Updating the Plan’s investment options
The default investment option is where your Plan savings will be invested if you haven’t made your own investment choice. It is called the Drawdown Lifestyle profile.
It uses four blended investment funds for the investment of your Plan savings; these are the Early Stage Growth fund, the Growth Investment fund, the Pre-Retirement fund and the At-Retirement fund. If your Plan savings are invested in the Drawdown Lifestyle profile, over time, they will automatically switch between the four blended funds.
What actions do you need to take?
You do not need to take any action, these changes will happen automatically in June 2025.
What do the changes mean for you?
If your Plan savings are invested in the Drawdown Lifestyle profile and you have 15 years or more to your Plan Retirement date, you will not be affected by the changes we are making. All your Plan savings will continue to be invested in the Early Stage Growth fund. We are not making any changes to this fund.
If you have fewer than 15 years to your Target Retirement date, there will be some changes to the blended funds in which your Plan savings are invested. We will be making changes to the investments used in the other three blended funds. Each of these three blended funds includes a mix of different investments, for example, equities, bonds, and cash. The diagram below is an illustration of how your Plan savings gradually switch over time between the blended funds used in the Drawdown Lifestyle Profile. The actual investment switches are made to your Plan savings every three months.
As an example, Mary’s Plan savings are currently invested in the Drawdown Lifestyle profile. She is 30 and has set her Target Retirement date to age 65. This means she has 35 years to retirement and her Plan savings are invested entirely in the Early Stage Growth fund. The only fund used in the Early Stage Growth fund is the Low Carbon Transition Global Equity Index Fund. This is not changing so she will not be impacted by the changes we are making to the Drawdown Lifestyle profile.
Sanjay is currently aged 54 and has set his Target Retirement date to age 60. This means he has 6 years to retirement and his Plan savings are invested in a mix of the Growth Investment and Pre-Retirement blended funds. This means that Sanjay will be impacted by the changes.
What do the changes mean for you?
If your Plan savings are invested in the Drawdown Lifestyle profile and you have 15 years or more to your Plan Retirement date, you will not be affected by the changes we are making. All your Plan savings will continue to be invested in the Early Stage Growth fund. We are not making any changes to this fund.
If you have fewer than 15 years to your Target Retirement date, there will be some changes to the blended funds in which your Plan savings are invested. We will be making changes to the investments used in the other three blended funds. Each of these three blended funds includes a mix of different investments, for example, equities, bonds, and cash. The diagram below is an illustration of how your Plan savings gradually switch over time between the blended funds used in the Drawdown Lifestyle Profile. The actual investment switches are made to your Plan savings every three months.
Changes to the Growth Investment fund – 15 to 5 years to retirement
The Growth Investment fund currently includes a mix of equity and diversified growth funds. The diversified growth fund will be removed and a new multi-asset credit fund will be added.
A multi-asset credit fund uses different types of loans and bonds to spread risk. Your Plan savings are invested in a mix of investments like corporate bonds, loans, and emerging market debt. It aims to deliver steady, stable growth for your Plan savings.
Changes to the Pre-Retirement fund -
9 years or less to retirement
The Pre-Retirement fund currently includes a mix of equity, diversified growth, absolute return bonds, and short duration credit funds. The current diversified growth fund will be removed and a new multi-asset credit fund will be added. The current UK short duration credit fund will also be removed and will be replaced with an asset backed securities fund.
An asset-backed securities fund invests in bonds that are supported by pools of assets like home mortgages and car loans. It aims to deliver steady, stable growth for your Plan savings.
Changes to the At-Retirement fund - 4 years or less to retirement
The At-Retirement fund currently includes a mix of equity, diversified growth absolute return bonds, and short duration credit and cash funds. The current diversified growth fund will be removed and a new multi-asset credit fund will be added. The current UK short duration credit fund will also be removed and will be replaced with an asset backed securities fund.
The diagram below shows the detailed breakdown of all the different types of investment funds used in the updated blended funds of the Drawdown Lifestyle profile:
Why has the Governance Group decided to make these changes?
The Governance Group monitors the performance of all the investments used within the default investment strategy and from time to time, makes changes where funds do not meet its performance objectives over the longer term.
The Lump Sum and the Annuity Lifestyle profiles
There are two other lifestyle profile options available in the Selected fund range that is monitored by the Governance Group. These are the Lump Sum Lifestyle Profile and the Annuity Lifestyle Profile. These lifestyle profiles use the same growth phase blended fund as the Plan’s default investment option. This means that the changes to the Growth Investment fund will also apply to the Lump Sum and the Annuity Lifestyle profiles.
The Pre-Retirement fund for the Lump Sum Lifestyle profile and the Annuity Lifestyle profile will also change. In both Pre-Retirement funds, the diversified growth fund will be removed and a new multi-asset credit fund will be added. For the Lump Sum Lifestyle profile, the current UK short duration credit fund will also be removed and a new asset backed securities fund will be added.
When will the changes be completed?
The changes will be completed in June 2025.
