DSV UK GROUP PENSION SCHEME Your Guide to Making Investment Decisions October 2015

Transcription

1 DSV UK GROUP PENSION SCHEME Your Guide to Making Investment Decisions October 2015 Issued on behalf of DSV Pension Trustees Limited (Trustee of the DSV UK Group Pension Scheme)

2 DSV UK GROUP PENSION SCHEME Your Guide to Making Investment Decisions PAGE Your guide to making investment decisions DOC C 1 Your options in a nutshell 2 The investment basics 3 How to decide which funds to invest in 6 Investment choices: Self-Select option 9 Investment choices: Lifestyle options 11 Other information 16 Glossary 16 Important note 18

3 DSV UK GROUP PENSION SCHEME YOUR GUIDE TO MAKING INVESTMENT DECISIONS 001 Your guide to making investment decisions If you wanted to save for a new car or a holiday, you might open a savings account with a bank. In return for your savings, the bank will give you a rate of return, which will help your money to grow. Investing your pension is a bit like this. However, rather than simply putting your money in a bank, you can invest your savings in different markets (like companies or bonds) to try and achieve a higher rate of return. There are two sections to the DSV UK Group Pension Scheme: The Final Salary Section for which there is a separate booklet. This Section provides you with a guaranteed income and the Trustees manage the investments for this section on your behalf. The Money Purchase Section which this Investment Guide is for. For this section you are responsible for investing your own Personal Account (a pot of money in your name) in line with your attitude to risk, when you re planning on retiring and how you plan to take your benefits from your Personal Account. Although there are two separate sections in the Scheme you should consider them together as they can affect each other. For more information about how it all works, please refer to the Guide: Your Retirement and Investment Options. Why you should read this guide? We want to help you make the right choices for your future and this document has been designed to walk you through the choices and the sorts of things you should consider when choosing your investments. It is all the more important since the changes to legislation that were introduced in April 2015 mean that you have more options in retirement, which may affect how you wish to invest your Personal Account. As mentioned above, it is for members of the Money Purchase Section of the DSV UK Group Pension Scheme ( the Scheme ), which also includes members who have paid Additional Voluntary Contributions. Take the time to read this document carefully and don t forget to review your investments regularly to ensure you are on track to achieving your retirement goals. If you need help making your decisions, speak to an independent financial adviser. Do you have to choose an investment option? Members who have not chosen an investment option will have their Personal Account automatically invested in a default lifestyle strategy. Please read page 9 for more details regarding the default solution. In addition, if you do not tell us the age at which you wish to commence taking your benefits (known as the Selected Retirement Age), we will assume this will be age 65. The Selected Retirement Age determines how your Personal Account is invested (unless you make a selection other than a lifestyle strategy). It also determines when the Scheme s administrator sends you information about your retirement options. The default strategy does not take into account your personal circumstances and preferences, so it is important that you make your own decision if at all possible.

4 DSV UK GROUP PENSION SCHEME YOUR GUIDE TO MAKING INVESTMENT DECISIONS 002 What do you need to do now? Choosing the right investments for you may be easier than you think. Simply follow these steps: Steps 1 Think about how you might want to take your benefits from the Money Purchase Section by reading the Guide Your Retirement and Investment Options Page See separate Guide 2 See your options in a nutshell Read a summary of your options. 2 3 Understand the investment basics Learn the basics of investments to help you better understand your options. 3 4 How to decide which funds to invest in Find out what you need to consider before making your selection. 6 5 Discover your investment choices Learn about the two key investment paths you can take Self Select or Lifestyle. 9 6 Explore your Lifestyle options Learn about the all-in-one lifestyle investment strategies Select your retirement age Make sure you select the age at which you expect to retire and consider whether you can afford to retire at this age. 15 Your options in a nutshell How does your pension work? As mentioned, your pension scheme is a mixture of a Final Salary Section and a Money Purchase Section. This guide refers to the Money Purchase Section. In the Money Purchase section: You and the Company contribute to your own Personal Account. To help your savings grow, you choose where to invest your Personal Account from a range of different options. At your Selected Retirement Age you use your Personal Account to supplement your final salary pension. You can do this by taking cash, annuity or flexible income. The size of your Personal Account when you retire will depend on how much money goes into your Personal Account, when you retire and how your investments perform. Your Final Salary Pension provides you with a guaranteed income which is payable during your lifetime and a pension for your spouse or dependant should you die first. If this provides you with enough guaranteed income, you may have more flexibility to do something different with your Money Purchase Section, for example take it as cash, or take a little bit at a time. For example, you might want to top up your Final Salary Pension in the earlier years of your retirement. For further details, please refer to your Scheme Booklet and the Guide Your Retirement and Investment Options.

5 DSV UK GROUP PENSION SCHEME YOUR GUIDE TO MAKING INVESTMENT DECISIONS 003 What are your investment options? The Trustees, after receiving appropriate advice, have provided you with access to a number of different investment funds managed by two leading UK fund managers. You can choose to invest your pension in a Self-Select option or a Lifestyle option. Self-Select options You can choose one or more of these funds: DSV Global Equity Fund DSV Annuity Fund DSV Cash Fund DSV UK Equity Fund DSV World (excluding UK) Fund DSV World Emerging Markets Equity Fund DSV Diversified Fund DSV Retirement Income Fund DSV Consensus Fund DSV Gilts Fund DSV Index-Linked Gilts Fund Lifestyle options Lifestyle Full Cash Lifestyle Balanced Drawdown Lifestyle Annuity Lifestyle Extra Cash Lifestyle Full Drawdown Risk warning: When deciding where to invest, you should bear in mind that the value of funds can go down as well as up. Remember that past performance is not a guide to future performance. The investment basics Passively managed investments Our range of funds is predominantly passively managed by one of our investment managers. The aim of a passively managed fund is to achieve a return as close as possible to a particular market sector. The performance of a market sector is measured by an Index (see the glossary on page 17). Passive management is also known as index-tracking. For example, one well known index is the FTSE All-Share which is based on the share prices of all companies with a full listing on the London Stock Exchange. Passive funds buy the same stock holdings and in the same proportions as those which are included in the selected Index. This enables investors to achieve returns close to the relevant index. Another advantage of passive management is that the charges levied by the investment manager are low. For details of which DSV funds are passively managed and their charges please see page 10.

6 DSV UK GROUP PENSION SCHEME YOUR GUIDE TO MAKING INVESTMENT DECISIONS 004 Actively managed investments Some fund types can t be managed in a passive way, and so these funds need to be managed on an active basis. This is because these funds don t have an index which a passive manager can copy. Currently, the funds that are actively managed are the DSV Diversified Fund, the DSV Retirement Income Fund and the DSV Cash Fund. For these funds the manager will use experience and market knowledge to make regular decisions on how to invest assets in a fund. For example, the DSV Diversified Fund invests in a wide range of different types of assets, and it s up to the manager to decide which assets to invest in and which ones to avoid at any point in time. They may update their views on these assets as economies and markets change, resulting in them adapting their portfolio. If their decision is correct and they invest in assets that perform well, then the decision will have boosted the fund s performance. However if their decision is incorrect, the performance of the fund will be reduced. As there is more effort and skill involved in actively managing funds, the annual charges are higher than passive funds. So the active manager has to make up the difference in cost by generating a good return from the assets in the fund. Types of investments For pension funds the most common types of assets available for investments are: Equities Bonds Mixed (or Diversified) Cash Equities: high capital risk potentially high reward What are equities? Company shares and equities are the same thing. Buying shares in a company gives the investor the right to share in the profits of the company. The portion of profits paid out on shares is called a dividend. Over time, investors in equities expect the value of their shares to increase as the company grows and becomes more profitable. Of course, there is also a risk that this might not happen. How risky are equities? The value of a company s shares can go up and down. Fluctuations (referred to as volatility) can occur for a number of reasons including: Changes in conditions in the economy in which the company operates. Changes in circumstances that are specific to the company (or industry) concerned, for example a takeover bid. The views of investors. All these factors can have a direct bearing on a company s prospects and therefore the value of its shares. The objective of most investors in equity funds is to achieve long term growth above inflation. Historically, shares have generally performed better than bonds or cash over the very long term, but they are more volatile and so are more risky. This means there have been periods of time when lower risk assets such as bonds have performed better than equities. Passively managed equity funds invest in many companies across different industries to reduce risk. This is because the impact of one share performing badly can be offset by other shares that do well.

7 DSV UK GROUP PENSION SCHEME YOUR GUIDE TO MAKING INVESTMENT DECISIONS 005 Bonds: medium capital risk medium reward What are bonds? Bonds are issued by governments and companies who want to borrow to raise money. Under the terms of the bond, the borrower promises to repay the loan, usually on a specified date in the future. Until that date a pre-determined fixed rate of interest is paid to the investor. British government bonds are known as gilts and company bonds are known as corporate bonds (see below). Investors are not required to keep a bond until the date of its repayment. Bonds can be bought and sold on the secondary market. The value of a bond during its lifetime can go up and down. The value will depend on the current and expected levels of interest rates, the time period to repayment, and the credit worthiness of the issuer if it s a corporate bond. Some gilts pay interest which increases at a rate linked to inflation and where the capital repayment at maturity also increases with inflation. These gilts are known as index-linked gilts. The value of indexlinked gilts will vary depending on the factors outlined above plus investor expectations of future rates of inflation. How risky are bonds or gilts? The value of bonds can go up and down. However, an annuity (which is a regular retirement income provided by an insurance company) is generally backed by longer dated bond investments. This means when you invest in a bond fund, you invest in a fund which very broadly follows changes in annuity rates (i.e. follows the cost of buying a regular pension with your Personal Account). Therefore, bonds provide some purchasing power protection for members who wish to buy an annuity when they retire. Because corporate bonds are issued by companies, they are higher risk than gilts. This is because the chance of a company not being able to repay their loan is higher than the British government failing to repay. However, there is the opportunity for bigger investment returns from corporate bonds than gilts because investors expect to be rewarded for taking this higher risk. The DSV Annuity Fund invests in a mix of relatively low risk corporate and government bonds. If you wish to buy an annuity with your Personal Account, investing in a bond fund such as the DSV Annuity Fund will be less risky than investing in equities over the shorter term. However, no investment funds (including bonds) can provide you with protection against the cost of pensions increasing if insurance companies think that people are living longer in their retirement. Mixed (or diversified funds): medium capital risk medium reward What are mixed funds? As the name suggests this type of fund invests in a wider range of types of investments, typically including equities, property, commodities or other growth seeking assets, as well as bonds and cash. This type of fund is more focussed on providing greater stability of returns through investing in a wide range of investments compared with a single asset class such as equities. Due to this wider range of investments, these funds are often called Diversified funds. How risky is a mixed fund? The value of a mixed fund can go up and down. Fluctuations (referred to as volatility) should be less compared to an equity fund due to the benefits of diversifying risk across a wide range of investments within the fund. This means that the fund may not fall as much as a fund holding only equities, but also may not rise as quickly when equity values rise.

8 DSV UK GROUP PENSION SCHEME YOUR GUIDE TO MAKING INVESTMENT DECISIONS 006 These types of funds are actively managed as they require a manager to decide which asset types to invest in and when to change them. Cash deposits: low capital risk low reward What are cash investments? Cash deposits are attractive for saving money over short periods, with almost no risk of loss in value. However, investing in cash is not necessarily the best strategy for longer-term retirement savings. This is because long term returns on cash deposits have historically been low compared to inflation, and also when compared to the returns on equities and bonds. How risky is cash? Over the longer term, cash funds are likely to grow less than equity or bond funds and the value of a cash fund may not keep up with the rising cost of living when actually the aim should be for your investments by more than inflation to help you save for retirement. However, if you are approaching retirement, you may want to consider investing some of your Personal Account in a cash fund as they are more stable and will help you to protect the value of your tax-free cash lump sum allowance at retirement. This is automatically taken account of in the lifestyle options. See page 11 for more information. How to decide which funds to invest in Before you make your investment decision please read the Guide: Your Retirement and Investment Options, and make sure you consider: When do you want to retire? How much income will you need when you retire? What other pension benefits do you have outside the Money Purchase Section? How much have you saved elsewhere and is this enough? If you can t afford to retire at your preferred age, should you increase your monthly pension contributions? Or do you need to defer your Selected Retirement Age? What investments could help you achieve your goals? How comfortable are you with the investment risk of your current funds? If you are close to retirement how do you think you will take your benefits, e.g. cash, annuity income or flexible instalments, or a combination? Is your Selected Retirement Age correct? Keep in mind that the main risks you face are: Not saving enough for retirement or retiring before its affordable (so not being able to afford the things you want). Taking benefits more quickly than is affordable, so that you run out of money in the later years of retirement. Not aligning investments to the way that you wish to take your benefits. Changing your investment strategy, the level of contributions you make to your pension or your Selected Retirement Age could make a big difference to your standard of living in retirement.

9 DSV UK GROUP PENSION SCHEME YOUR GUIDE TO MAKING INVESTMENT DECISIONS 007 Assessing how much investment risk you are comfortable with Once you have built a picture of what you want to achieve, you need to strike your own balance between the level of capital risk you are prepared to take and the return you need from your investments. All investments involve some risk, but not all risk is bad. Generally speaking, the higher the risk you take with your investments, the higher the potential return. Investments like equities typically provide higher returns over the long term. However, they are also likely to go up and down in value, sometimes dramatically in a very short amount of time. This is less important when you are young, but becomes critical as you get closer to when you want to take a cash sum from your fund or buy a regular income. The options available through the Scheme mean that most members should find an approach that helps them reach their savings goal, whilst offering a level of risk that they feel comfortable with. Work out how much of your Personal Account can be taken as a lump sum The proportion of your Personal Account that you plan to take as a cash lump sum could influence your investment choices. When you retire, you can choose to take up to 25% of your total scheme benefits (including any Final Salary Section entitlement and Additional Voluntary Contributions) as a tax free cash lump sum. Currently, the Scheme is able to offer you the option of using your Personal Account for all of your tax free lump sum entitlement that is payable from the Scheme. Typically this means you can take at least one third of your Personal Account tax free. For members who have a relatively large Final Salary pension under the Scheme, or a relatively small Personal Account, a higher proportion can be taken (in some cases as much as the full amount of the Personal Account). As the calculation varies from one member to another, you will receive a statement showing what this means for you. This will be an estimate as we will not know the precise amount until you actually retire. However, the estimate should help you plan ahead and in particular will help you make your investment decision. This is currently issued to members from their 50 th birthday. You may decide to take more than the tax free amount as a lump sum. Please note that if you do, you will need to pay the tax that is due on the excess amount. For some people this can mean paying tax at a higher rate. Investing in the DSV Cash Fund If you can (and want to) take all of your Personal Account as a lump sum, investing in cash as you approach retirement will reduce the risk of more volatile investments (Equities and Bonds) potentially falling in value shortly before retirement. However, whilst cash is a less risky option as you approach retirement, cash is not necessarily the best strategy for longer term retirement savings. This is because long term returns on cash deposits have historically been low compared to the returns on equities and bonds. For this reason, all of the Scheme s Lifestyle options adopt a strategy that focuses on growth in the years further away from retirement. The importance of your Selected Retirement Age How many years will your Personal Account be invested for before you retire? The closer you are to retirement the less risk you may want to take. If you are far from retirement you may be able to ride out the short-term fluctuations in performance. Before you choose your investments, think about how much time you have to invest and your personal circumstances. Don t forget to review and update your Selected Retirement Age regularly.

10 DSV UK GROUP PENSION SCHEME YOUR GUIDE TO MAKING INVESTMENT DECISIONS 008 What type of income would you like when you retire? After taking the tax free lump sum, you can use the rest of your benefits to provide an income in retirement. There are a number of different ways you can do this (e.g. buying an annuity, taking all of it as cash over a short period or investing in income drawdown). Your choice should play a part in the investment decisions you make today. An annuity is a regular retirement income that you purchase from an insurer, which pays you an income for life. The annuity you buy can also include additional options such as payments being linked to inflation or a guarantee that an income will be paid to your spouse for life after you die. The amount of income you receive will depend on how much money you have on the date you buy it and what it costs to buy an annuity at that date (the cost can go up and down significantly depending on market conditions). If you purchase an annuity that is inflation linked or guaranteed to pay to your spouse, this will be more expensive. If you plan on purchasing an annuity with your Personal Account, you need to ensure your savings don t lose their buying power as you approach retirement. If you would like a more flexible income you can also buy a product that allows you to draw down as much as you need as and when you need it. To do this, at retirement you will need to transfer your Personal Account to another pension provider. You will then be able to access any of the new freedoms that apply such as withdrawing amounts that you determine as and when you like. The risk with this type of income is that it could run out if you take too much too soon. Protect the investment growth during the period before you retire If you are close to retirement (approaching five years), it is critical that you consider: Is your Personal Account invested in a way that will help you protect your tax free cash lump sum? What will happen to your Personal Account if the markets are not performing well just before you reach retirement? As we have mentioned earlier, if you have more than five years before you plan to retire (the longer the better), you may have time to ride out any ups and downs in the stock markets and benefit from higher risk investments such as equities. However, if your timeframe is shorter, you will have less time to recover any short term losses, or your investments may fall in value just as you need to disinvest them to take your benefits. For this reason, during the period before retirement, the Scheme s Lifestyle options aim to protect you by moving your investments gradually over the last five years before your Selected Retirement Age into funds that will suit your plans for retirement (three years for building up investments in cash). As your retirement plans may be different from other members, it is vital that you select the right Lifestyle strategy for you and keep your decision under review in case your circumstances change. To help you select a Lifestyle strategy we have named them according to the types of investments held when you reach your Selected Retirement Age. You should also consider investing in the self-select funds to help meet your retirement objectives. For example, investing in the DSV Cash Fund will help to reduce capital risk if you plan to take your benefits as a lump sum. Investing in the DSV Gilts Fund, the DSV Index-Linked Gilts Fund or the DSV Annuity Fund can help provide protection if you wish to buy an annuity at retirement. Although these funds can fall in value, it is likely that the cost of purchasing an annuity will fall in value at the same time.

11 DSV UK GROUP PENSION SCHEME YOUR GUIDE TO MAKING INVESTMENT DECISIONS 009 You don t have to buy an annuity with the rest of your Personal Account after you ve taken your tax free cash if you don t want to. You can be more flexible with it if you prefer by transferring to a flexible drawdown pension with another pension provider. Investing in the DSV Retirement Income Fund will help you manage risks during the period before you transfer. Making your own selections allows you to tailor your investment choices specifically to the options you want to take at retirement, or set your investment risk at the level that you want. Trustee s Default Funds If you have read the information in this Guide, but do not feel confident enough to make your own decision, we recommend that you first consider contacting a financial adviser (see below). Alternatively, if you do not make your own decision about how your Personal Account is invested, the Trustees operate two default approaches which apply automatically if you do not make your own choice. The main default will be the Lifestyle Balanced Drawdown. As you approach five years before your Selected Retirement Age, we will estimate your tax free cash lump sum entitlement at retirement and compare it to an estimate of the value of your Personal Account (allowing for future investment returns and any regular contributions that are payable). If the excess amount of your Personal Account is under 3000, the default fund will be Lifestyle Cash. We will write to you if this is the case, and also remind you that you may choose an alternative approach if you wish. Your personal circumstances may mean that the default fund may not be appropriate for you. It is therefore important that you make your own decision if you can (or seek advice). You should also keep your investment choice under review. Financial advice If you are uncertain about what decisions to make (investment fund selection, retirement options etc.), then the Trustees strongly recommend that you seek independent financial advice. You can find an independent financial adviser local to you at You will need to meet the cost of this advice. Investment choices: Self-Select option With the self-select option, you are in control of your investments. You can create your own investment strategy from the full range of funds. However, before you self-select your investments, ask yourself what you are looking for in an investment fund. What is your attitude to capital risk? How many funds do you want to invest in? What performance are you hoping to achieve? Your attitude to capital risk is personal and can change as you get older. Read pages 3 to 7 to better understand your attitude to risk and the sorts of investments you could consider. Investing in more funds and/or different asset classes could help you manage your capital risk. Read page 4 to 6 for details. Some funds aim to deliver higher returns than others, although they generally do this by investing in higher risk funds. Remember, all investments can go down as well as up, so make sure you are comfortable with the level of risk you are taking.

12 DSV UK GROUP PENSION SCHEME YOUR GUIDE TO MAKING INVESTMENT DECISIONS 010 The table below lists the range of funds and charges currently offered to members by the Trustees: Fund Type Fund name Benchmark index Total Expense Ratio % p.a. Equity funds DSV UK Equity Fund FTSE All-Share 0.1 DSV World (excluding UK) Fund FTSE World ex UK 0.22 DSV Global/UK Equity Fund Composite DSV Emerging Markets Equity Fund FTSE Emerging Markets 0.45 Mixed funds DSV Diversified Fund UK CPI + 4% p.a DSV Retirement Income Fund Base rate +3.5% p.a DSV Consensus Fund Composite 0.15 Bond funds DSV Annuity Fund Composite 0.15 DSV Gilts Fund FTSE A UK Gilts >15 Years 0.1 DSV Index-Linked Gilts Fund FTSE A Index-Linked Gilts >5 Years 0.1 Cash fund DSV Cash Fund Libid 7-day The Total Expense Ratio ( TER ) consists of two components 1. A fixed percentage applied to each fund. This represents the percentage the investment manager will deduct from the fund s value each year for managing the investments. Your Personal Account reflects the amount of money you have after charges have been deducted. 2. Additional expenses are also paid to the investment manager to cover the cost of other services, such as the fees paid to the custodian, auditors and registrar of units. This figure is reviewed annually by the managers and may change. This also includes any platform fee if relevant. More information about these funds is included in the Scheme s factsheets which can be found via The funds offered are subject to change at the discretion of the Trustees and may be managed by more than one investment provider. If you elect to use the self-select option, the Trustees strongly recommend that you review your investments regularly, especially in the years leading up to your retirement or if your retirement plans change.

13 DSV UK GROUP PENSION SCHEME YOUR GUIDE TO MAKING INVESTMENT DECISIONS 011 Investment choices: Lifestyle options The lifestyle options are pre-determined investment strategies that choose your investments for you depending on how many years away from retirement you are and the type of benefit you plan to take (e.g. cash, annuity income or drawdown). Funds are moved in small steps as you approach retirement. This means that switches are smoother than a one off switch of funds, which helps to reduce the risk that the switch happens at an adverse time. The lifestyle options work in three stages throughout your working life the first to help your pension grow, the second to diversify risk, and the third to protect your Personal Account in relation to the way you plan to take your benefits. Growth Phase In the earlier stage of your career contributions are invested in higher risk assets e.g. equities Diversification Phase Once you are within 15* years to retirement, your savings gradually switch into assets that are lower risk than equities, but should still give you good returns e.g. mixed assets Protection Phase Once you are within 5* years to retirement you start investing in line with the type of income you plan to take e.g. bonds and cash if you plan to take an annuity *Your Personal Account will move into the diversification and protection phases based on the number of years before your Selected Retirement Age. The Growth and Diversification Phases Your Personal Account will start to gradually move your savings into the diversification phase 15 years before your Target Retirement Age. The chart below shows which funds you will be invested in: Growth and Diversification Phases Allocation 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Years to Target Retirement Date DSV Diversified Fund DSV Global Equity Fund The Protection Phase An advantage of the Growth and Diversification Phases is that you aim for higher returns in your earlier years, when you may be able to afford to ride the ups and down of the markets. Then, in the years as you

14 DSV UK GROUP PENSION SCHEME YOUR GUIDE TO MAKING INVESTMENT DECISIONS 012 approach retirement, you will become more certain of the value of your Personal Account, the level of benefits you will receive and the type of income you want. Options in the Lifestyle Protection Phase There are five Lifestyle options available to you. All of the Lifestyle options adopt the same investments for the Growth and Diversification Phases, but differ in the Protection Phase. 1. Lifestyle Full Cash Strategy This Lifestyle fund moves to 100% cash by the time you reach your retirement. You should consider this strategy if you plan to take the whole of your Personal Account at retirement as a cash lump sum. Full Cash Allocation 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Years to Target Retirement Date DSV Cash Fund DSV Diversified Fund The transition is carried out over each the last three years (in quarterly steps): Fund % DSV Diversified Fund DSV Cash Fund Lifestyle Annuity Strategy This Lifestyle option moves your funds to 33% cash and the rest to the DSV Annuity Fund (a combination of bonds and gilts), as this fund is a good match to changing annuity prices. You should consider this option if you plan to take part of your Personal Account at retirement as a tax free cash lump sum and purchasing an annuity with the remainder.

15 DSV UK GROUP PENSION SCHEME YOUR GUIDE TO MAKING INVESTMENT DECISIONS 013 Annuity with 33% Cash Allocation 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Years to Target Retirement Date DSV Cash Fund DSV Annuity Fund DSV Diversified Fund The transition is carried out over each the last five years (in quarterly steps): Fund % DSV Diversified Fund DSV Annuity Fund DSV Cash Fund Lifestyle - Balanced Drawdown Strategy This Lifestyle option moves your funds to 33% cash and the rest to the DSV Retirement Income Fund, a fund which will continue to grow whilst you leave it invested. You should consider this option if you plan to target benefits of one third (33%) of your Personal Account as a tax free cash lump sum, and to invest the remainder in drawdown, which aims to provide you the option to choose a flexible level of income. Drawdown with 33% Cash Allocation 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Years to Target Retirement Date DSV Cash Fund DSV Retirement Income Fund DSV Diversified Fund

16 DSV UK GROUP PENSION SCHEME YOUR GUIDE TO MAKING INVESTMENT DECISIONS 014 The transition is carried out over each the last five years (in quarterly steps): Fund % DSV Diversified Fund DSV Retirement Income Fund DSV Cash Fund Lifestyle - Extra Cash Strategy This Lifestyle option moves your Personal Account to 67% cash by the time you reach your Selected Retirement Age, and the rest to the DSV Retirement Income Fund which will continue to grow whilst you leave it invested. You should consider this option if you plan to target benefits of two thirds (67%) of your Personal Account as a cash lump sum, and to invest the remainder in drawdown, which aims to provide you the option to choose a flexible level of income. 67% Cash 33% Drawdown Allocation 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Years to Target Retirement Date DSV Cash Fund DSV Retirement Income Fund DSV Diversified Fund The transition is carried out over each the last five years (in quarterly steps): Fund % DSV Diversified Fund DSV Retirement Income Fund DSV Cash Fund Lifestyle-Full Drawdown Strategy This Lifestyle option moves your Personal Account to 100% DSV Retirement Income Fund. You should consider this approach if you do not wish to take a lump sum at retirement but plan to target drawdown which aims to provide you the option to choose a flexible level of income based on the whole value of your Personal Account.

17 DSV UK GROUP PENSION SCHEME YOUR GUIDE TO MAKING INVESTMENT DECISIONS 015 Full Drawdown Allocation 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Years to Target Retirement Date DSV Retirement Income Fund DSV Diversified Fund The transition is carried out over each the last five years (in quarterly steps): Fund% DSV Diversified Fund DSV Retirement Income Fund Make sure you select your retirement age When choosing your investments, make sure you also notify us of your Selected Retirement Age (SRA). This is the age you think you might retire. This allows the Trustee to switch your Personal Account and contributions at the right time during the Protection Phase. Your SRA is only an indication of when you plan to retire. This information is confidential within the administration of the Scheme and does not commit you to retire at that age you can change your mind, but let the Scheme administrator know if you do. If you do not specify an SRA, then age 65 (the Scheme s current Normal Retirement Age) will be regarded as your SRA for the purposes of lifestyle switching and for communicating with you in the run up to your retirement.

18 DSV UK GROUP PENSION SCHEME YOUR GUIDE TO MAKING INVESTMENT DECISIONS 016 Other information Additional Voluntary Contributions Additional Voluntary Contributions can be invested differently from your main contributions to the Scheme. How do I track my fund? Annual benefit statements are issued to all members of the Scheme. These show current unit totals and values. From early 2016 you will also be able to access your personal investments and fund values via For information about your fund or for valuations of your fund contact the Scheme Administrator. Transferring your Personal Account Your Money Purchase benefits held in your Personal Account are known as flexible benefits. Your final salary pension is now referred to as safeguarded benefits. Under UK regulations, you are now able to transfer your flexible benefits while keeping your safeguarded final salary pension in the Scheme. Transferring your Personal Account is necessary if you wish to access the drawdown option (flexible income in retirement). However, it is recognised that for most people, transferring a final salary pension is not in their best interests. You should contact a financial adviser if you are considering this option. Contact the Scheme Administrator Write to: DSV Scheme Administrator Hymans Robertson LLP 45 Church Street Birmingham B3 2RT Call: Fund performance information If you would like general information on the available funds, you can get fund factsheets which are available via Making changes to your Personal Account investments You can change your investments using the Investment instruction form in Your Pension Scheme Membership Pack. For a copy of this form please contact your Human Resources Department or the Scheme Administrator. Glossary Annuity A series of regular payments, provided to you from an insurance company, which can either be fixed or linked to inflation and payable for the rest of your life. A minimum period of payment can be guaranteed, or payments can continue to a spouse after death, if selected by you at the time of purchasing the annuity. Benchmark This is a yardstick against which the investment policy or performance of a fund manager can be compared. These have been set out in the table on page 10.

19 DSV UK GROUP PENSION SCHEME YOUR GUIDE TO MAKING INVESTMENT DECISIONS 017 Bond A certificate of debt issued, for example, by governments or companies, with interest paid on the debt. The money paid initially for the bond is returned upon reaching the end of the agreed period. Cash This can mean bank deposits with building societies or banks, but from an investment perspective usually includes very short term loans to organisations in order to enhance interest rate payments. The monetary value of a cash fund does not normally go down except in severe market conditions, although inflation will erode its purchasing power. Cash deposits attract interest at variable rates. Corporate Bonds A certificate issued by a public company promising to repay borrowed money and a fixed rate of interest at specified times. Diversified Fund A fund that invests in a variety of different assets including equities, cash, bonds and commodities (e.g. gold). It is designed on the basis that different types of investments can perform differently at different times. This should provide less volatile returns over the long term compared with investing in the underlying asset classes individually. Equity A share in a company, which can provide investment returns in two ways. First, if the company does well or is seen favourably in the market, the value of the share could increase. Similarly, the value of the share could decrease if the company does badly or is seen unfavourably in the market. Second, owners of shares may receive a dividend each year, depending on how well the company has performed. (It should be noted that the value of shares can go down as well as up). Gilt A Bond issued by the UK Government. Index A benchmark against which the performance of a fund can be measured. Index-Linked Gilts Government bonds that pay interest which increases at a rate linked to inflation and where the capital repayment at maturity is also inflation proofed. Index Returns Returns designed to perform in line with an index. Pooled Funds A Pooled Fund combines the savings of many individuals with the same investment objectives into a large portfolio that invests in a diversified mix of assets. Investments are measured in units, with each unit having a daily calculated value. Personal Account Your personal pot of money which contains the contributions made by you and by DSV into the Money Purchase section of the Scheme, plus the investment returns on those contributions, less any charges related to the investments you choose.

20 DSV UK GROUP PENSION SCHEME YOUR GUIDE TO MAKING INVESTMENT DECISIONS 018 Important note Neither the Trustees, the Company nor their advisers are able to advise you on which investment option is best suited to you. This leaflet does not constitute financial advice and it is recommended that, if you need assistance, you should seek the advice of your Independent Financial Adviser (IFA). If you do not have an IFA, visit for a list of IFAs in your area. Please see Your Pension Scheme booklet for further information about the Scheme or the Guide Your Retirement and Investment Options for further information about the new retirement options. Prepared by: Hymans Robertson LLP on behalf of DSV Pension Trustees Limited