Your overall retirement savings value isn’t just made up of the contributions you and your employer have paid in.
The performance of the funds you invest your money in will have a big impact on how much you’re building up in your retirement savings Account over time. This is where you start to put your money into training for the day you’ll need it.
If you complete an application form to join the Plan you will be asked to choose where your contributions are invested.
You should invest your savings in a way that works for you and your circumstances, and at levels of risk that you’re comfortable with.
What is an investment fund?
It’s a type of pooled investment where people invest their money with the aim of increasing or at least maintaining its value.
Different funds invest in different things – like company shares, property, bonds or cash. They all have different objectives and different levels of risk. There are a number of factors that will affect a fund’s performance, including where they are in the world, the type of activities associated with the fund and the size of the market.
Generally though, funds that invest in company shares are more likely to go up and down in value than funds that invest in bonds and cash. Investments in bonds and cash are less likely to go up and down in value in the short term but they’re also less likely to grow by as much over the longer term.
So the choices you make will depend on how you feel about the ups and downs of investments, how long you have to go until retirement and what other savings you have as part of your plan for giving you an income once you’ve retired.
Your investment fund options
The Trustee of the Plan, with help from investment advisers, has carefully selected a range of funds that you can choose to invest your money in. These funds offer different levels of growth, and have different levels of risk associated with them too. The fee for managing your investments (or the ‘Investment Management Charge’) varies between different funds. The funds available for you to choose from are also reviewed regularly to make sure they’re performing to an acceptable standard.
So here is a brief summary of the funds that you can choose from if you want to make your own investment selections. Click on each one to go to the more detailed fact sheet that will give you more information.
Made up of company shares traded on stock markets in the UK or overseas.
L&G World (ex UK) Equity Index Fund
Because this fund invests in overseas equities it helps to protect your retirement savings by spreading the risk among different markets. For this fund you also have the option to choose a currency hedged or unhedged fund.
Annual management charge: 0.13%Did you know?
A ‘currency hedged’ fund just means that if a fund is invested in overseas markets then the risk associated with that foreign market currency aims to be reduced, or ‘hedged’. This is because currency and price fluctuations can negatively affect the price of the assets held in the fund. A currency hedged fund uses currency exchange contracts to cancel out the impact of currency exchange rate movements on the fund’s investment. However, this is only beneficial depending on what happens with exchange rates, which is why unhedged funds exist too.
L&G Retirement Income Multi-Asset Fund
The aim is to enhance the returns you might get on your investments whilst managing the downside risks by including a range of different types of investment that may include equities, bonds, money market funds, property, listed infrastructure and listed shares of private equity investments. Click on the fact sheet button at the bottom of the page to find out more.
Annual management charge: 0.30%
L&G UK Equity Index Fund
Only investing in UK companies this fund aims to gain returns that are the same as the FTSE-All Share Index. Click on the fact sheet button at the bottom of the page to find out more.
Annual management charge: 0.20%
L&G Emerging Markets Equity Index Fund
Investing in developing economies such as Brazil, China, Russia and India this fund aims to achieve the same returns as the FTSE Emerging Markets Index. Click on the fact sheet button at the bottom of the page to find out more.
Annual management charge: 0.40%
L&G Ethical UK Equity Index Fund
This aims to achieve the same returns as the FTSE4Good UK Index which uses a committee to evaluate and select companies that are socially responsible and have high ethical, environmental and social principles. Click on the fact sheet button at the bottom of the page to find out more.
Annual management charge: 0.20%
Morgan Sindall Growth Fund
Investing in a mix of L&G funds the aim is to achieve a strong return over the long term and help to reduce risk by spreading investments across different markets. Click on the fact sheet button at the bottom of the page to find out more.
Annual management charge: 0.21%
L&G Dynamic Diversified Growth Fund
Investing in high-growth investments in both the UK and outside the UK this fund aims to get long term returns that are similar to returns expected from equities. Click on the fact sheet button at the bottom of the page to find out more.
Annual management charge: 0.42%
Investment in commercial property e.g. shops and offices rather than in residential property.
L&G Managed Property Fund
This is an actively managed fund which means it aims to outperform the average returns by analysing the available stocks and identifying those they believe will deliver higher returns. It also invests in some cash options. Click on the fact sheet button at the bottom of the page to find out more.
Annual management charge: 0.70%
A form of loan to a company or Government – the borrower pays interest and pays back the loan when it matures (bonds issued by the UK Government are also called gilts).
L&G Over 5 Year Index-Linked Gilts Index Fund
This aims to follow the returns of the UK index-linked Gilt market (over 5 years) and invests in medium and long term gilts. Click on the fact sheet button at the bottom of the page to find out more.
Annual management charge: 0.08%
L&G Over 15 Year Gilts Index Fund
Investing in long term Gilts this aims to follow the returns of the FTSE A Government (over 15 Year) Index. Click on the fact sheet button at the bottom of the page to find out more.
Annual management charge: 0.08%
L&G AAA-AA-A Corporate Bond over 15 Year Index Fund
The bonds are primarily in Sterling and issued by companies and other non-Government organisations. The bonds have a minimum credit rating of ‘A’. This indicates the credit worthiness of the companies issuing the bonds and the higher the credit rating the more safe and stable it is considered to be. Click on the fact sheet button at the bottom of the page to find out more.
Annual management charge: 0.12%
This works in a similar way to deposit accounts with a bank or building society and provides a return in the form of interest payments.
L&G Cash Fund
This aims to deliver competitive rates of return from cash deposits and other short-term investments. Click on the fact sheet button at the bottom of the page to find out more.
Annual management charge: 0.125%
The Lifestyle Option
This is a ready-made investment strategy, and designed to meet the needs of a wide range of people. So if you don’t want to make your own investment selections then this will do much of the work for you.
If you were automatically enrolled into the Plan your contributions (and those from your employer) will be invested into the Drawdown Lifestyle Option, which is the default fund.
How it works
The Lifestyle Option automatically moves your money into lower risk investments as you approach retirement. It has been specifically designed to suit people who will withdraw their retirement savings gradually through their retirement rather than choosing a regular income or annuity.
Early on you’ll be invested in the Morgan Sindall Growth Fund to bring in healthy returns.
Once you get within 15 years of retirement, your money will be moved into the Dynamic Diversified Fund to help reduce some of the investment risk and then again, when you’re within seven years of your selected retirement age, your money will be automatically switched into the Legal & General Retirement Income Multi-Asset Fund so that there is still some growth but also further reducing some of the investment risk.
Finally, over the last four years before your selected retirement age a quarter of your money will be moved into the Cash Fund.
Closed Lifestyle Option
If, on 30 September 2013, you were invested in the Lifestyle Option and within 10 years of your Selected Retirement Age, you will be in the Closed Lifestyle Option which is different from the one described above.
This one is designed for people who will be choosing an annuity at retirement – or a regular income throughout their retirement. That means that as you get nearer to retirement your money is invested in corporate bonds and gilts as the market value of these is broadly linked to the cost of buying an annuity.
What's right for you?
There are several factors that can determine what might suit you. These can be things like the level of investment risk you personally feel comfortable with, how far away from retirement you are, and how you plan to take your retirement savings when you actually come to retire.