Investment matters.
How your Plan pension savings are invested, and how those investments perform, has a big impact on how much you’ll have saved when you retire.
So, regularly reviewing your investments is a good idea. We’ve included some questions to ask yourself below, as a guide to get started. If you know the answers – that’s great! But if not, there’s some pointers to help you.
The Investment Sub Committee (ISC) regularly reviews the investment choices offered to members – and, earlier this year, made changes to the Plan’s investment options. Plus, you’ll find a summary of some further changes taking affect from October here too.
Do you know how your savings are invested?
Your pension savings are invested in the TRP Drawdown Lifestyle Investment Programme or a range of self-select funds (or a combination of the two options).
Both of these options were reviewed and updated by the Investment Sub-Committee (ISC) earlier this year following a review of the long-term performance of the underlying funds, how and when Plan members have taken their pension savings, where members are currently invested and the average amounts members have saved at different points in time.
Did you know?
That
of the Plan’s assets are invested in the TRP Drawdown Lifestyle Investment Programme?
Do you know how yours are invested?
The TRP Drawdown Lifestyle Investment Programme (the default option)
If you haven’t chosen how your savings are invested, then they’ll be invested in the TRP Drawdown Lifestyle Investment Programme.
It’s designed to do most of the work for you, by choosing how your savings are invested, based on:
- when you tell Scottish Widows you’re planning to take your pension savings (your Target Retirement Age), and
- taking your savings flexibly in retirement, by keeping your savings invested and taking out money as you need it (known as ‘income drawdown’).
If you're invested in the TRP Drawdown Lifestyle Investment Programme, your savings will gradually shift between different investments as you get closer to your Target Retirement Age. So, if this is how your savings are invested, make sure you check and update your Target Retirement Age. If your Target Retirement Age does not reflect when you aim to retire, you could lose out on potential investment returns or be exposed to excessive investment risk.
and/or
The self-select fund range
If you want to have more control over how your pension savings are invested, you can choose to invest them in a range of more than 30 available funds.
These investments are not linked to your Target Retirement Age and do not change automatically over time – so, if you’re invested in the self-select fund range, it’s your responsibility to decide if, and when, you may wish to switch your investments.
Watch out for some new changes coming soon.
Following the ISC’s most recent review, we’re making some further changes to the Plan’s investments.
1. If you have investments in the TRP blended funds – either as part of the TRP Drawdown Lifestyle Investment Programme and/or as a self-select fund option.
We will be replacing the T. Rowe Price Emerging Markets Equity Fund with the Robeco Emerging Markets Enhanced Index Equities Fund early next year.
and/or
2. If you choose your investments from the self-select fund range.
Early next year the Robeco Emerging Markets Enhanced Index Equities Fund will also be made available to you as part of the self-select fund range. Many of you are invested in the T. Rowe Price Emerging Markets Equity Fund – so this will remain available as part of the Plan’s self-select fund range in addition to the new fund.
Plus, we're working with Scottish Widows to add a new active value global equity fund to the self-select range too, with the aim of making this available to you in the first half of next year too.
Please note, the UK share class of Robeco Emerging Markets Enhanced Index Equities Fund was created on 25 June 2024 and performance will not be shown on the factsheet until one year after this date (as is legally required). To see indicative performance of this fund, please take a look at the factsheet which shows the fund’s returns in euros.
We'll write to those of you directly impacted with more information once these changes have been made.
Have you checked how your investments have performed?
Here you’ll find an update on fund performance over the past year, up until 30 June 2024.
Remember, some types of investment will grow your money faster than others over the long term. But, your savings may go up and down in the short term.
How investments performed in general over the year.
Performance across most asset classes over the year to 30 June 2024 was positive - with equities delivering the strongest performance:
- US technology stocks performed particularly well trading off increased focus on artificial intelligence (AI).
- Emerging market equities generated strong positive returns on the back of some recent improvement in Chinese sentiment, aided by limited support for the real estate sector, and strong earnings in India and Taiwan.
Government bonds trended lower, following an initial sharp sell-off in US Treasuries and yields peaking towards the end of April. Overall, fixed income assets delivered negative returns over the year to 30 June 2024.
The TRP Drawdown Lifestyle Investment Programme (the default option).
Overall, the TRP Drawdown Lifestyle Investment Programme produced positive returns for members at all stages of the lifestyle over the period to 30 June 2024.
Members more than 15 years away from their TRA experienced the largest positive returns, as these members were invested primarily in equities (through the TRP Growth Fund) which was the best performing asset class over the period.
At 15 years to TRA members' investments start to de-risk – which means fixed income and alternative investments (as part of the TRP Balanced Fund) are added into the existing mix of mostly equity investments. Then at five years to TRA, a cash fund is also added to further manage risk. Although the fixed income assets underperformed, due to a difficult market backdrop for bonds, the diversified and cash investments performed better, which provided some protection to overall returns.
In summary, the TRP Drawdown Lifestyle Investment Programme successfully decreased volatility for members in the lead up to retirement over the period.
So, if you’re invested in the TRP Drawdown Lifestyle Investment Programme (the default strategy), then you will have experienced positive returns over the period to 30 June 2024, regardless of how far you are from your Target Retirement Age.
Do you know what investment charges you pay?
How much you pay in investment charges will depend on how you choose to invest your pension savings, as the charges vary across different investment funds.
The funds that your savings are invested in have charges to cover the cost of the services provided by Scottish Widows, such as administration, fund costs and managing your investments (the Annual Management Charge), plus the cost of any additional expenses incurred, like the cost of switching between self-select funds (Fund Expenses). These charges are all bundled together and known as the “Total Annual Fund Charge”.
Did you know?
That as at 30 June 2024, there were
assets under management in the Plan.
That’s an increase of just over £35 million in assets over the previous 12 months.
Total Annual Fund Charge
=
Annual Management Charge (AMC)
+
Fund Expenses
For example, if you’re invested in the TRP Drawdown Lifestyle Investment Programme and are more than 15 years from your Target Retirement Age, your Total Annual Fund Charge is currently set at 0.373% a year. This means that, in this example, for every £1,000 you have invested, you’d pay £3.73 each year as a Total Annual Fund Charge.
Good news about your Annual Management Charge
The Investment Sub Committee (ISC) keeps all charges under review, as we need to make an annual assessment that members like you are receiving "value for money".
We’re pleased to be able to let you know that earlier this year we negotiated a reduction of 0.03% in the Annual Management Charge across all funds. These lower charges are already in place.
Plus, we’ve agreed a further reduction with Scottish Widows that will come into effect once the Plan’s assets reach £250 million.
You can read more about investment charges, as well as check the Annual Management Charges for the Plan’s investment options in Scottish Widows’ fund guide.