Guidance on your fund choices

Transcription

1 April 2018 Guidance on your fund choices The University Of Warwick Pension Scheme DC Section Start

2 Introduction Your investment choices What is a Lifestyle Strategy The Zurich Passive: Interim Lifestyle (the default) The other lifestyle strategies Lifestyle strategy and your selected retirement age The full range of funds The types of investment The risks of investing Other investment information How to find out more Data protection 2

3 Introduction This guide provides information on the fund choices Zurich has made available to you following consultation with the trustees of the The University of Warwick Pension Scheme DC Section (the trustees) and their specialist advisers. Once you are a member of the plan, you can log in and see how and where your payments are invested at any time. You may or may not be comfortable with making or reviewing your own investment decisions on a day to day basis. There are different options available depending on how much involvement you want and they are described in the following sections. The triangle opposite reflects the different levels of day to day involvement, less at the top through to more hands-on at the bottom. If you re not comfortable with making investment decisions you should seek help from a financial adviser. You may be charged for any financial advice you receive. Your investment choices Your payments will automatically be invested in the Zurich Passive: Interim Lifestyle. For more information about the Zurich Passive: Interim Lifestyle, please see the Lifestyle section. Once you are a member you can choose from the following investment options: one of the other lifestyle strategies, or The full range of funds. If you do not make an investment choice, Zurich will automatically invest your payments in the Zurich Passive: Interim Lifestyle. You can also choose a combination of the above options. Depending on the investments you choose, the levels of risk and potential investment performance differ. The value is not guaranteed and can go down, which will affect the retirement income you get in the future. The default lifestyle strategy The other lifestyle The full range of funds 3

4 Lifestyle A lifestyle strategy means your money is automatically moved into less volatile funds as you approach your selected retirement age. This can be useful to help defend against unexpected falls in fund prices as you reach retirement, but could also mean you miss out on future investment growth as you approach retirement. While this could be a good way to invest for many people, you need to bear in mind that it may not be right for you as it does not take your individual circumstances into account. You should think carefully about how closely a lifestyle strategy meets your investment needs. There is no guarantee this strategy will prove beneficial to your plan and the retirement income you get in the future. You can move your money in or out of a lifestyle strategy at any time. There are currently no fees or penalties for doing this. You can invest in more than one lifestyle strategy at the same time. The Zurich Passive: Interim Lifestyle The Zurich Passive: Interim Lifestyle contains the following funds: The Zurich Passive: Interim Lifestyle Zurich Passive Multi-Asset V CS1 Zurich Passive Multi-Asset IV CS1 Zurich Passive Multi-Asset III CS1 Zurich Passive Multi-Asset II CS1 Zurich Passive Annuity Purchase CS1 Zurich Money Market CS1 4

5 The table shows the asset class, objective and charge for the funds that make up the Zurich Passive: Interim Lifestyle Strategy. Fund name Asset class Objectives Total charge* Zurich Passive Multi-Asset V CS1 Managed The fund aims to achieve capital growth over the long term. The fund sits in a range of 5 funds labelled I,II,III,IV,V. The lowest risk, lowest expected return profile of the five funds in the suite is I and the highest risk, highest expected return profile is V % Zurich Passive Multi-Asset IV CS1 Managed The fund aims to achieve capital growth over the long term. The fund sits in a range of 5 funds labelled I,II,III,IV,V. The lowest risk, lowest expected return profile of the five funds in the suite is I and the highest risk, highest expected return profile is V % Zurich Passive Multi-Asset III CS1 Managed The fund aims to achieve capital growth over the long term. The fund sits in a range of 5 funds labelled I,II,III,IV,V. The lowest risk, lowest expected return profile of the five funds in the suite is I and the highest risk, highest expected return profile is V % Zurich Passive Multi-Asset II CS1 Managed The fund aims to achieve capital growth over the long term. The fund sits in a range of 5 funds labelled I,II,III,IV,V. The lowest risk, lowest expected return profile of the five funds in the suite is I and the highest risk, highest expected return profile is V % Zurich Passive Annuity Purchase Fund CS1 Bonds The fund aims to reflect to some degree the changes in the cost of purchasing a level annuity % Zurich Money Market CS1 Money Market** The fund aims to provide stability of capital and a modest level of return through investment in bank deposits such as time deposits and certificates of deposit and government debt instruments such as gilts and treasury bills, with less than 12 months to maturity % * For more details on the fund charges, please refer to the Other investment information section. ** In some circumstances, where the interest rates are low, the returns on money market funds may be less than the charges, which will reduce the value of the fund and the income you receive in the future. 5

6 The graph shows how the plan value and any regular payments are invested up to your selected retirement age. Your money will gradually and automatically move into funds that are less volatile from 6 years before retirement. The Zurich Passive: Interim Lifestyle Fund holding % 90% 80% 70% 60% 50% 40% 30% 7.6% 6.7% 85.7% 15.3% 13.3% 71.4% 22.9% 20% 30.5% 26.7% 8% 33.9% 29.6% 16% 37.2% 25% 40% Zurich Passive Multi-Asset V CS1 Zurich Passive Multi-Asset IV CS1 Zurich Passive Multi-Asset III CS1 Zurich Passive Multi-Asset II CS1 Zurich Passive Annuity Purchase CS1 20% 10% 0% 57.1% 42.8% 28.5% 32.6% 35% Zurich Money Market Fund CS Less than Years to selected retirement age 1 Objective This option is managed by Zurich to provide a passively managed investment solution that combines the potential for growth with the aim to protect potential income as selected retirement age approaches. It is suitable if you have not, or can not, decide how to take your retirement benefits. 6

7 The other lifestyle strategies The other lifestyle strategies you can choose to invest in are the Zurich Passive: Flexible Retirement Lifestyle, the Zurich Passive: Securing Lifelong Income Lifestyle, and the Zurich Passive: Immediate Spend Lifestyle. The Zurich Passive: Flexible Retirement Lifestyle contains the following funds: Zurich Passive Multi-Asset V CS1 Zurich Passive Multi-Asset IV CS1 Zurich Passive Multi-Asset III CS1 Zurich Passive Multi-Asset II CS1 Zurich Money Market CS1 The other lifestyle strategies The following graph shows how the plan value and any regular payments are invested up to your selected retirement age. Your money will gradually and automatically move into funds that are less likely to experience changes in value from 6 years before retirement The Zurich Passive: Flexible Retirement Lifestyle 90% 80% 8% 16% 25% Zurich Passive Multi-Asset V CS1 Fund holding % 70% 60% 50% 40% 30% 63% 69.2% 75% Zurich Passive Multi-Asset IV CS1 Zurich Passive Multi-Asset III CS1 Zurich Passive Multi-Asset II CS1 Zurich Money Market CS1 20% 10% 0% Less than Years to selected retirement age 1 Objective This option is managed by Zurich to provide a passively managed investment solution that combines potential growth with the flexibility to decide when and how retirement benefits will be taken. 7

8 The Zurich Passive: Immediate Spend Lifestyle Strategy contains the following funds: Zurich Passive Multi-Asset V CS1 Zurich Passive Multi-Asset IV CS1 Zurich Passive Multi-Asset III CS1 Zurich Passive Multi-Asset I CS1 Zurich Money Market CS1 The following graph shows how the plan value and any regular payments are invested up to your selected retirement age. Your money will gradually and automatically move into funds that are less likely to experience changes in value from 6 years before retirement The Zurich Passive: Immediate Spend Lifestyle 90% 8% 16% 25% 80% Zurich Passive Multi-Asset V CS1 Fund holding % 70% 60% 50% 40% 30% 63% 69.2% 75% Zurich Passive Multi-Asset IV CS1 Zurich Passive Multi-Asset III CS1 Zurich Passive Multi-Asset I CS1 Zurich Money Market CS1 20% 10% 0% Less than Years to selected retirement age 1 Objective This option is managed by Zurich to provide a passively managed investment solution that combines potential growth with a de-risking approach to support cash withdrawals at your selected retirement age. 8

9 The Zurich Passive: Securing Lifelong Income Lifestyle Strategy contains the following funds: Zurich Passive Multi-Asset V Fund Zurich Passive Multi-Asset IV Fund Zurich Passive Multi-Asset III Fund Zurich Passive Annuity Purchase Fund Zurich Money Market Fund The graph shows how the plan value and any regular payments are invested up to your selected retirement age. Your money will gradually and automatically move into funds that are less volatile from 6 years before retirement. The Zurich Passive: Securing Lifelong Income Lifestyle Strategy 90% 80% 8% 16% 25% Zurich Passive Multi-Asset V Fund Fund holding % 70% 60% 50% 40% 30% 63% 69.2% 75% Zurich Passive Multi-Asset IV Fund Zurich Passive Multi-Asset III Fund Zurich Passive Annuity Purchase Fund Zurich Money Market Fund 20% 10% 0% Less than Years to selected retirement age 1 Objective This option is managed by Zurich to provide a passively managed investment solution that combines potential growth with the aim to protect the income purchasing power of an annuity as you approach your selected retirement age. 9

10 Lifestyle strategy and your selected retirement age If you have invested in a lifestyle strategy, it will end when you reach your selected retirement age. If you change your selected retirement age, which you can do online by logging in and selecting My details, this will automatically alter your lifestyle strategy. If you reach your selected retirement age and decide not to take your benefits we will move your selected retirement age to your 75th birthday. Your money will remain invested in the individual funds the money is held in at the time. Please bear in mind these will be low risk funds with lower growth potential and their value may not keep up with inflation. Ensure your selected retirement age is up to date. 10

11 The full range of funds You also have the option to choose from the full range of funds. You can find out about these on the Investment choices page. Please remember, depending on the investments you choose, the levels of risk and potential investment performance differ. The value can go down as it s not guaranteed, which will affect the retirement income you get in the future. The full range of funds 11

12 The types of investment It s important to understand a little more about the types of investment you can make. There are four main types of investment, which are often called asset classes. Each one works in a different way and carries its own particular investment risks. You need to understand how each one works and the risks involved before making any investment decisions. Money market investments: money on deposit (e.g. cash in a bank or building society) and short term loans to raise cash. Gilts and bonds: loans to the UK government or companies. Property: physical buildings, usually commercial properties. Shares: stakes in a company (also called equities). Fund managers buy and sell these assets on your behalf, with the aim of increasing their value over a period of time. The following diagram shows how different assets have higher or lower risks attached to them, and could potentially give you higher or lower returns on your initial investment. While the diagram shows the general long term (over ten years) relative performance of the asset classes, it s important to note the way an asset class has performed in the past isn t necessarily how it will perform in the future. Low Potential returns High Money Market Gilts and Bonds Property Shares The risks of investing The Introduction to investing guide describes the different asset classes such as shares, property and money markets in more detail. It is designed to help you understand the relationship between risk and reward. It s very important to understand the risks associated with investing, and also how you feel about risk before you decide where to invest your payments. Depending on the funds you choose, the levels of risk and potential investment performance differ. There s always the risk that your money could be worth less than when it was originally invested which would result in reduced retirement income in the future. The higher the risk, the more likely it is to fluctuate in value over time. Choosing a lower risk investment usually means that your money is likely to fluctuate by smaller amounts, but you are less likely to see higher growth. The general rule is the greater potential for growth, the more risks you take. A volatile fund tends to see frequent and/or sharp rises and falls in value while a less volatile fund is likely to both rise and fall in value less quickly. If your plan grows less than the rate of inflation, this could reduce the retirement income you get in the future. The actions and decisions of the underlying fund management are the responsibility of the fund managers or fund management companies. However, Zurich does monitor the fund managers offered through its fund governance process. Low Risks of value falling High 12

13 Other investment information Fund charges and expenses are not fixed and can change on a daily basis depending on what the fund has bought or sold on a particular day. We recommend you read the Introduction to investing for more information about the different charges that make up the total charge. There is also a fund fact sheet for each individual fund available on the Investment choices page. The underlying funds the lifestyle strategies invest in may change in the future. The design of the lifestyle strategies may also change. Decisions about future changes to the underlying funds and the lifestyle strategies will be made by Zurich, following consultation with the trustees and their specialist advisers, and in line with Zurich s fund governance process. If these changes don t change the name, investment risk, objective or increase the cost, you won t be told about them. However, the changes will be updated in this guide and in the fund fact sheets. If in the future there are any changes to any of the funds, such as a change in the name, level of investment risk, objective or increase in the cost, you will be told about the changes are as soon as possible. There is also a small risk that a fund manager or company responsible for the funds your payments are invested in become unable to meet their financial obligations. In the unlikely situation this occurs you would not be covered by the Financial Services Compensation Scheme (FSCS). In this event, Zurich Assurance Ltd would make a claim against the fund manager or company in an attempt to recover the money. However, you could still lose all or some of your retirement fund. * Sterling ISA Managers Limited has made a range of pension funds (Zurich pension funds) available for you to invest in through Zurich Assurance Ltd. (Both companies are part of Zurich s UK Life business). For more information please read the Important information about Zurich pension funds attached to the Terms and Conditions which also tells you more about Zurich pension funds and Zurich Assurance Ltd s responsibilities. 13

14 How to find out more If you d like to know more about the fund choices available to you, please contact HR Pensions Administration team. Zurich may record or monitor calls to improve its service. Zurich cannot give you advice but can give you more information to help you. If you re unsure about making an investment decision, you should take financial advice. For details on how to find a financial adviser near you, go to unbiased.co.uk. You will usually have to pay for any financial advice you receive. Data protection The trustees have chosen Zurich Assurance Ltd as its pension scheme provider. This section tells you how Zurich Assurance Ltd (part of the Zurich Insurance Group) will deal with your personal information. Where Zurich introduces you to a company outside the group, that company will tell you how they will use your personal information. Zurich Assurance Ltd will only act after receiving instructions from the trustees to enrol you into or join the plan. We and our selected third parties will only collect and use your personal information (i) where the processing is necessary in connection with providing you with a quotation and/or contract of insurance; (ii) to meet our legal or regulatory obligations; or (iii) for our legitimate interests. It is in our legitimate interests to collect your personal information as it provides us with the information that we need to provide our services to you more effectively including providing you with information about our products and our services. We will always ensure that we keep the amount of information collected and the extent of any processing to the absolute minimum to meet this legitimate interest. Full details of the way we will use your personal information and details about your rights as a data subject can be found in the leaflet Your privacy is important to us. We will contact you to obtain consent prior to processing your personal information for any other purpose. You can find details of our selected third parties with whom we may share your personal information in the leaflet Your privacy is important to us. We may also process your personal information by means of automated decision making and profiling for the purposes of targeted marketing, where appropriate, or where we have consent to do so. You can ask for further information about our use of your personal information or complain about its use, by contacting our Data Protection Officer in the first instance at: Zurich Insurance Group, Tri-centre 1, Newbridge Square, Swindon, SN1 1HN or by ing the Data Protection Officer at gbz.general.data.protection@uk.zurich.com. If you remain concerned about our processing of your personal information, or are not satisfied with our handling of any request by you in relation to your rights, you also have the right to make a complaint to the Information Commissioner s Office. Their address is: First Contact Team, Information Commissioner s Office, Wycliffe House, Water Lane, Wilmslow, SK9 5AF. Full details of how we use your personal information can be found in the leaflet Your privacy is important to us. NP (04/18) RRD