IHG UK Defined Contribution Pension Plan

Transcription

1 IHG UK Defined Contribution Pension Plan Your Fund Options This document describes the three LifeStyle strategies currently offered in the IHG UK Defined Contribution Pension Plan ( the Plan ). It also describes the full fund range offered, including the risk rating and profile as assigned by the Investment Fund Manager. The information should be read after you have understood the investment approaches available to you and these are explained within the main Plan booklet. The fund range is provided via BlackRock Life Limited who have been selected by the Trustee to offer a diverse range of funds to suit members needs. All of the funds are available for you to choose under the FreeStyle investment approach, whereas if you select one of the LifeStyle investment approaches your funds will be invested in line with the description on the next page. The LifeStyle funds are clearly highlighted for you in the following pages. This guide shows the Total Expense Ratio (TER) for each fund. The TER is made up of an Annual Management Charge (AMC) and additional expenses. The additional expenses can fluctuate and are shown in this guide as at 30 June The Trustee pays the AMC for members employed by the Company. The AMC is however payable by members who have left the employment of the Company, or opted out of the Plan. The additional expenses (if any) are payable by all members. AMCs and additional expenses are reflected in the daily price of the units you hold so you will not see any unit deductions from your account. The charges you pay may change in the future and in this event, the Trustee will let you know of any changes in advance of them being implemented. You should always ensure that you have read and understood the terms of any fund in which you choose to invest. The terms may include information that will be important to you in deciding which funds to invest in. A full description of each fund and details of the past performance is available from BlackRock by: calling the Helpline on Available between 9am and 5pm, Monday to Friday logging in to your pension online via the BlackRock TargetPlan website Available through the pensions area of the InterContinental Hotels Group corporate website at Ceri IHG

2 LifeStyle Investment Strategies The LifeStyle option aims to balance the different investment risks by automatically changing where funds are invested over the period to retirement. Initially the LifeStyle options will invest in equities to take advantage of high growth potential. As you approach retirement, your investments are gradually switched into less volatile investments to try and protect the value of your account before it is used to provide your retirement benefits. LifeStyle strategies are designed to target the type of benefit to be taken at retirement and the age at which you want to take that benefit. This may mean it is not suitable for all members and this type of strategy will not necessarily generate higher returns than other investment strategies. How Plan accounts may currently be used to provide benefits at retirement: Flexible Access Drawdown You may choose to invest some or all of the savings in your account at retirement and, after having taken any available tax free cash lump sum, withdraw taxable payments over time (known as Drawdown ). This option is currently only available by transferring your account out of the Plan to an external product. Annuity You may use some or all of your account at retirement, after having taken any available tax free cash lump sum, to secure a lifetime income from an insurance company (known as an Annuity ). This would involve transferring your account, after taking any tax free cash, to an insurance company. Cash You may use some or all of the savings in your Plan account at retirement to provide one or more cash payments, part of which would currently be tax free and the rest taxable. The Plan offers three LifeStyle options for members who may wish to target one of the above options at retirement. The graphs on the following page show how these LifeStyle options will be invested. If you want to change how you intend to take your benefits at retirement, you can consider changing which LifeStyle strategy you are invested in. Unless you choose otherwise, your account will be invested by default in the Drawdown LifeStyle option. You can amend your investment choices at any time by accessing the BlackRock TargetPlan website. Target Retirement Age As LifeStyle options are set up to automatically switch your investments as you approach your Target Retirement Age. Your Target Retirement Age will automatically default to the Normal Retirement Age described in the Plan Handbook. If you intend to retire at a different date, or if you would like the switch to more cautious investments to occur earlier or later than it otherwise would, then you can change your Target Retirement Age via your access to the BlackRock TargetPlan website. 2 Room to be yourself

3 The following graphs illustrate how LifeStyle strategies work by switching your funds between asset classes as you approach retirement (Year 0 is your Target Retirement Age) Drawdown LifeStyle 100% Proportion of fund (%) 80% 60% 40% 20% 0% Time to retirement Annuity LifeStyle 100% 80% Proportion of fund (%) 60% 40% 20% 0% Time to retirement Cash LifeStyle 100% Proportion of fund (%) 80% 60% 40% 20% 0% Time to retirement Long Term Growth Diversified Assets Pre Retirement Cash The investment funds which are included in the LifeStyle strategies are described in the following pages. The only exception to this is the Long Term Growth fund which is made up of a combination of three investment funds (all described individually in this booklet) as follows: 60% BlackRock DC Aquila World (Ex-UK) 30% BlackRock DC Aquila UK 10% BlackRock DC Aquila Emerging Markets 3

4 Below is a summary of the available funds in low to high risk order. More detailed information for each fund is shown on pages 5 to 9. Fund Name Asset Investment Risk TER*** AMC** Type Style* Rating at 30 June 2015 BlackRock DC Gilts and Active 0.3% 0.31% Sterling Bond Corporate Bonds BlackRock DC Index-Linked 0.15% 0.16% Index-Linked Gilt Gilts BlackRock DC Gilts 0.15% 0.15% Long Gilt BlackRock DC Cash Cash Active 0.15% 0.18% LGIM Pre Retirement Gilts and 0.3% 0.3% Fund Corporate Bonds Diversified Assets Multi Active Medium 0.60% 0.62% Fund Assets to BlackRock DC Property Active Medium 0.95% 0.98% Property BlackRock DC Aquila UK Medium 0.25% 0.26% UK Index to HSBC Amanah Specialist Medium 0.65% 0.65% Pension Fund to BlackRock DC Aquila Overseas 0.25% 0.27% European Index BlackRock DC Aquila Overseas 0.25% 0.27% Japanese Index BlackRock DC Aquila Overseas 0.25% 0.27% Pacific Rim Index BlackRock DC Aquila Overseas 0.25% 0.26% US Index BlackRock DC Aquila Overseas 0.25% 0.27% World (Ex-UK) Index BlackRock DC Aquila Overseas Very 0.40% 0.47% Emerging Markets * The two styles of fund management are passive and active, and these are described on page 14 of the main booklet. ** Annual Management Charge - where applicable, this is deducted directly from the fund to cover the provider s investment management services *** Total Expense Ratio - this is the estimated total combined cost of the fund and is made up of the AMC plus other annual operating expenses such as fund administration services, custodian, accounting and legal fees. 4 Room to be yourself

5 BlackRock DC Sterling Bond Fund Gilts and corporate bonds Active AMC: (TER:) 0.3% (0.31% as at 30 June 2015) Invests mainly in UK government and corporate bonds and may also invest in other fixed interest securities and currencies hedged into Sterling. The fund aims to produce a return in excess of its FTA All Stocks Gilts Index Corporate bonds and gilts are usually less volatile than equities but have historically produced lower returns over the long-term. You should be aware that their prices will vary and can fluctuate both up and down. This fund can be used to help protect against rises in the price of purchasing annuities and could therefore be suitable for members nearing retirement and/or for members with a low appetite for risk. BlackRock DC Index-Linked Gilt Fund Index-Linked Gilts AMC: (TER:) 0.15% (0.16% as at 30 June 2015) Invests mainly in Index-Linked UK government bonds and aims to produce a return in line with its Financial Times Actuaries Over 5 Year Index-Linked Index The volatility (a measure of the amount of fluctuation in an asset s price) of index-linked gilts is usually less than that of equities, although historically they have produced lower returns over the long-term. You should be aware that their prices will vary and can fluctuate both up and down. This fund can be used to help protect against rises in the price of purchasing annuities and could therefore be suitable for members nearing retirement and/or for members with a low appetite for risk. BlackRock DC Long Gilt Fund Gilts AMC: (TER:) 0.15% (0.15% as at 30 June 2015) Invests mainly in long-dated UK government bonds and aims to produce a return in line with its Financial Times Actuaries Over 15 Year Gilts Index The volatility (a measure of the amount of fluctuation in an asset s price) of gilts is usually less than that of equities, although historically they have produced lower returns over the long-term. You should be aware that their prices will vary and can fluctuate both up and down. This fund can be used to help protect against rises in the price of purchasing annuities and could therefore be suitable for members nearing retirement and/or for members with a low appetite for risk. 5

6 BlackRock DC Cash Fund Lifestyle Cash Active AMC: (TER:) 0.15% (0.18% as at 30 June 2015) Invests with building societies, banks and other leading institutions and aims to produce a return in line with its 7 Day London Inter-Bank Bid Rate (the rate at which major London banks offer to take funds on deposit from other banks). This fund aims to protect the value of your investment. However, there is still some risk to the capital and the return achieved on cash investments may not be as high as other types of investment and may not keep pace with inflation over the long-term. This fund is generally suitable for members who are nearing retirement and want to protect the part of their account that can be taken as tax-free cash at retirement. LGIM Pre Retirement Fund Lifestyle Gilts and Corporate Bonds AMC: (TER:) 0.3% (0.3% as at 30 June 2015) Invests in UK government and corporate bonds. The mix of assets is adjusted over time to reflect the investments underlying a typical non-inflation linked pension product. The fund aims to track the return of its A mix of UK government and corporate bonds benchmarks, adjusted to reflect the underlying investments in a typical non-inflation linked pension product. Corporate bonds and gilts are usually less volatile than equities but have historically produced lower returns over the long-term. You should be aware that their prices will vary and can fluctuate both up and down. This fund can be used to help protect against rises in the price of purchasing annuities and could therefore be suitable for members nearing retirement who intend to purchase an annuity and/or for members with a low appetite for risk. Diversified Assets Fund Lifestyle AMC: (TER:) Multi asset Medium to (but Medium for shorter terms) Active 0.60% (0.62% estimated) The fund uses a flexible investment approach with the aim of achieving a target investment return of 3.5% above the Bank of England Base Rate, over a three year rolling period. The fund will typically hold a mix of assets at any one time. Aims to achieve 3.5% above Bank of England Base Rate. This fund invests in a variety of assets with the aim of achieving above inflation returns, with minimal risk. However, because of the mix of assets held there will be some exposure to equities and the value of these can fluctuate significantly both up and down. This fund may be suitable if you have a medium term to retirement (5 to 15 years) or if you have a medium to low appetite for risk. 6 Room to be yourself

7 BlackRock DC Property Fund Property Medium Active AMC: (TER:) 0.95% (0.98% as at 30 June 2015) The Fund has a diversified exposure to a range of UK commercial property assets such as offices, shopping centres, retail warehouse parks and industrial estates. The fund gains its exposure to these assets by investing in a number of underlying pooled property funds. HSBC/AREF Pooled Property All Balanced Funds Index This fund aims to provide the high-performance potential of property investment, while spreading the risk of any one property adversely affecting the overall return. However, you should be aware that property returns can fluctuate both up and down and that the costs associated with maintaining and running property investment can be high. BlackRock DC Aquila UK Index Fund Lifestyle (30% of Long Term Growth) UK equities Medium to AMC: (TER:) 0.25% (0.26% as at 30 June 2015) Invests mainly in equities within the FTSE All Share Index and aims to track the return of its FTSE All Share Index This fund aims to provide the high-performance potential of equities while spreading the risk of any one share adversely affecting the overall investment. However, you should be aware that equity returns can fluctuate significantly both up and down and that the fund is largely tied to the fortunes of the UK stock market. HSBC Amanah Pension Fund Medium to AMC: (TER:) 0.65% (0.65% as at 30 June 2015) Invests in company shares from around the world and is compliant with Islamic Shariah principles. Dow Jones Islamic Titan Index This fund aims to provide the high-performance potential of equities. However, you should be aware that equity returns can fluctuate significantly both up and down. As assets in this fund are not denominated in Sterling, the value of the fund may be affected by changes in exchange rates. This fund is suitable for those members who wish to hold Shariah compliant investments. 7

8 BlackRock DC Aquila European Index Fund AMC: (TER:) 0.25% (0.27% as at 30 June 2015) Invests mainly in equities within the FTSE World Europe (ex-uk) Index and aims to track the return of its FTSE World Europe (ex-uk) Index This fund aims to provide the high-performance potential of equities while spreading the risk of any one share adversely affecting the overall investment. However, you should be aware that equity returns can fluctuate significantly both up and down and that the fund is largely tied to the fortunes of the European (excluding UK) economy. As the assets in this fund are not denominated in Sterling, the value of the fund may be affected by changes in exchange rates. BlackRock DC Aquila Japanese Index Fund AMC: (TER:) 0.25% (0.27% as at 30 June 2015) Invests mainly in equities within the FTSE World Japan Index and aims to track the return of its FTSE World Japan Index This fund aims to provide the high-performance potential of equities while spreading the risk of any one share adversely affecting the overall investment. However, you should be aware that equity returns can fluctuate significantly both up and down and that the fund is largely tied to the fortunes of the Japanese economy. As the assets in this fund are not denominated in Sterling, the value of the fund may be affected by changes in exchange rates. BlackRock DC Aquila Pacific Rim Index Fund AMC: (TER:) 0.25% (0.27% as at 30 June 2015) Invests mainly in equities within the FTSE World Asia Pacific (ex-japan) Index and aims to track the return of its FTSE World Asia Pacific (ex-japan) Index This fund aims to provide the high-performance potential of equities while spreading the risk of any one share adversely affecting the overall investment. However, you should be aware that equity returns can fluctuate significantly both up and down and that the fund is largely tied to the fortunes of the Asia Pacific (excluding Japan) economy. As the assets in this fund are not denominated in Sterling, the value of the fund may be affected by changes in exchange rates. 8 Room to be yourself

9 BlackRock DC Aquila US Index Fund AMC: (TER:) 0.25% (0.26% as at 30 June 2015) Invests mainly in equities within the FTSE World USA Index and aims to track the return of its FTSE World USA Index This fund aims to provide the high-performance potential of equities while spreading the risk of any one share adversely affecting the overall investment. However, you should be aware that equity returns can fluctuate significantly both up and down and that the fund is largely tied to the fortunes of the North American economy. As the assets in this fund are not denominated in Sterling, the value of the fund may be affected by changes in exchange rates. BlackRock DC Aquila World (ex-uk) Index Fund Lifestyle (60% of Long Term Growth) AMC: (TER:) 0.25% (0.27% as at 30 June 2015) Invests in overseas equities, using a global sector based approach identifying preferred companies in each sector. The fund aims to produce a return in line with its FTSE World (ex-uk) Index This fund aims to provide the high performance potential of equities. By investing in world stock markets (excluding UK), the fund reduces the risk of any one country adversely affecting overall investment performance. However, you should be aware that equity returns can fluctuate significantly both up and down. As the assets in this fund are not denominated in Sterling, the value of the fund may be affected by changes in exchange rates. DC Aquila Emerging Markets Fund Lifestyle (10% of Long Term Growth) Very AMC: (TER:) 0.40% (0.47% as at 30 June 2015) Invests in emerging markets equities with the aim of achieving a return that is consistent with the return of its MSCI Global Emerging Markets Index. This fund aims to provide the high performance potential of equities. However, you should be aware that equity returns can fluctuate significantly both up and down and that the fund is largely tied to the fortunes of developing economies. As the assets in this fund are not denominated in Sterling, the value of the fund may be affected by changes in exchange rates. 9