Investment options

An investment fund is 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 ‘Annual 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.

Equity funds: Made up of company shares traded on stock markets in the UK or overseas.

Property Funds: Investment in commercial property e.g. shops and offices rather than in residential property.

Bond funds: 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).

Cash Fund: 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.

Don't forget!

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.  Click here to learn more about your attitude to risk.

The Lifestyle Option Funds

Instead of choosing which funds to invest your money in, you can choose the Lifestyle Option.

The Lifestyle Option invests your money for you and automatically moves it 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 your money will be invested in the Retirement Growth Fund to bring in healthy returns.

Once you get within 15 years of retirement, your money will be moved into the Legal & General 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.  You can learn more about these funds in the investment fund comparison chart. 

Finally, over the last four years before your selected retirement age a quarter of your money will be moved into the Cash Fund.

If you were automatically enrolled into the Plan, your contributions (and those from your employer) will be invested in the Lifestyle Option, which is the default 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.