Member Case Studies

 

Once you’ve chosen how your pensions contributions are invested, you should regularly review your retirement savings to see how they’ve performed. You should also check to make sure they’re still appropriate for your circumstances.

 

It’s important to remember that it’s likely that there will be periods where your retirement savings fall in value, and whilst the Trustee has chosen a selection of investment options that it believes will provide positive returns over the long-term, they cannot guarantee this.

 

Member case study: Lifestyle option – Sarah 

 

 

The below chart shows how Sarah’s retirement savings would have changed on a daily basis over the past three years:

 

 

This shows a reasonably steady increase in Sarah’s retirement savings by around £7,000, of which £6,500 was from the regular contributions and £500 was generated through investment returns.

 

However, looking more closely at the performance over the first three months of 2016 shows the underlying changes in the value of her savings pot that were experienced in this period:

 

 

Whilst Sarah’s retirement savings have increased steadily over the past 3 years, if Sarah had looked at their value on 31 December 2015 and then again on 11 February 2016, she would have seen a fall in her savings of £700 and may not have seen the subsequent recovery over the following year. That’s why it’s important to have a long-term view of your retirement savings.

 

Member case study: Lifestyle option – Joe

 

 

Joe’s case study shows how greater member contributions can lead to increased pensions savings.

Joe has the same salary as Sarah and starts with the same level of savings, however he has chosen to make greater member contributions than Sarah (6% of salary for Joe vs 3% for Sarah). This means he also receives a higher level of contributions from Telefónica (at 9% of salary rather than 6% which Sarah receives).

 

The below chart shows how Joe’s retirement savings would have changed on a daily basis over the past three years:

 

 

This shows a steady increase in Joe’s retirement savings by around £12,000, of which £11,000 was from the regular contributions and £1,000 was generated through investment returns. The higher level of contributions for Joe has resulted in a greater amount of retirement savings.

 

What does this mean for me?

The above case studies are based on real market data and are intended to illustrate how the value of your retirement savings can fall as well as rise. However the Trustee provides investment options where they believe the long-term performance will be positive, however they cannot guarantee this. They also illustrate that you don’t necessarily need to react to short-term falls in your retirement savings.

 

In the examples above, Sarah and Joe are both invested in the growth stage in the Lifestyle option, which aims to achieve a balance of positive investment growth and a relatively stable experience for members, i.e. a lower chance of a large fall in the value of your retirement savings. When selecting your investment options, it’s important to get an appropriate balance between returns and stability.

 

For further information on your investment options, click here.

 

Joe’s example also illustrates the importance of deciding the level of contributions which are appropriate to you and are also affordable. Remember that the greater the level of contributions you make, the more Telefónica will pay into your retirement pot [up to a maximum].

 

For further information on the contribution levels available, click here.

 

When making decisions about your retirement savings we recommend you take financial advice. You can find an independent adviser by going to www.unbiased.co.uk.

 

Note: the charts in the member case studies above are not available for members to view for their own retirement savings.