What are our lifestyle options and how do they work? A lifestyle option is an investment option that is basically made up of two phases. The first (or growth ) phase aims to grow members pension savings by more than inflation to provide a real return. The second (or defensive ) phase uses funds to prepare those pension savings for retirement. Those funds depend on the sort of benefit the member plans to take. The move from growth to defensive begins as the member gets closer to their Selected Retirement Date (SRD). Prudential offers three categories of these options. Our Lifetime Investment Profiles help savers take advantage of the benefits brought by pension freedoms. See pages 2-3. Our Lifetime Investment Options and Pension Protector Option target the purchase of an annuity with 25% tax-free cash while offering a number of risk profiles. See pages 3-4. This example graph demonstrates how a typical lifestyle option works Lifestyle Investment starts Automatic switching starts Take your benefits Fund B Growth Defensive Fund A Years A lifestyle option can be selected when the plan is first taken out, or at any time during its term, and can apply to both regular and single contributions. You can cancel or switch out immediately on request, and can switch back into an option at any time. The funds being used, their risk ratings and the point where your fund value will start automatic switching, will be dependent on the lifestyle option you choose. Details are shown in the tables overleaf. You can only choose one lifestyle option but you can also choose to invest part of your pension fund in the Prudential With-Profits Fund. The switches between the funds are automatically done and are normally free of charge. However, there may be a cost to you if the switch is from a fund where the, generally lower, selling price applies that day to a fund where the, generally higher, buying price applies on the day the switch is completed. Prudential reserve the right to change the terms of lifestyle options. continued overleaf
The value of your investment can go down as well as up so you might get back less than you put in. If you require information on charges, please refer to your fund guide. If you do not wish to invest in a lifestyle option, the full range of funds available is also shown in your fund guide. For further details of the advantages and disadvantages of lifestyling please visit pru.co.uk/lifestyling Lifestyle Investment Profiles There are four Lifetime Investment Profiles to choose from, which help you to take advantage of the wider choice of options bought about by Pension Freedoms. The default growth phase fund for them is the Prudential Managed Fund. You can also select your own choice of funds for this phase, subject to our approval that they are appropriate. Lifetime Investment Profile targeting retirement options # # Where no investment choice is made for a Premier Stakeholder Pension Plan, the contribution will be invested in the default fund the Lifetime Investment Profile targeting retirement options. Lifetime Investment Profile targeting an annuity* Lifetime Investment Profile targeting 100% cash* Defensive 10-5 5-0 growth phase fund(s) with the Prudential Managed and Fixed Interest funds Ongoing switches so that at SRD investments are split 30% Prudential Managed, 45% Prudential Fixed Interest and 25% Prudential Cash funds Defensive 10-5 5-0 growth phase fund(s) and the Prudential Fixed Interest Fund Ongoing switches so that at SRD investments are split 75% Prudential Fixed Interest and 25% Prudential Cash funds Defensive 10-4 4-0 growth phase fund(s) with the Prudential Managed and Fixed Interest funds Ongoing switches so that at SRD investments are 100% Prudential Cash Fund
Lifetime Investment Profile targeting drawdown* Defensive 10-0 0 growth phase fund(s) with the Prudential Managed and Fixed Interest funds Investments are 40% Prudential Managed and 60% Prudential Fixed Interest funds Lifestyle Investment Options There are three Lifetime Investment Options available to choose from, the difference between them is the risk rating and potential for growth. You can either select which funds you want to include in the growth phase, or select the default funds specified in the tables below. The Lifetime Investment Options are all designed for members intending to take their benefits as 25% tax free cash and an annuity. Lifetime Investment Option Cautious Strategy* Lifetime Investment Option Balanced Strategy # Growth 10+ Chosen managers(s)/fund(s) Prudential Managed Fund Defensive 10-5 Monthly phased switch to the Prudential Fixed Interest Fund 5-0 Growth 10+ Chosen managers(s)/fund(s) Prudential Equity Fund Defensive 10-5 Monthly phased switch to the appropriate Managed Fund 5-3 Monthly phased switch to the Prudential 95% Safeguard Fund 3-0 # This lifestyle option is not available to new customers or to new investment from existing customers.
Lifetime Investment Option Opportunity Strategy* Growth 8+ Chosen managers(s)/fund(s) Prudential Equity Fund Defensive 8-3 Monthly phased switch to the appropriate Managed Fund 3-1 Investment in the Prudential Managed Fund 1-0 Pension Protector Option The Pension Protector Option requires you to select the funds you want to include in the growth phase. It s designed for members intending to take their benefits as 25% tax free cash and an annuity. Pension Protector Option* Growth 5+ Chosen managers(s)/fund(s) Chosen manager(s)/funds(s) Defensive 5-0 For further details please contact your financial adviser who will help you choose the strategy that is the most appropriate for you. continued overleaf
Fund Risk Ratings This table highlights what risk level is associated with investing in the default funds that make up each of the lifestyle options. For details of the ratings for other funds please see your fund guide. These risk ratings have been developed by Prudential to help provide an indication of a fund s potential level of risk and reward based on the type of assets which may be held within the fund. Prudential will keep the risk ratings under regular review and as such they may be subject to change in the future. We therefore recommend that before making any decisions about fund choice you understand the appropriate risk rating. Other companies may use different descriptions and as such these risk ratings should not be considered as generic across the fund management industry. The value of your investment can go down as well as up so you might get back less than you put in. Growth from your investment can t usually be achieved without exposure to some risk. Being too cautious can also put your investment at risk, for example it may not grow quickly enough to keep up with inflation. Inflation will reduce what you can buy in the future. Potential Reward and Risk Indicator 6 Higher Risk Higher Fund Prudential Equity Fund Higher 5 Medium to Higher Risk 4 Medium Risk 3 Lower to Medium Risk Potential Rewards Prudential Managed Fund Prudential Fixed Interest Fund Risks 2 Lower Risk Prudential 95% Safeguard Fund 1 Minimal Risk Lower Prudential Cash Fund Lower Our lifestyle options, from time-to-time, may not match to our risk ratings, in terms of the movement from higher to lower risk, as our risk ratings may change. Prudential reserves the right to change the terms of any type of lifestyle option, subject to certain restrictions in respect of existing investments in the option. When moving from one lifestyle option to another, 100% of the savings invested there will also be automatically moved. Completion of an additional form will be required to authorise a switch from the With-Profits Fund to a lifestyle option. Prudential reserves the right to withdraw or change the funds available at any time, subject to certain restrictions. New funds may also be made available.
www.pru.co.uk The Prudential Assurance Company Limited (PACL) is registered in England and Wales. This name is also used by other companies within the Prudential Group. Registered Office at Laurence Pountney Hill, London, EC4R 0HH. Registered number 15454. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. P480 02/2018