From 31 March 2021, we’re making the following changes to some of our workplace default funds, available as part of our pension and Aegon Retirement Choices (ARC) fund ranges:
- We’re updating the fund objectives to better reflect how the fund invests
- We’re updating some of the funds’ composite benchmarks
Why we’re making these changes
In January 2021, we announced our commitment to achieving net zero carbon emissions across our pension default fund strategies by 2050. As part of this strategy, in February 2021 we announced our partnership with HSBC Global Asset Management (HSBC) to launch the HSBC Developed World Sustainable Equity Index fund. We aim to make our asset allocation more globally diversified, and embed Environmental, Social and Governance (ESG) considerations into our investment process.
As one of the first steps to achieving this target, the fund objective and some of the composite benchmarks for some of the default funds have been updated, to reflect the higher global focus of the funds. Full details can be found in the table below:
| Aegon Workplace Default & Aegon Workplace Default (ARC) | |
|---|---|
| Old fund objective | New fund objective |
| This is Aegon’s default fund. It is a single solution that adapts to meet employees changing needs throughout their working life - right up to retirement and beyond. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing mainly in global equities (company shares) with the remainder (currently around 25%) in UK bonds (a blend of UK corporate, UK index-linked and conventional government bonds). In the six years before your target retirement year, we’ll progressively move you into less risky investments. This process assumes that you’ll remain invested at retirement, potentially withdraw some of your fund and keep your options about taking an income open. As this is Aegon’s default fund, we reserve the right to make changes to make sure it continues to remain appropriate for use as a scheme default. | This is Aegon’s default fund. It is a single solution that adapts to meet employees changing needs throughout their working life - right up to retirement and beyond. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing mainly (generally at least 65%) in global equities (company shares) with the remainder in bonds (corporate and/or government bonds) and/or cash. In the six years before your target retirement year, we’ll progressively move you into less risky investments. This process assumes that you’ll remain invested at retirement, potentially withdraw some of your fund and keep your options about taking an income open. As this is Aegon’s default fund, we reserve the right to make changes to make sure it continues to remain appropriate for use as a scheme default. |
| GPP Default | |
|---|---|
| Old fund objective | New fund objective |
| This fund uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term 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. Six years before the start of your target retirement year (the lifestyle stage), we’ll progressively start switching your investment into our Long Gilt and (in the final year) Cash fund, with the aim of giving you more certainty about the level of annuity you’ll be able to buy when you retire and to cater for your maximum tax-free cash entitlement, currently 25% of your pension pot. We reserve the right to change our lifestyle funds. The fund is only available to Aegon Group Personal Pension planholders whose scheme started on or after 1 December 2008. | This fund uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing mainly (generally at least 65%) in global equities (company shares) with the remainder in bonds (corporate and/or government bonds) and/or cash. It’s designed to track the markets it invests in, so performance should be similar to those markets. Six years before the start of your target retirement year (the lifestyle stage), we’ll progressively start switching your investment into our Long Gilt and (in the final year) Cash fund, with the aim of giving you more certainty about the level of annuity you’ll be able to buy when you retire and to cater for your maximum tax-free cash entitlement, currently 25% of your pension pot. We reserve the right to change our lifestyle funds. The fund is only available to Aegon Group Personal Pension plan holders whose scheme started on or after 1 December 2008. |
| Stakeholder Default | |
|---|---|
| Old fund objective | New fund objective |
| This fund uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term 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. Six years before the start of your target retirement year (the lifestyle stage), we’ll progressively start switching your investment into our Long Gilt and (in the final year) Cash fund, with the aim of giving you more certainty about the level of annuity you’ll be able to buy when you retire and to cater for your maximum tax-free cash entitlement, currently 25% of your pension pot. We review our lifestyle funds from time to time and may change how they work if we believe this to be in the best interests of investors. | This fund uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing mainly (generally at least 65%) in global equities (company shares) with the remainder in bonds (corporate and/or government bonds) and/or cash. It’s designed to track the markets it invests in, so performance should be similar to those markets. Six years before the start of your target retirement year (the lifestyle stage), we’ll progressively start switching your investment into our Long Gilt and (in the final year) Cash fund, with the aim of giving you more certainty about the level of annuity you’ll be able to buy when you retire and to cater for your maximum tax-free cash entitlement, currently 25% of your pension pot. We review our lifestyle funds from time to time and may change how they work if we believe this to be in the best interests of investors. |
| Aegon Default Equity & Bond Lifestyle (ARC) | |
|---|---|
| Old fund objective | New fund objective |
| This fund uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term 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. Then, six years before your nominated retirement year, it automatically starts moving into investments better suited to preserving the size of annuity you can buy (the lifestyle stage). It does this by investing increasing amounts into the Long Gilt fund. This process assumes you’ll buy an annuity when you retire. In the final two years, we’ll also move some of your investment into our Cash fund, to cater for your tax-free cash entitlement. Up until May 2018, this was Aegon’s default fund, which meant it was designed for use by company pension schemes. We reserve the right to make changes to make sure this fund continues to remain appropriate for use as a scheme default. | This fund uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing mainly (generally at least 65%) in global equities (company shares) with the remainder in bonds (corporate and/or government bonds) and/or cash. It’s designed to track the markets it invests in, so performance should be similar to those markets. Then, six years before your nominated retirement year, it automatically starts moving into investments better suited to preserving the size of annuity you can buy (the lifestyle stage). It does this by investing increasing amounts into the Long Gilt fund. This process assumes you’ll buy an annuity when you retire. In the final two years, we’ll also move some of your investment into our Cash fund, to cater for your tax-free cash entitlement. Up until May 2018, this was Aegon's default fund, which meant it was designed for use by company pension schemes. We reserve the right to make changes to make sure this fund continues to remain appropriate for use as a scheme default. |
| Aegon Growth Tracker (Flexible Target) & Aegon Growth Tracker (Flexible Target) (ARC) | |
|---|---|
| Old fund objective | New fund objective |
| This fund is aimed at those who want to keep their options open at retirement. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term 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. In the six years before your target retirement year (the flexible target stage), we’ll progressively move you into less risky investments. We’ll also move part of your investment into cash in the final two years to cater for your maximum tax-free cash entitlement, currently 25% of your pension pot. We review our workplace target funds regularly and may change them if we believe it’s in the best interests of investors. | This fund is aimed at those who want to keep their options open at retirement. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing mainly (generally at least 65%) in global equities (company shares) with the remainder in bonds (corporate and/or government bonds) and/or cash. It’s designed to track the markets it invests in, so performance should be similar to those markets. In the six years before your target retirement year (the flexible target stage), we’ll progressively move you into less risky investments. We’ll also move part of your investment into cash in the final two years to cater for your maximum tax-free cash entitlement, currently 25% of your pension pot. We review our workplace target funds regularly and may change them if we believe it’s in the best interests of investors. |
| Old composite benchmark | New composite benchmark |
|
|
| Aegon Growth Tracker (Annuity Target) & Aegon Growth Tracker (Annuity Target) (ARC) | |
|---|---|
| Old fund objective | New fund objective |
| This fund is aimed at those who intend to buy an annuity (a type of guaranteed pension) on retirement. It uses a two-stage investment process. In the early years (the growth stage), 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. In the six years before your target retirement year (the annuity target stage), we’ll progressively move you into investments (currently long gilts and cash) with the aim of giving you more certainty about the size of annuity you’ll be able to buy when you retire and to cater for your maximum tax-free cash entitlement, currently 25%. We review our workplace target funds regularly and may change them if we believe it’s in the best interests of investors. | This fund is aimed at those who intend to buy an annuity (a type of guaranteed pension) on retirement. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing mainly (generally at least 65%) in global equities (company shares) with the remainder in bonds (corporate and/or government bonds) and/or cash. It’s designed to track the markets it invests in, so performance should be similar to those markets. In the six years before your target retirement year (the annuity target stage), we’ll progressively move you into investments (currently long gilts and cash) with the aim of giving you more certainty about the size of annuity you’ll be able to buy when you retire and to cater for your maximum tax-free cash entitlement, currently 25%. We review our workplace target funds regularly and may change them if we believe it’s in the best interests of investors. |
| Old composite benchmark | New composite benchmark |
|
|
| Aegon Growth Tracker (Cash Target) & Aegon Growth Tracker (Cash Target) (ARC) | |
|---|---|
| Old fund objective | New fund objective |
| This fund is aimed at those who plan to cash in their savings at retirement. It uses a two-stage investment process. In the early years (the growth stage), 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. In the six years before your target retirement year (the cash target stage), we’ll progressively move you into less risky investments and then into cash. On your selected retirement date, your fund will be 100% invested in cash. We review our workplace target funds regularly and may change them if we believe it’s in the best interests of investors. | This fund is aimed at those who plan to cash in their savings at retirement. It uses a two-stage investment process. In the early years (the growth stage) it aims to grow savings over the long term by investing mainly (generally at least 65%) in global equities (company shares) with the remainder in bonds (corporate and/or government bonds) and/or cash. It’s designed to track the markets it invests in, so performance should be similar to those markets. In the six years before your target retirement year (the cash target stage), we’ll progressively move you into less risky investments and then into cash. On your selected retirement date, your fund will be 100% invested in cash. We review our workplace target funds regularly and may change them if we believe it’s in the best interests of investors. |
| Old composite benchmark | New composite benchmark |
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Source: Aegon UK
There’s no guarantee the funds will meet their objectives. The value of an investment can fall as well as rise and isn’t guaranteed. The final value of your pension pot when you come to take benefits may be less than has been paid in.
What current investors need to do
Existing investors don’t need to do anything. Investors may notice these changes in our literature and on our website from 31 March 2021 onwards. The changes will be implemented gradually across our material, so you may notice both the old and new information in use for a time.
Please speak to a financial adviser if you’re unsure about what these changes mean for you. If you don’t have a financial adviser, you can find one in your area at www.moneyadviceservice.org.uk