Changes to how your pension is invested. For members of The Walt Disney Retirement Savings Plan (the Plan)

Transcription

1 Changes to how your pension is invested For members of The Walt Disney Retirement Savings Plan (the Plan)

2 The changes in summary We are making changes to the investment options available within The Walt Disney Retirement Savings Plan (the Plan). Legislation introduced in April 2015 has increased the flexibility and choice around how you can take your savings at retirement. You can now take up to 25% of your savings as tax-free cash, and use the remainder to choose one (or a mix) of the options opposite: 2

3 The changes in summary continued What the changes are We want to make sure the Plan offers investment options that reflect the choices you have available at retirement, which is why we are making some changes to your investment options. As well as changing the Plan s lifecycle options, some changes are also being made to some of the funds used as part of the Plan s self-select options. To reflect these three retirement options, we have made some changes to the lifecycle strategies: Please read this information carefully Consider whether you would like to make your own choice from the new range of options. If you don t make an active choice, your investment strategy will automatically change at the end of June. 3

4 Your retirement options From age 55, you can access your retirement savings in one or a mix of these options: A Annuity B Bit by bit (known as drawdown) C Cash If you choose to purchase a traditional annuity, you ll receive a guaranteed income for life. Some annuities cost more than others, for example depending on if you want your income to increase with inflation or not, or if you want to provide for your partner/spouse on your death. Make sure you work out what annuity suits you and shop around for the best deal. We have a process in place that can help you with this, please contact the Plan administrator for further details. This option lets you take your money as and when you need it. You can draw down any amount, either as a one-off lump sum, or a series of lump sums while the rest of your money stays invested in your pension account. The Walt Disney Retirement Savings Plan doesn t offer this option, so you ll need to transfer your savings to a provider that offers a drawdown facility if you choose this option. Check the tax position before you decide. You could take all of your pension account in a single-lump sum. Typically 25% of this would be tax free and the rest will be taxed as income. You need to check on the tax payable, as taking it all at once may push you into a higher tax bracket. 25% TAX FREE With all these options, you can take 25% of your pension account as tax-free cash. 4

5 Your decisions Next steps Read the information provided Consider your options Make your choice between 1 to 31 May 2017 Temporary suspension of all Plan activity * from 1 June 2017 to 3 July 2017 The investment changes will be completed by 3 July 2017 Opportunity to make investment changes re-opens on 3 July 2017 * Including investment switching, transfers in/out, retirements or any other transactions. In addition investment switching within the existing funds will be unavailable from 18 May

6 Your decisions If you would like to make your own choice Having considered the new range of options and lifecycle strategies, you may decide that the automatic change of funds does not suit your objectives. In this instance, you could consider one of the other lifecycle options, or choose from the self-select options. From Monday 1 May 2017 to Wednesday 31 May 2017 you will be able to make an alternative choice on the Plan website. It is possible to make changes to your investment option after the investment changes have been completed on 3 July 2017, but you should bear in mind that you are liable for any costs incurred when switching funds. These costs would be duplicated if you do not make an active choice before 31 May but decide to switch funds once the investment changes have been completed. If you decide that you would prefer not to use one of the lifecycle options, and choose to select your own investment choices known as self-select then you will need to carefully consider how to invest your account throughout your working life, particularly in the period approaching retirement. You can split your contributions between funds or you can choose just one it s up to you. 6

7 Your lifecycle investment options Changes to the lifecycles The current lifecycle options follow a strategy based on how far you are from your retirement age. They are designed to invest in funds that target growth whilst you are a long way from retirement, and gradually move your fund allocation to funds that are generally more appropriate as you approach retirement. The Trustees have undertaken a review of the current lifecycle strategies. Presently, these are designed for members who are looking to purchase an annuity at retirement. However as you can now also take cash or drawdown your cash bit by bit, your investment options need to reflect this. The main difference is how they invest as you get closer to retirement. The lower risk lifecycle An annuity focused option that aims to provide investment returns that are a better match to changes in the cost of buying an annuity. The medium risk lifecycle A drawdown focused option that continues to keep a mix of investments and still target some growth above inflation. This is because most drawdown plans still look for investment returns on your savings as you draw them over time. The higher risk lifecycle The higher risk lifecycle is also drawdown focused (like the medium risk lifecycle) but is higher risk as it invests in the Active Global Equity Fund and aims for higher returns up to retirement. 7

8 Your lifecycle investment options Lifecycles What has changed & why The lower risk lifecycle 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Money Market Pre Retirement (level) DGF This continues to invest in a Diversified Growth Fund up until 10 years until retirement when it gradually de-risks into the Pre-Retirement Level Pension Fund and the Money Market Fund. There have been some changes to the underlying funds, as shown in the table on page 9. This makes it more appropriate if you think you ll take an annuity at retirement. The medium risk lifecycle 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Money Market DGF Global Equity Tracker You will no longer invest in any pre-retirement funds, but instead: Invest into the Global Equity Tracker Fund until you are 10 years from your retirement age. Then, gradually de-risk into the Diversified Growth Fund and the Money Market Fund. There have been some changes to the underlying funds, as shown in the table on page 9. Take your savings/or access your savings bit by bit (drawdown). The higher risk lifecycle 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Money Market DGF Active Global Equity This continues to invest in an Active Global Equity Fund until 7 years before retirement. At this time, 35% of your assets remain in the Active Global Equity Fund while the remainder is gradually moved into the Diversified Growth Fund (instead of the Pre-Retirement Fund) and the Money Market Fund. The underlying funds for the Active Global Equity Fund have changed see page 9. This makes it more appropriate if you think you ll take drawdown at retirement and you re prepared to take a higher amount of risk with your investments. 8

9 Your lifecycle investment options The underlying funds These are the mix of funds that make up the overall lifecycles: Funds Current lifecycles Underlying funds New lifecycles Underlying funds What s changed Active Global Equity Fund 60% MFS Global Equity 30% M&G Recovery 10% MSIM Emerging Markets 60% Ardevora Global Long Only 15% M&G Recovery 15% Lindsell Train UK Equity Fund 10% MSIM Emerging Markets MFS replaced by Ardevora 50% of M&G Recovery Fund allocated to Lindsell Train UK Equity Fund Global Equity Tracker Fund 30% BlackRock UK Equity Index Tracker 10% BlackRock Emerging Markets Equity Index 30% BlackRock UK Equity Tracker Index 10% BlackRock Emerging Markets Equity Index No change 20% BlackRock World ex-uk Index 20% BlackRock World ex-uk Index 40% BlackRock ex-uk Equity Hedged 40% BlackRock ex-uk Equity Hedged Diversified Growth Fund 75% Schroders Diversified Growth Fund 25% LGIM Diversified Fund 50% Schroders Diversified Growth Fund 50% LGIM Diversified Fund Allocation to LGIM Diversified Fund increased to 50% Pre-Retirement (Level) Fund LGIM Pre-Retirement LGIM Pre-Retirement No change Money Market Fund BlackRock Money Market BlackRock Money Market No change Further fund information and how the funds are performing are available on the Disney website. 9

10 Your lifecycle investment options You have the option of making your own investment choice. To do this you should take the following steps: 1 Review 2 Read 3 Make your current choices by logging onto the Plan s website or by contacting the UK Add It Up! Team. about the new choices. your choice on the Plan s website between 1 and 31 May 2017 by downloading a copy of the investment switch form and returning your completed form to Capita either by post or . If you don t make your own choice As you are invested in the current default lifecycle strategy, at the end of June, we will move you into the New Default or the Lower Risk Lifecycle depending on how far away from your retirement age you are. This is to reflect your current investment option, and years from retirement. Do you have more or less than 15 years until your Retirement Age? More than 15 years Less than 15 years Don t know You will be moved to the new default lifecycle Your fund will continue to grow in the Global Equity Tracker Fund up until 10 years from your retirement age. Over the course of the 10 years before retirement your fund will gradually switch into the Diversified Growth Fund and the Money Market Fund. See page 8 You will be moved to the new lower risk lifecycle In the last 5 years leading up to your retirement age, a proportion of your assets will gradually switch to the Money Market Fund. At retirement, your fund will be invested in the Diversified Growth Fund, the Pre-Retirement Fund and the Money Market Fund. See page 8 You can find out your Retirement Age on Going forward, you will no longer be able to differentiate between how your main (Company and member) contributions and AVCs or any transfers-in are invested. If they are currently invested differently, your AVCs and any transfers-in will be invested in line with your main contributions. 10

11 Your self-select options If you would like to make your own investment choice, you have the option of choosing to invest in any one, or a mix of the following investment funds: Fund Current underlying fund(s) New underlying fund(s) What s changed Total fund charge % p.a. Equities active Active UK Equity Fund M&G Recovery Fund 50% M&G Recovery Fund 50% Lindsell Train UK Equity Fund 50% of M&G Recovery Fund allocated to Lindsell Train UK Equity Fund 0.87 Active International Equity Fund MFS Global Equity Fund Ardevora Global Long Only MFS replaced by Ardevora 0.71 Active Global Equity Fund 60% MFS Global Equity 30% M&G Recovery 10% MSIM Emerging Markets 60% Ardevora Global Long Only 15% M&G Recovery 15% Lindsell Train UK Equity Fund MFS replaced by Ardevora 50% of M&G Recovery Fund allocated to Lindsell Train UK Equity Fund % MSIM Emerging Markets Active Emerging Markets Equity Fund MSIM: Emerging Markets Equity Fund MSIM: Emerging Markets Equity Fund No change

12 Your self-select options Fund Current underlying fund(s) New underlying fund(s) What s changed Total fund charge % p.a. Equities passive UK Equity Index Tracker Fund BlackRock UK Equity Index Fund BlackRock UK Equity Index Fund No change 0.13 Overseas Equity Index Tracker Fund BlackRock World ex-uk Equity Index Fund BlackRock World ex-uk Equity Index Fund No change 0.15 Global Equity Index Tracker Fund 30% BlackRock UK Equity Index Tracker 30% BlackRock UK Equity Tracker Index No change % BlackRock Emerging Markets Equity Index 10% BlackRock Emerging Markets Equity Index 20% BlackRock World ex-uk Index 20% BlackRock World ex-uk Index 40% BlackRock ex-uk Equity Hedged 40% BlackRock ex-uk Equity Hedged 12

13 Your self-select options Fund Current underlying fund(s) New underlying fund(s) What s changed Total fund charge % p.a. Other funds Active Property Fund M&G Property Fund M&G Property Fund No change 0.76 Pre-Retirement Fund (Inflation-linked pension) LGIM Pre-Retirement Fund (Inflation-linked pension) LGIM Pre-Retirement Fund (Inflation-linked pension) No change 0.18 Pre-Retirement (Level) LGIM Pre-Retirement (Level pension) LGIM Pre-Retirement (Level pension) No change 0.18 Money Market BlackRock Money Market BlackRock Money Market No change 0.18 Diversified Growth Fund 75% Schroders Diversified Growth Fund 25% LGIM Diversified Fund 50% Schroders Diversified Growth Fund 50% LGIM Diversified Fund Allocation to LGIM Diversified Fund increased to 50% 0.54 If you are currently invested in the self-select options, the above changes will automatically take place. 13

14 Finding out more Go to the Plan website, there you can: Find more general information on the Plan Use the pension planner Look at your pension record Learn more about your investment options While we have tried to make it as easy as possible for you, we understand making financial decisions can sometimes be a bit daunting. If you are not sure about the best option for you, you can speak to a financial adviser click here for more information. 14

15 Contact details Any questions? If you would like more information about your pension account, or need to update your details, please contact the Plan administrator, Capita: Helpline: Website: Address: Capita, Radio House, Thanet Way, Whitstable, CT5 3QP Feedback If you have a query which Capita is unable to help you with, or you would like to give us feedback, please contact: Ray O Sullivan Human Resources Department ray.osullivan@disney.com 15