Other investment options

The default investment option is Balanced Lifestyle. However, this is not the only investment option.

There are two other Lifestyle options, which both work in the same way as the balanced arrangement, but involve different levels of investment risk and potential return.

If you choose one of these options, your contributions will be invested for you in funds selected by the Trustee, which are adjusted as you get closer to retirement. The chosen funds will depend on your age and the age you select for retirement, which is why they are referred to as "lifestyle".

When you are many years from retirement, your contributions will be invested in funds that are designed for long-term investment growth. As you move closer to retirement your money will be gradually switched into funds that involve less risk and offer greater stability.

Lower risk and lower potential return

The lower risk/return option uses the same underlying funds as the Balanced Lifestyle arrangement, but it starts to move into lower-risk investments ten years before your retirement date, rather than five.

Your assets start in the BlackRock Diversified Growth Fund and are then gradually moved into a combination of the BlackRock Over 15 Year Corporate Bond Fund and the Standard Life Managed Cash Fund.

The additional five years in the switching period, when compared with the Balanced Lifestyle arrangement, are what give this option the potential to be lower risk. Greater time in the stability stage means there is less risk of your pension falling in value if the market takes a downturn close to the time when you plan to retire. On the other hand, there are also fewer years in the growth stage, so you may have less time to benefit from the higher returns that the BlackRock Diversified Growth Fund aims to provide.

Higher risk and higher potential return

The higher risk/return arrangement also uses the the BlackRock Over 15 Year Corporate Bond Fund and the Standard Life Managed Cash Fund in the stability stage. The switch occurs over a five-year period in the run up to retirement, in the same way as the Balanced Lifestyle arrangement. The key difference is the funds chosen for the growth stage.

As well as the BlackRock Diversified Growth Fund, which is used in the other two arrangements, your pension is invested in Trilogy Global Diversified Fund and a BlackRock (50:50) Global Equity Index. The split between these funds is also gradually rebalanced during the five-year lead up to retirement.

The higher-risk element of this arrangement comes from the two additional equity funds used during the growth stage, as these are more sensitive to market movements. This means that they may fall in value more than the BlackRock Diversified Growth Fund, but they also have the potential to produce greater growth.

Lifestyle arrangements: at a glance

Your contributions will be invested 100% in whichever arrangement you choose. The key differences between the options are the funds that your contributions will be invested in and the length of the switching period in the lead up to retirement.

If you would like to invest in the default Balanced Lifestyle click here.

If you would like to invest in one of the other two lifestyle options click here.

Take complete control of your pension

Another option is for you to choose the funds that you invest in from the full range that we offer. This Selfstyle arrangement gives you more freedom and responsibility for your investment strategy.

For more information, click here.