Pensions

Briggs Pension Scheme (2001)

Annual Governance Statement 2019

Please click here for the Annual Governance Statement 2019

Information of the Investment Options and Default Strategy

Investment options

The Trustees have made available the following investment options for Members:

  • The Diversified Fund
  • Retirement Income Multi-Asset Fund
  • The Pre-Retirement Fund
  • Cash Fund

As a member of the Scheme, all of the assets in your Individual Account are invested with Legal & General (“LGIM”).  All of these assets are managed by Legal & General.

The Diversified Fund is structured as a ‘fund-of funds’, and is implemented almost entirely through passive LGIM vehicles (with the exception of some high yield assets and the holding of some physical property.). The investment objective of the Fund is to produce long-term investment growth through exposure to a diversified range of asset classes.

The Retirement Income Multi-Asset Fund is managed by LGIM with the aim of enhancing returns and managing downside risk.  The investment objective of the fund is to provide long-term investment growth up to and during retirement, and to facilitate the drawdown of retirement income. It is invested in a mixture of index tracking and actively managed funds.

The Pre-Retirement Fund aims to provide diversified exposure to assets that reflect the investments underlying a typical traditional level annuity product. The Fund is managed on a passive, index-tracking, investment basis, investing in Gilts, corporate bonds and other fixed interest securities.

The Cash Fund aims to maintain capital and provide a return in line with money market rates. The fund will generally invest in short term deposits, certificates of deposit, government bonds (predominantly UK) issued in pounds sterling, and other financial instruments.

Full details of each of these funds are available from the Secretary to the Trustee.

The Trustees will regularly review the performance of the chosen investment manager (currently Legal & General) who may be added to or replaced in the future.

What is a lifestyle investment strategy?

The Trustees have adopted a lifestyle investment strategy as the default investment strategy for members unless they choose otherwise.  The broad aim of the lifestyle investment strategy is to invest your Individual Account for growth and to automatically change the way in which your Individual Account is invested over the ten years before a target retirement age of 65 (or such other retirement date as you may choose (“your Selected Retirement Date”)).  The general aim of this switching process is to make the level of your pension more predictable.  This means that at target retirement age your Individual Account will usually be invested in a way which broadly matches the form in which your benefits are typically taken – approximately 25% of your Individual Account will usually be taken as a cash lump sum with the balance of your Individual Account being used to provide a pension.

How is the lifestyle strategy implemented?

From the 1 October 2019 the Default lifestyle strategy will be the Freedom Lifestyle Strategy.

It is implemented by investing your Individual Account entirely in the Diversified Fund until you reach age 55 (as normal). However, between the ages of 55 and 65 your Individual Account will be gradually moved to the Retirement Income Multi-Asset Fund (as opposed to the Fixed Interest Fund) and the Cash Fund so that by age 65, a portion equalling 75% of your Individual Account will be invested in the Retirement Income Multi-Asset Fund and 25% in the Cash Fund.

This is the strategy that will be the default investment strategy unless you chose otherwise. The change in the allocation between the funds in your Individual Account in the ten years prior to your target retirement date/Selected Retirement Date, will occur with switches four times a year.  Contributions made by you and the Company during this time will be invested proportionately in the three funds.  Further details of this switching process can be obtained from the Secretary to the Trustees.

The Retirement Income Multi-Asset Fund aims to provide long term investment growth with a view to facilitating the drawdown of retirement income. To achieve this, the Retirement Income Multi-Asset Fund provides exposure to a wide range of different assets (cash, commodities such as oil and gold, shares, property etc.). The fund is managed by Legal & General with the aim of enhancing returns, but also managing risk. To that end, the investments are both index tracked, and actively managed.

The previous default strategy under the Scheme was the ‘Annuity Default Lifestyle Strategy’. It is implemented by investing your Individual Account entirely in the Diversified Fund (i.e. a fund which invests for growth by holding a wide range of shares both in the UK and overseas) until you reach age 55.  Between the ages of 55 and 65 the investments in your Individual Account will be automatically and progressively moved to the Fixed Interest and Cash Funds such that at age 65 your Individual Account will be invested broadly 25% in the Cash Fund and 75% in the Fixed Interest Fund.

A Fixed Interest fund is generally accepted as an appropriate investment for assets that will be used to buy a pension (referred to as an ‘annuity’) as annuity rates are typically linked to values available in the Fixed Interest market.  By investing, in the period shortly before retirement, that part of your Individual Account that is likely to be used to purchase an annuity, in a Fixed Interest Fund, the value of this part of your Individual Account should move broadly in line with annuity rates.  This gives a degree of protection against changes in annuity rates close to your target retirement date/Selected Retirement Date therefore making your ultimate pension amount more predictable. The change in the allocation between the funds in your Individual Account in the ten years prior to your target retirement date/Selected Retirement Date, will occur with switches four times a year.  Contributions made by you and the Company during this time will be invested proportionately in the three funds. This lifestyle strategy is still available under the Scheme. You will be required to complete an investment form, available from the Secretary to the Trustees, to select this lifestyle strategy.

Further details of this switching process can be obtained from the Secretary to the Trustees.

Please note that for members over 55 years of age at 1 January 2014 have a different default switching strategy that applies over a five year period beginning at age 60.

What are the current management charges?

The current investment management charges that apply to the funds, and that will be deducted from your Individual Account, are:

Fund

(*=default arrangement)

(all held with LGIM)

Administration 

charges

Indirect fees  Transaction costs within the fund
Diversified Fund* 0.30% pa 0.02% -0.05%
Pre-retirement Fund 0.15% pa 0.00% 0.02%
Cash Fund 0.12% pa 0.00% 0.00%
Retirement Income Multi-Asset Fund (RIMA) 0.35% pa 0.03% 0.03%

 

Indirect Fees: (from sub-funds within the fund)

Note: Indirect transaction costs have been calculated assuming a static fund structure as at 31 March 2019.

 

Cumulative effect of charges and transaction costs

 

Illustrative examples of the cumulative impact of costs and charges

This table shows in today’s money the projected pot over time for a member invested in each of the specified funds. Values shown are estimates only and are not guaranteed.

Member 1

Annuity Lifestyle Strategy
10 year matrixPre-retirement Fund
(default fund)
Freedom Lifesyle Strategy

10 year matrix

RIMA Fund

 

Years invested Before charges After charges Before charges After charges
1 £12,600 £12,500 £12,600 £12,500
3 £18,000 £17,900 £18,000 £17,900
5 £23,900 £23,600 £23,900 £23,600
10 £40,300 £39,500 £40,300 £39,500
15 £60,900 £59,100 £60,900 £59,100
20 £87,600 £84,100 £87,600 £84,100
25 £119,000 £113,000 £119,000 £113,000
30 £156,000 £147,000 £157,000 £147,000
35 £190,000 £178,000 £199,000 £185,000
38 (SRD is age 65) £202,000 £189,000 £220,000 £204,000


Notes to assist in interpreting the figures

The examples given above have been prepared on the following assumptions:

  1. Projected pension pot values are shown in today’s terms, and do not need to be reduced further for the effect of future inflation.
  2. The example member is age 27, a Selected Retirement Date of their 65th birthday, a starting fund of £10,000, a salary of £25,000 and is paying minimum contributions.
  3. Inflation is assumed to be 2.5% each year.
  4. Contributions are assumed to increase in line with assumed earnings inflation of 2.5% each year.
  5. Growth rates assumed are:
    • Long-term growth portfolio – 6.0% each year
    • RIMA fund – 5.0% each year
    • Pre-retirement fund – 2.9% each year
    • Cash – 0.5% each year

The growth rates shown in the table are for illustrative purposes only and are not guaranteed.  Where transaction costs in the year to 31 March 2019 are negative they have been assumed to be nil in future.

 

Member 2

Annuity Lifestyle Strategy
10 year matrixPre-retirement Fund
(default fund)
Freedom Lifesyle Strategy

10 year matrix

RIMA Fund

 

Years invested Before charges After charges Before charges After charges
1 £55,700 £55,500 £55,700 £55,500
3 £67,800 £67,200 £67,800 £67,200
5 £80,700 £79,600 £80,700 £79,600
10 £117,000 £114,000 £120,000 £117,000
15 (SRD is age 65) £146,000 £142,000 £158,000 £152,000


Notes to assist in interpreting the figures

The examples given above have been prepared on the following assumptions:

  1. Projected pension pot values are shown in today’s terms, and do not need to be reduced further for the effect of future inflation.
  2. The example member is age 50, a Selected Retirement Date of their 65th birthday, a starting fund of £50,000, a salary of £35,000 and is paying minimum contributions.
  3. Inflation is assumed to be 2.5% each year.
  4. Contributions are assumed to increase in line with assumed earnings inflation of 2.5% each year.
  5. Growth rates assumed are:
    • Long-term growth portfolio – 6.0% each year
    • RIMA fund – 5.0% each year
    • Pre-retirement fund – 2.9% each year
    • Cash – 0.5% each year

The growth rates shown in the table are for illustrative purposes only and are not guaranteed.  Where transaction costs in the year to 31 March 2019 are negative they have been assumed to be nil in future.

Further Information

Information on all of the funds can be found via the LGIM website’s fund centre and searching for the relevant Funds our Scheme offers. It is available here; https://www.lgim.com/uk/en/fund-centre/

LGIM’s website for defined contribution pension scheme members also provides useful information and tools; https://microsites.lgim.com/lgim

Secretary to the Trustees

Julie Fletcher

Briggs Pension Trustees Limited

Derby Street

Burton-on-Trent

Staffordshire

DE14 2LH

+44 1283 566661