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Once you start making Additional Voluntary Contributions (AVCs) or Pension Extra contributions you can choose how these are invested. We know that investments can be confusing and we're here to help you understand the options available to you.
How do investments work?
There are two investment strategies available and you choose which suits you best. You then select the funds you'd like your contributions to be invested in, within that strategy.
Your contributions are invested each month into the funds you've chosen. Each fund is divided into 'units' and each unit has a value (the unit price). Your invested contributions buy units in these funds and every time you pay a contribution into the fund you're allocated more units. The number of units bought with your contributions depends on the unit price on the day when your contributions are invested. Unit prices can change daily and the overall value of your pension account is based on the total number of units that you hold and their unit price on any given day.
LifePlanSome decisions are made for you
You choose from a small group of funds. In the early-to-mid stages of saving for your retirement, your contributions are invested in funds which aim to increase the value of your account faster than inflation. As you get nearer retirement, the units are gradually and automatically switched to more stable, lower-risk funds, with the aim of giving you more certainty of the value of your savings at retirement.
PersonalChoiceYou make all the decisions
There is a range of funds available for you to choose from and your contributions are invested in the funds you’ve chosen until you decide otherwise. Your funds will not automatically switch to other funds, so you need to decide if and when you want to switch.
If you don't make a choiceAll the decisions are made for you
This is a specific version of LifePlan, chosen by the Trustee, for members who don’t make an investment choice. Your contributions will be invested in this version of LifePlan if you don’t select one of the other two investment options. Although this may be appropriate for many members, it may not be appropriate for everyone, so the Trustee recommends that you review your own circumstances and seek independent financial advice if you're unsure.
You can invest all your contributions using one investment approach, or you can invest each contribution type (employee, company and additional) in different approaches.
Risk and reward
Each investment fund has a predetermined investment objective. For lower risk funds, these are invested in assets which tend to provide more stable returns, with a lower variation in their value over the short term, but this does mean over the longer term they are less likely to outperform higher risk investments. Higher risk investments tend to have more unpredictable values which can change quickly over the short term, but as a result, they do offer a higher potential return over the longer term. For further information please see Risk and reward section.
Making or changing your investment choices
Once you’ve decided how you’d like your contributions to be invested you can tell us quickly and easily on Your Pension. You can change your investment options as often as you like and at the moment there's no charge for changing these, although the Trustee reserves the right to change this.
You can monitor how well your funds are performing, check the current value of your account and model what this might be worth at retirement, on Your Pension.
You can also look at the fund investment information, which shows you the past performance and unit price history, together with factsheets detailing how the funds are currently invested.
See the fund charges factsheet for details of the current charges.