Closure of two Aegon Brooks Macdonald (ARC) funds

Fund_Update.jpg

On 21 May 2020, we’re closing the following Aegon Brooks Macdonald funds available on our Aegon Retirement Choices (ARC) fund range:

  • Aegon Brooks Macdonald Workplace Flexible Strategy (ARC)
  • Aegon Brooks Macdonald Workplace Flexible Retirement (ARC)

When the funds close, we’ll move investors into the alternative funds listed in the tables below, unless they tell us to move their investment elsewhere before then.

We’ll be writing to all those affected in advance to let them know about the closures.

Why we’re closing the funds

We constantly monitor and refine our fund ranges. These funds haven’t grown as we’d expected, which means they’re too small to be economically viable. As a result, we’ve decided to close the funds.

The changes in more detail

We’ve carefully selected the alternative funds as they invest in broadly similar assets and have broadly similar aims as the existing funds and we believe them to be the most comparable funds available within the ARC fund range.

Details of the old and new funds are outlined below. For more information on the alternative funds you can view the fund factsheets via the Fund prices and performance page.

  Existing fund until 21 May 2020 New fund effective from 21 May 2020
Fund objective Aegon Brooks Macdonald Workplace Flexible Strategy (ARC) Aegon Adventurous Tracker Flexible Target (ARC)
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 UK and international equities (company shares) with a portion invested in fixed income (bonds). In the seven years before their target retirement year (the flexible target stage), we’ll progressively move investors into a drawdown fund, made up of a cautious mix of investments. In the year they retire, they will be around 75% invested in the drawdown fund and 25% in cash to provide the maximum tax free cash entitlement (currently 25% of their pension pot). This approach aims to offer a balance between reducing risk and continuing to grow savings so investors can draw an income if they want to while they decide how and when they want to take their benefits. Brooks Macdonald provides the asset allocation model and oversight for this fund, for which it receives a fee, paid from the fund’s annual management charge. 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 in an equal mix of UK and international equities (company shares). 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.
Fund charge † 0.20% 0.05%
Aegon risk rating Above-average risk Above-average risk

Source: Aegon UK

  Existing fund New fund effective from 21 May 2020
Fund objective Aegon Brooks Macdonald Workplace Flexible Retirement (ARC) Aegon Interim Retirement Flexible Target (ARC)
This fund is designed for Brooks Macdonald scheme members invested in the Aegon Brooks Macdonald Flexible Retirement fund who have reached their target retirement year, but haven’t yet taken their pension benefits. In the member’s retirement year, they will automatically be transferred into this fund. While scheme members decide how they want to take their retirement income, the fund aims to keep risk low while providing some continued growth. It does so by investing in a mix of investments (company shares, bonds and cash) and countries so they’re not reliant on the success of just one investment type. It’s designed as a short-to-medium term investment. This fund is designed for those invested in a Flexible Target fund who have reached their target retirement year, but haven’t yet taken their pension benefits. In their target retirement year, they will automatically be transferred into this fund. While investors decide how they want to take a retirement income, it aims to keep risk low and make sure they’re not reliant on the success of just one investment type. It does this by investing in a mix of investments (company shares, bonds and cash) and countries. It’s designed to track the markets it invests in, so performance should be similar to those markets. This fund is designed as a short-to-medium term investment.
Fund charge † 0.20% 0.05%
Aegon risk rating Low risk Low risk

Source: Aegon UK

† This is on top of any product or adviser charge you pay and includes a fixed management fee plus expenses that vary with the day-to-day costs of running the fund.

There’s no guarantee the fund will meet its objectives. The value of an investment can fall as well as rise and is not guaranteed. You could get back less than you originally invested.

What current investors need to do

If investors are happy to be moved into the alternative funds, as listed above, they don’t need to do anything. However, if investors feel that the new funds aren’t suitable for them, they can switch their investment and redirect any future investment, free of any switch charge, into an alternative fund or funds of their choice. If investors wish to do this, they should complete a switch form and return it to us as soon as possible.

If you would like more information, please speak to a financial adviser. If you don’t have one, you can find one in your area at unbiased.co.uk