchmark, over rolling 3 year periods. The Fidelity fund invests in the underlying fund through a reinsurance policy with Threadneedle Pensions Limited. 0.90% 0.02% 0.92% Active BlackRock European Equity Fund Risk rating: M2 Fund specific risk factor: 3, 6 T his life fund invests in an underlying fund managed by BlackRock Life Limited. The objective of the underlying fund is: This fund invests in the shares of companies in Europe and aims to achieve a return that is consistent with the return of the FTSE All-World Developed Europe ex-uk Index. This index is widely regarded as the benchmark for UK pension fund investment in European company shares. The Fidelity fund invests in the underlying fund through a reinsurance policy with BlackRock Life Limited % 0.015% 0.153% Passive BlackRock Japanese Equity Index Fund Risk rating: M2 Fund specific risk factor: 3, 6 This life fund invests in an underlying fund managed by BlackRock Life Limited. The objective of the underlying fund is: This fund invests in the shares of Japanese companies and aims to achieve a return that is consistent with the return of the FTSE All-World Japan Index. This index is widely regarded as the benchmark for UK pension fund investment in shares of companies in Japan. The Fidelity fund invests in the underlying fund through a reinsurance policy with BlackRock Life Limited % 0.011% 0.149% Passive 18

19 SELF-SELECT FUND RANGE Fund Name Risk Rating, Risk Factors and Fund Objectives Annual charge Other charges Total expense ratio Fund style BlackRock Pacific Rim Equity Index Fund Risk rating: M2 Fund specific risk factor: 3, 6 This life fund invests in an underlying fund managed by BlackRock Life Limited. The objective of the underlying fund is: This fund invests in the shares of companies in the Pacific Rim and aims to achieve a return that is consistent with the return of the FTSE All-World Developed Asia Pacific ex-japan Index. This index is widely regarded as the benchmark for UK pension fund investment in shares of companies in the Pacific Rim. The Fidelity fund invests in the underlying fund through a reinsurance policy with BlackRock Life Limited % 0.015% 0.153% Passive BlackRock UK Equity Index Fund Risk rating: M2 Fund specific risk factor: 3 T his life fund invests in an underlying fund managed by BlackRock Life Ltd. The objective of the underlying fund is: This fund invests in the shares of UK companies and aims to achieve a return that is consistent with the return of the FTSE All-Share Index. This index is widely regarded as the benchmark for UK pension fund investment in shares of companies in the UK. The Fidelity fund invests in the underlying fund through a reinsurance agreement with BlackRock Life Ltd % 0.004% 0.122% Passive BlackRock US Equity Index Fund Risk rating: M2 Fund specific risk factor: 3, 6 T his life fund invests in an underlying fund managed by BlackRock Life Limited. The objective of the underlying fund is: This fund invests in the shares of US companies and aims to achieve a return that is consistent with the return of the FTSE All-World USA Index. This index is widely regarded as the benchmark for UK pension fund investment in shares of companies in the US. The Fidelity fund invests in the underlying fund through a reinsurance policy with BlackRock Life Limited % 0.007% 0.145% Passive 19

20 SELF-SELECT FUND RANGE Fund Name Risk Rating, Risk Factors and Fund Objectives Annual charge Other charges Total expense ratio Fund style Fidelity Japanese Equity Pensions Fund Risk rating: M2 Fund specific risk factor: 6 This life fund invests in an underlying fund managed by Fidelity. The Fund s investment objective is to achieve long term capital appreciation. The Fund will invest primarily in the shares of companies in Japan. There is no policy to restrict investment to particular economic sectors % 0.09% 0.928% Active Fidelity L&G Ethical Global Equity Index Class 9 Risk rating: M2 Fund specific risk factor: 3,5,6 This life fund invests in an underlying fund managed by Legal & General Assurance (Pensions Management) Ltd. The investment objective of the fund is To track the performance of the FTSE4 Good Global Equity Index (less withholding tax if applicable) to within +/-0.5% p.a. for two years out of three. The fund invests in the underlying fund through a reinsurance agreement with Legal & General Assurance (Pensions Management) Ltd. 0.40% 0.00% 0.40% Passive Fidelity North America Equity Pensions Fund Risk rating: M2 Fund specific risk factor: 6, 15 This life fund invests in an underlying fund managed by Fidelity. The Fund s investment objective is to achieve long term capital appreciation. The Fund will invest primarily in the shares of companies in the United States of America. There is no policy to restrict investment to particular economic sectors % 0.11% 0.948% Active 20

21 SELF-SELECT FUND RANGE Fund Name Risk Rating, Risk Factors and Fund Objectives Annual charge Other charges Total expense ratio Fund style Global Equity 30/70 Index Fund Risk rating: M2 Fund specific risk factor: 3, 4, 6 T he fund invests primarily in equities, both in the UK and overseas markets. The fund has approximately 30% invested in the shares of UK companies. 60% of the assets are invested into developed overseas equities with approximately 75% currency exposure hedged back to Sterling, and the remaining 10% is invested into Emerging Markets Equities. This fund may invest in or reinsure into underlying funds managed by Fidelity or our Fund Partners % 0.016% 0.184% Passive Fidelity BlackRock World (ex-uk) Equity Index Fund Class 9 Risk rating: M2 Fund specific risk factor: 3, 6 This life fund invests in an underlying fund managed by BlackRock Life Limited. The objective of the underlying fund is: This fund invests in the shares of overseas companies, (Europe, Japan, Far East, US and Canadian markets) according to market capitalisation weightings. Within each of those markets, the fund aims to generate returns consistent with those of each country s primary share market. This fund aims to achieve a return in line with the FTSE All-World Developed ex-uk Index. The Fidelity fund invests in the underlying fund through a reinsurance policy with BlackRock Life Limited. 0.15% 0.01% 0.16% Passive 21

22 SELF-SELECT FUND RANGE Fund Name Risk Rating, Risk Factors and Fund Objectives Annual charge Other charges Total expense ratio Fund style Fidelity HSBC Amanah Pension Fund Class 4 Risk rating: M2 Fund specific risk factor: 4, 5, 6, 9 This life fund invests in an underlying fund managed by HSBC Global Asset Management (UK) Limited. The objective of the underlying fund is: The fund aims to create long term appreciation of capital through investment in a diversified portfolio of securities as defined by a relevant world index, which meets Islamic investment principles as interpreted and laid down by the Shariah Committee and provided to the Board of Directors. 0.75% 0.00% 0.75% Passive Fidelity Emerging Markets Equity Pensions Fund Risk rating: H Fund specific risk factor: 4, 6, 18 This life fund invests in an underlying fund managed by Fidelity. The Fund s investment objective is to achieve long term capital appreciation. The Fund will invest primarily in securities of countries experiencing rapid economic growth including, without limitation, Africa, the Indian sub-continent, Latin America, South East Asia, Europe and the Middle East. There is no policy to restrict investment to particular economic sectors % 0.15% 1.188% Active 22

23 SELF-SELECT FUND RANGE Fund Name Risk Rating, Risk Factors and Fund Objectives Annual charge Other charges Total expense ratio Fund style Fidelity L&G Risk Global Emerging Markets Equity Index Fund Class 10 Risk rating: H Fund specific risk factor: 3, 4, 6 This life fund invests in an underlying fund managed by Legal & General Assurance (Pensions Management) Ltd. The objective of the underlying fund is: The fund aims to track the performance of the S&P/IFCI Composite Global Emerging Markets Index (less withholding tax) to within +/- 1.5% p.a. for two years out of three. The Fidelity fund invests in the underlying fund through a reinsurance policy with Legal & General Assurance (Pensions Management) Ltd. 0.00% 0.638% Passive Fidelity Pacific Equity Pensions Fund Risk rating: H Fund specific risk factor: 3, 4, 6, 9, 11, 15, 18 This life fund invests in an underlying fund managed by Fidelity. The Fund s investment objective is to achieve long term capital appreciation. The Fund will invest primarily in the shares of companies in South East Asia excluding those in Japan. There is no policy to restrict investment to particular economic sectors % 0.12% 1.958% Active 23

24 SELF-SELECT FUND RANGE Fund Name Risk Rating, Risk Factors and Fund Objectives Annual charge Other charges Total expense ratio Fund style Fidelity Standard Life Managed Fund Risk rating: H Fund specific risk factor: 3, 4, 6 This life fund invests in an underlying fund managed by Standard Life Investments. The objective of the underlying fund is: The fund aims to provide long term growth whilst investing in a diversified portfolio of assets (including equities, bonds, property, cash deposits and money-market instruments) in order to reduce the risk associated with being solely invested in any one asset class. These assets can be from both the UK and overseas. The fund is predominantly equity based (with a bias to the UK) and is actively managed by our investment team, who will vary the proportions held in each asset class to try to take advantage of opportunities they have identified. The value of investments within the fund can fall as well as rise and is not guaranteed you may get back less than you pay in. The fund may use derivatives for the purposes of efficient portfolio, reduction of risk or to meet its investment objective if this is permitted and appropriate. The sterling value of overseas assets held in the fund may rise and fall as a result of exchange rate fluctuations. The Fidelity fund invests in the underlying fund through a reinsurance policy with Standard Life Assurance Limited % 0.01% 0.638% Active Standard Life UK Equity Select Fund Risk rating: H Fund specific risk factor: 3, 18 This life fund invests in an underlying fund managed by Standard Life Investments. The objective of the underlying fund is: The fund aims to provide long term growth and is designed for investors who are looking for exposure to the UK equity market by investing in a concentrated portfolio of UK equity assets. The fund invests predominantly in the shares of companies listed on the UK stock markets and is actively managed by our investment team, who will select stocks to try to take advantage of opportunities they have identified. The value of investments within the fund can fall as well as rise and is not guaranteed you may get back less than you pay in. The fund may use derivatives for the purposes of efficient portfolio, reduction of risk or to meet its investment objective if this is permitted and appropriate % 0.01% 1.848% Active 24

25 SELF-SELECT FUND RANGE Fund Name Risk Rating, Risk Factors and Fund Objectives Annual charge Other charges Total expense ratio Fund style Fidelity L&G World Emerging markets Equity Index Fund Risk rating: H Fund specific risk factor: 3, 4, 6 This life fund invests in an underlying fund managed by Legal & General Assurance (Pensions Management) Ltd. The objective of the underlying fund is: The fund aims to track the total return of the FTSE AW - All Emerging Markets Index (less withholding tax) to within +/- 1.5% pa for two years in three. The Fidelity fund invests in the underlying fund through a reinsurance policy with Legal & General Assurance (Pensions Management) Ltd. 0.60% 0.00% 0.60% Passive Fidelity Schroder QEP Global Active Value Fund Class 9 Risk rating: H Fund specific risk factor: 3, 4, 6, 9, 15, 18 This life fund invests in an underlying fund managed by Schroder Pension Management Limited. The objective of the underlying fund is: The Schroder Life QEP Global Active Value Fund objective is to achieve long term capital growth and income through investment in collective investment schemes as well as directly held transferable securities, derivatives, cash, deposits, warrants and money market instruments. The Fidelity fund invests in the underlying fund through a reinsurance policy with Schroder Pension Management Limited. 0.75% 0.03% 0.78% Active 25

26 RISK RATING Investment risk and how Fidelity rates funds There are various ways to measure risk, but we have chosen to provide an indication of the risks involved in our fund range by considering two factors. The first factor is volatility based on past performance. Volatility is the movement, both up and down, in the fund returns over a fixed period. The second factor is an internal assessment of the underlying asset types within a fund. These ratings provide a guide to help you understand the potential risk involved when investing in our fund range. Each increase in risk level represents an increase in the potential for your fund value to grow but also to fall. Each additional level also increases the likelihood of the value of your fund fluctuating dramatically. These ratings may change in the future and we will not contact you when they do. For the most up to date ratings you should review the latest fund factsheet on PlanViewer or contact the Pensions Service Centre. None of our risk ratings imply or offer any form of guarantee. Remember that each fund has been assigned a risk category based on our internal methodology and this only considers risk in the context of our overall fund range. It is important that you read the appropriate risk category description. You should also consider financial advice regarding the suitability of your investment choices. L1 L2 M1 M2 H Increased growth potential Greater volatility expected RISK BAND L1 Lower risk/return DESCRIPTION Greater emphasis is placed on capital preservation rather than maximising returns. This means that these types of funds will generally aim to preserve the value of your investments but in return will usually offer a lower rate of growth. Please note that low risk does not mean that the fund s value would not fall. L2 M1 M2 Lower-medium risk/return Medium risk/return Medium-higher risk/return Less emphasis is placed on capital preservation than in the lower risk/return category introducing a chance of higher potential returns. Compared to the lower risk/return category there is more of a risk of your fund value going down but in return for this there may be a better chance of your fund value experiencing a higher rate of growth. The potential for capital growth is generally better than the lower risk/return and lower-medium risk/return categories but the value of the fund may vary considerably either up or down. The potential for capital growth is higher than the medium risk/return category, but risk is increased. Funds in this category can often experience large fluctuations in value, either up or down, especially in the shorter term. H Higher risk/return The potential for capital growth could be high, but with a corresponding level of risk. Funds in this return category can often experience extreme fluctuations in value, either up or down, especially in the shorter term. 26

27 FURTHER INFORMATION This booklet has been produced for members of the VISTA BNP Paribas Retirement Savings Plan. List of current funds A list of current funds is available on PlanViewer where you can access performance data and fund information. Monitoring your investments Reviewing and changing your investments over time is important, especially as you near retirement, in order to meet your expected retirement income. You will be able to view and manage your investments using PlanViewer, where you can find fund and performance information. You will receive an annual benefit statement showing the contributions paid into your account, the current balance of your account and the funds in which it is invested as well as an illustration of the benefits that your account may provide at retirement (using a number of assumptions). Switching You can change your investment from the Lifestyle strategy to Self-Select, or vice versa, or change your investment choice under Self-Select whenever you want. You can do this in one of two ways, either: by using PlanViewer at planviewer.co.uk or by calling the Pensions Service Centre on There is no charge for changing the way your VISTA account is invested. However, please remember that if you move money between funds or switch from one investment option to another, you may be out of the market for a short time. If the market moves in that time, it could affect the value of your investments. Any request to change your investment choice will be picked up on the next working day and depending on which funds are involved will determine how long the process will take. If you move from a Fidelity fund to another Fidelity fund the switch out and switch in will occur on the same day, and there will not be any out of market exposure. If you are moving from or moving to a fund not managed by Fidelity this process may take longer, depending on when the investment is priced and if the market moves this could affect the value of your investment. The pricing used will be dependent on the timing of the fund(s) being sold and the fund(s) being bought. Please contact Fidelity s Pensions Service Centre for further details. 27

28 FURTHER INFORMATION Investment charges There are no initial charges for the funds. So if you contribute 100 to your VISTA account, 100 is invested into your chosen funds. These funds have annual charges, which currently range from 0.088% to 0.90%. Funds also incur expenses such as auditing and registry fees and the figures quoted in your literature are a guide based on historical estimates and may change. The annual charge and the other expenses are deducted from each fund s assets and are reflected in the quoted daily price for the fund they are not taken directly from your VISTA account. Performance figures for the funds therefore take account of all charges. All charges are reviewed regularly and Fidelity will notify you if the annual charges increase. The nature of investments Contributions may be allocated to funds of FIL Life Insurance Limited (FIL Life). Through these funds, FIL Life invests in underlying Fidelity unit trusts and open-ended investment company (OEIC) funds managed by FIL Investment Services (UK) Limited, authorised and regulated by the Financial Conduct Authority. FIL Life Insurance Limited (FIL Life) may also invest into funds managed by non-fidelity fund managers or be reinsured by non-fidelity life insurance companies. The name of the non-fidelity insurance company or fund manager will normally be shown in the name of the FIL Life fund. Active trading Fidelity reserves the right to limit the number or frequency of times you switch. Fidelity may do this, for example, if short-term or excessive trading could harm fund performance by disrupting portfolio strategies and increasing the expenses that the fund has to pay. Active trading is discouraged, these are switches of units held in a fund for less than 30 days. Active trades will be investigated as they are considered detrimental to other investors. An active trade will result in the individual receiving a letter explaining Fidelity s Dealing Policy and requesting that no further active trades are undertaken. If further active trades are made, measures will be taken to discourage the practice, such as applying trading restrictions on the VISTA account. The policy will apply at all times, regardless of market volatility. Diversification You can manage risk by spreading your investment across a number of funds. This is called diversification. You can diversify your investment by investing in a: 1. combination of stockmarkets in different countries, so your investment does not depend on the fortunes of just one market. 2. mixture of investment types. For example you could invest some of your savings in equities for potential growth and the rest in bonds and cash so you don t expose all your savings to the risk of a sudden fall in the stockmarket. Balanced funds work in this way. 28

29 FURTHER INFORMATION Risk Fidelity can t guarantee what your VISTA account will be worth or what your actual retirement income will be. Reasons could include: The value of your investments may go down as well as up and you may not get back the amount invested. If you decide to take your benefits in the form of a pension (e.g an annuity) your retirement income may be lower than the estimated yearly pension amount shown on your annual VISTA account summary. This may happen if: you take some or all of your benefits before your planned retirement date investment performance is lower, or charges are increased above those illustrated the cost of buying a pension increases the type of pension you purchase is different from that shown in your annual pension account summary you decide to take a cash amount from your pension account when you take your benefits. Fund charges may increase. The value of a fund may be affected if any of the institutions with which cash is deposited suffers insolvency or other financial difficulty. You bear the risk that any funds into which our FIL Life Insurance Limited funds are invested or into which our funds are reinsured do not pay Fidelity the full amount. In addition to some of the general risks highlighted above, each fund will have its own specific risks. In the Your fund choices section of this document we show which risks are associated with each fund. Fidelity has also rated each of the available funds to give you an indication of the potential level of risk applicable. These risk ratings are shown in the Risk rating Investment risk and how Fidelity rates funds section of this document. Review of investment options The Trustee Board review the investment options on offer from time to time and may, following any such review, make changes, including withdrawing an existing option. The Trustee Board will contact you if changes are necessary. Neither the Company nor the Trustee Board accept responsibility for your choice of investment options, including the default option, Lifestyle. Also, if you invest in Lifestyle, it is your responsibility to keep your target retirement date up to date. It will not be changed automatically if you were to agree a retirement date with your employer. Investment information on PlanViewer is produced by the fund managers and neither the Bank nor the Trustee Board accept any responsibility for them. 29