Pension news

Changes to investment options: what happens next

26 March 2018

We recently advised that the Trustee of The Pearson Pension Plan (the Plan) had decided to make some changes to the investment options available to members.

These changes will affect anyone who is a defined contribution (DC) member and/or has additional voluntary contributions (AVCs) invested with the Plan.

What is changing?

There are a number of changes taking place and it is dependent on how your Pension Pot is invested as to how you will be affected.

Changes to the lifecycle investment option

Currently, the Plan offers one lifecycle option to DC members and a separate lifecycle option for members with AVCs.

A lifecycle option is where a member’s Pension Pot automatically changes where it is invested, switching from higher risk funds to lower risk funds the nearer the member is to retirement.

From May 2018, there will be three new lifecycle options which have been designed 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)
  • a pension (also called an annuity) at retirement (the annuity lifecycle)
  • a cash lump sum at retirement (the cash lifecycle)

Changes to the self-select investment portfolio

For members who prefer to select their own investments, the self-select funds have also been updated to provide greater flexibility to meet individual circumstances.

Please note, if you fall into this category you should be aware that some of the funds that you may currently be invested in will no longer be available and are being replaced by alternative choices.

Switching to the new investment options:

If your Pension Pot is currently invested in one of the investment options that is no longer available, your funds will be switched to the new funds. The table below sets out how your funds will be switched.

Current Investment option New investment option
Lifecycle – More than 5 years from retirement Drawdown lifecycle
Lifecycle – Less than 5 years from retirement - Pension Pot more than £30,000 (projected to retirement) Annuity lifecycle
Lifecycle – Less than 5 years from retirement - Pension Pot less than £30,000 (projected to retirement) Cash lifecycle
BlackRock (30:70) currency hedged global equity index fund Blended global equity fund
BlackRock over 5 years index linked gilt index fund Blended index linked gilt fund
Money market fund BlackRock sterling liquidity fund
Schroder Life intermediated diversified growth fund Blended multi-asset fund
BlackRock market advantage strategy fund Blended multi-asset fund
Standard Life global absolute return strategies fund Blended multi-asset fund

Lower charges from Aviva

As well as the above changes, Aviva has also agreed to reduce the annual management charges (AMCs) for most of the investment funds available to members of the Plan.

To find out more information about the investment changes, as well as the new AMCs, please visit our investment change webpage

What do I need to do?

You do not need to take any action. The switch will happen automatically from 4 April to 8 May 2018. You will not be able to make investment changes, or access the membersite, during this four-week period.

We encourage you to use this opportunity to check that your Pension Pot is invested in the funds you believe are appropriate for you. If you would like to change your investment options prior to 4 April or after 8 May you can do this online via the Aviva membersite.

Contact us

The Trustee is unable to provide you with advice in relation to your benefits within the Plan. You should seek independent financial advice as part of your retirement planning. The Money Advice Service will help you to find an independent adviser in your area.

If you have any questions about your benefits in the Plan, please contact the pensions helpline:

freephone: 0800 7811378
web: the contact us page