Lifestyle investment option

 

The Lifestyle options need the least input from yourself. The Plan’s Trustee selects the funds your contributions will be invested in.

 

While you are still some years away from retirement, your contributions are invested in a fund looking to achieve investment growth. As your retirement approaches, you are gradually switched into funds designed to offer stability based on how you intend to use your DC savings.

 

As the Lifestyle options switch into lower-risk funds as you near retirement it is important that nominated Plan retirement age is up-to-date. If your funds are switched to lower-risk funds too early, you will have less time for your savings to grow. If your funds are switched too late, it could mean that your savings are less protected and could therefore fall significantly if there was a market downturn.

 

The default retirement age for the Plan is 65 or 60 if you are an ex-Final Salary member. To update your Plan retirement age, go to www.telefonicarewards.com.  Remember, the target retirement age you select will impact what Lifestyle option your fund switches to 5 years before your target retirement age.

 

There  are 3 Lifestyle options to choose from. Which option you are best suited to will depend on how you intend to take your savings at retirement. The Lifestyle options are:  

 

  • Getting ready for income drawdown
  • Getting ready to purchase an annuity
  • Getting ready to cash out

 

If you are unsure how you will take your savings at retirement, don’t worry, the 3 Lifestyle options invest in the same way until you are 5 years from your Plan retirement age.

 

In the growth stage (until you are 5 years from retirement) each Lifestyle option invests in a multi-asset fund. This fund aims to grow your retirement savings ahead of inflation (after all costs) whilst limiting the likelihood of a significant loss to your savings over any individual year. 

 

 

To understand how the Lifestyle options differ in the final 5 years please click on the drop down boxes below.

Getting ready for income drawdown

Under this option, as you approach retirement your savings will automatically switch into funds that aim to find a balance between continuing to grow and protecting the value your savings, to help prepare you to take your savings a bit at a time (known as drawdown).

Getting ready to purchase an annuity

This is the same as the old Balanced Lifestyle option. Under this option, as you approach retirement your savings will automatically switch into funds that aim to protect your savings against the cost of buying an income for life (known as an annuity). This is the default option for the Plan.

Getting ready to cash out

Under this option, as you approach retirement your savings will automatically switch into funds that aim to protect the value of your savings. This option helps prepare you to take your savings as cash

All three Lifestyle options are designed assuming you will take 25% of your Retirement Account as a tax-free lump sum.

 

How do the Lifestyle options compare?

The key differences between the Lifestyle options is the Stability funds that they invest in the final 5 years to retirement. 

 

Lifestyle option Growth fund(s) Stability fund(s) - 5 years from retirement you will gradually switch into:
Getting ready for income drawdown Prior to 11 August 2016: BlackRock Diversified Growth Fund 

From 11 August 2016: SL Mobile Diversified Growth Fund*
Prior to 11 August 2016: BlackRock Diversified Growth Fund 
 
From 11 August 2016: SL Mobile Diversified Growth Fund*

Standard Life Deposit and Treasury Fund

 

Getting ready to purchase an annuity Prior to 11 August 2016: BlackRock Diversified Growth Fund 

From 11 August 2016: SL Mobile Diversified Growth Fund*
Over 15 Year Corporate Bond Fund

Standard Life Deposit and Treasury Fund
Getting ready to cash out Prior to 11 August 2016: BlackRock Diversified Growth Fund 

From 11 August 2016: SL Mobile Diversified Growth Fund*
Standard Life Deposit and Treasury Fund

 

* The SL Mobile Diversified Growth Fund will initially be invested 70% in the BlackRock Diversified Growth Fund and 30% in the Standard Life Enhanced Diversified Growth Fund. All funds invested in the BlackRock Diversified Growth Fund will be switched to the SL Mobile Diversified Growth Fund on 11 August 2016. For more information, click here.