Changes to investment options and charges

River Ouse, Cambridgeshire

Following recommendations from its investment advisers, Lane Clark & Peacock, the Trustee of The Pearson Pension Plan (the Plan) has decided to make some changes to the investment options available to Plan members with effect from 27 October 2021. There have also been changes to the annual management charges (AMCs) for members.

Investment choices

How you choose to invest your pension pot in the Plan is an important decision. Your choices can make a real difference to the value of your pension pot and the level of benefits it will provide at retirement. With an understanding of your retirement options, and an idea of how you might take your benefits, you can start to think about how to invest your pension pot. Remember, you can choose either a lifecycle option or a combination of one or more of the self-select funds (but not a mix of both).

The lifecycle options

A lifecycle option is an investment selection process, under which contributions are invested in different investment funds at different proportions as you get closer to your chosen retirement age. Each of the Plan’s lifecycle options is tailored to meet different retirement needs, depending on whether you wish your pension pot to provide:

  • a flexi-access drawdown facility (by transferring out of the Plan), which allows you to take income from your pension pot whilst it continues to remain invested (the drawdown lifecycle option)
  • a pension (also called an annuity) at retirement (the annuity lifecycle option)
  • a cash lump sum at retirement (the cash lifecycle option)

Changes to the lifecycle options

Change of investment fund for all three lifecycles

The BlackRock over 15 year corporate bond fund has been replaced by the BlackRock short duration credit fund in all three lifecycle options.

Change of investment fund for the annuity lifecycle option

The Blended index linked gilt fund has been replaced by the Annuity targeting fund in the annuity lifecycle option.

Default investment for Additional Voluntary Contributions (AVCs)

Currently, the default investment option for AVCs (i.e. the investment option which applies if you do not make a different selection) is the cash lifecycle option. However, the default investment option for pension pots in the Plan’s DC sections is the drawdown lifecycle option. The Trustee has decided that for DC members whose pension pots are invested in the drawdown lifecycle option, their AVCs should also be invested by default in the drawdown lifecycle option. This change will apply to both the existing and new AVCs invested in the default investment option.

The Trustee took this decision because it agreed that it was appropriate that the default investment options for DC pension pots and AVCs were aligned, so that members had their entire Plan pension savings invested in the drawdown lifecycle option.

Self-select funds

If you prefer to make your own investment choices, you can access a range of ‘self-select funds’.

Self-select funds give you full control of your investments. This means that, as well as deciding how to invest your retirement savings, you should check regularly how your investments are performing. You also have to decide if and when to move your pension pot to different funds as you approach retirement.

You can invest all your pension pot in one fund or spread your investment across multiple funds. It is up to you. This leaflet gives details of the funds available.

If you decide to invest in one or more self-select funds, you should review your investment choices on a regular basis.

Changes to the self-select funds

Environmental, Social and Governance (ESG) investment options

As part of a review of the Plan’s ESG strategy, the Trustee has decided to enhance the ESG investment options available to Plan members. ESG refers to the three key factors socially responsible investors use to measure the responsibility and sustainability of investments. The Trustee has decided to add a new BMO responsible global equity fund to the investment range with effect from 3 November 2021. In addition, the Trustee has decided to close the Jupiter ecology fund to new members, although it will remain open for members who are already invested in this fund.

The BMO responsible global equity fund aims to provide long-term capital growth. It seeks to achieve this by investing in companies screened against defined responsible and sustainable criteria, including exclusions on tobacco, alcohol, weapons, gambling, nuclear and pornography. The fund also requires companies to meet sector standards on social and environmental impacts, including systems for managing labour standards, human rights, supply chains, environmental impacts, water, waste and biodiversity.

The AMCs for the BMO responsible global equity fund are 0.70%.

New investment fund

The BlackRock short duration credit fund has been added to the self-select option range.

Lower AMCs

Aviva has agreed to reduce the AMCs for most of the investment funds available to members of the Plan (although some have been slightly increased). This is great news as lower charges can significantly improve the value of your pension pot available at retirement.

Fund NamePrevious %Current %
Blended global equity fund0.290.26
Blended multi-asset fund0.650.69
Blended index linked gilt fund0.180.17
BlackRock over 15 years corporate bond index fund0.180.19
BlackRock world (ex-UK) equity index fund0.190.19
BlackRock UK equity index tracker fund0.180.19
Annuity targeting fund0.18
BlackRock sterling liquidity fund0.180.14
Jupiter ecology fund1.160.89
Threadneedle pensions property fund0.910.84
BlackRock over 15 years gilt index fund0.180.19
MFS Meridian global equity fund0.960.74
BlackRock short duration credit fund0.28
BMO responsible equity fund0.70

What do I need to do?

You do not need to take any action. The changes will happen automatically between 20 October to 3 November 2021. You will not be able to make investment changes, or access Aviva’s secure online membersite, during this two-week period.

If you wish to make any changes to your current investment choices before these changes are made, you should do this via the online Fund switch form before 15 October. Alternatively, you will be able to update your investment choices after 3 November. Please note that due to Aviva’s rebalancing process, you may not see the changes to your lifecycle option for up to a month after this date.

We encourage you to use this opportunity to check that your pension pot/AVCs are invested in the funds you believe are appropriate for you.

Getting help

The Trustee is unable to provide you with advice in relation to your investments within the Plan. You should seek independent financial advice as part of your retirement planning. You can find an independent adviser in your area on the MoneyHelper website. You will have to pay for the advice or services that you receive from the adviser. MoneyHelper brings together the support and services of three government-backed financial guidance providers: the Money Advice Service, the Pensions Advisory Service and Pension Wise.


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