We’re making some changes to our default funds

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To simplify our investment offering for customers, we’re making Aegon’s in-house default funds the same for all investors – whether you’re currently using Aegon Retirement Choices (ARC) or are invested in one of our older pension products. 

This affects the following funds: 

  • Aegon Default Equity and Bond Lifestyle (ARC)
  • GPP Default
  • Stakeholder Default

The funds will transition to the new approach gradually, and the change will be complete by Autumn 2016.

What is changing? 

Our default funds have a two stage investment strategy. In the early years (the growth stage), they aim to grow your savings. When you get closer to retirement (usually within five or six years) the funds move into investments designed to prepare an investor's savings for retirement. The funds are only changing in the growth stage for now. 

The changes will affect the funds' benchmarks, the fund descriptions and will result in some, limited, changes to what the funds invest in in the growth stage. For more detail about the changes click on the expandable boxes below.

Why are we making these changes?

Pension providers like Aegon have a responsibility to ensure that their funds remain appropriate for their customers. This is particularly important for default funds as these customers rely heavily on us to look after their retirement needs. We constantly review our default funds, as part of our Funds Promise, particularly if legislation changes.

The changes to the funds aim to improve long-term performance and mean our in-house default funds will follow the same investment strategy, no matter what product you're invested in. 

What current investors need to do?

Current investors don't need to do anything, their fund name, risk rating and charges remain the same. 

Over the next year we’ll make a further change to our in-house default funds, to take advantage of the Government’s new pension flexibility rules. Our new default fund will move from an annuity target to a flexible target strategy. We’ll tell you more about this change nearer the time.

The value of these investments can go down as well as up. There’s a chance you may get back less than you invested.

The following is just an extract from the full fund descriptions. The key differences are highlighted in bold.

Fund name Previous New
GPP Default During the early years of your investment, the fund aims to provide long-term capital growth by investing in a diversified portfolio of mainly UK and overseas equities (shares), but also in fixed interest investments (bonds) and cash. It aims to broadly match the performance of its benchmark, the ABI Mixed Investment 40-85% Equities pension sector median, by investing in largely the same assets and in the same proportions as it It aims to grow long-term savings by investing mainly in global equities (company shares) with the remainder (around 25%) in UK bonds (a blend of UK corporate, UK index-linked and conventional government bonds). It’s designed to track the markets it invests in, so performance should be similar to those markets.
Stakeholder default
Aegon Default Equity & Bond Lifestyle (ARC) It aims to grow your pension savings in the early years (the growth stage) by mainly investing in company shares (up to 75%) with the rest in bonds and cash. It does this by investing 75% in equities and 25% bonds.

There’s no guarantee the fund objectives will be met.

Fund name Previous New
Ageon GPP Default fund ABI Mixed Investment 40%-85% shares sector median A composite of: 37.5% FTSE UK All Share Index, 37.5% FTSE World ex UK Index, 13.3% Markit iBoxx GBP Non Gilts Index, 9.0% FTSE Gilts All Stocks Index, 2.8% FTSE Index-Linked Over 5 Years Index
Aegon Stakeholder Default fund
Aegon Default Equity & Bond Lifestyle ARC A composite of: 55% FTSE All Share Index, 6.67% FTSE All-World USA GBP Index, 6.67 % FTSE All World Developed Europe ex UK Index, 3.33% FTSE All World Japan Index, 3.33% FTSE All World Developed Asia Pacific ex Japan Index, 15% FTSE A British Govt Over 15 Years Index, 10% FTSE UK Gilts Index-linked Over 5 Years Index

The asset allocation changes in the new fund will be broadly similar to the existing default strategies, with slight differences which are outlined below.

Fund name Previous (%)* New (%)*
GPP Default
UK equity 32.9
North America equity 15.6
European (ex UK) equity 13.2
Japanese equity 5.2
Pacific ex Japan equity 3.4
Emerging markets equity 2.8
UK Corporate bonds 3.7
UK gilt 3.5
Overseas corporate bond 7.0
Cash 8.5
UK equity 37.5
North America 23.6
European (ex UK) equity 6.9
Japanese equity 3.7
Pacific ex Japan equity 3.3
UK corporate bond 10.3
UK gilt 10.1
Stakeholder default
Aegon Default Equity & Bond Lifestyle (ARC)
UK equity 55.9
North America equity 6.9
European (ex UK) equity 6.1
Pacific ex Japan equity 3.8
Japanese equity 3.3
UK gilt 23.9

*'Previous' figures as at end March 2016. 'New' figures show the desired asset allocation when the transition is complete.