Transfer of AVC's to the Investor Plan
The Trustees reviewed a range of factors in relation to the range of third party AVC funds in which members are invested, including the unit-linked funds that are the subject of this letter. These factors included:
1. Historic fund performance;
2. Potential to meet fund objectives in the future;
3. Fund charges.
The Trustees observed that:
1. The performance of these funds had been satisfactory in the period under review;
2. Prospects for meeting objectives in future were (in most cases) reasonable; but
3. There are relatively high charges associated with these legacy funds when compared to similar funds available in the Investor Plan.
The Trustees also noted that these are legacy funds which are closed to new contributions and currently only held by a small number of members.
The Trustees concluded that transferring members to the Investor Plan would help members receive overall better value.
By transferring your holdings into the Investor Plan you will immediately benefit from the lower fees the Trustees have been able to negotiate with the Investor Plan’s fund managers. You will also benefit from the ongoing control and oversight the Trustees have over the Investor Plan’s investment arrangements.
For more details on the Investor Plan visit the My Pension website.
The default investment option is the one used for all members of the Investor Plan unless they choose otherwise. This option is called the Flexible Access Lifestyle.
‘Lifestyle’ options mean funds will automatically move to less volatile investments as you get closer to retirement to minimise the risk of large fluctuations in your pension savings shortly before you access them.
‘Lifestyle’ blends together three different funds (the Fidelity Siemens Balanced Fund, the Fidelity Siemens Consolidation Fund and the Fidelity Siemens Opportunity Fund) to achieve long-term growth that is similar to equities but with less variability in returns. The funds invest in a range of underlying funds. Initially they provide diversified exposure to global equities, including emerging market equities, and incorporate a limited allocation to property and infrastructure funds. As you near retirement the blend automatically changes with the aim of reducing the variability in returns. Within 10 years of your target retirement age the blend increases bond strategies with the aim of reducing variability further.
The latest fund charges for the Investor Plan are set out in the following table. Please note these charges can change from time to time; the latest charges can be found on the Investor Plan website.
The table includes the separate charges for each of the funds that makes up the default investment option but be aware that the overall charges in the default investment option will vary over time as the blend of these funds’ changes depending on your age. The charges (the total expense ratio) start at 0.21% if you are 26 years or more from your target retirement age because you would be 100% invested in the Opportunity Fund. They reach a maximum of 0.48% as you approach your target retirement age, when you would be 75% invested in the Balanced Fund and 25% invested in the Consolidation Fund.
Your target retirement age is the age you are aiming to take your benefits, this is automatically set to 65. If you want to choose another age, when the transfer is complete, you can do this by visiting the Investor Plan website, logging in and then selecting the change investment screen.
If you are invested in the default investment option then your target retirement age will be used to work out when to switch your account into lower-risk investment options and retiring at a different time may defeat the objective of your chosen Lifestyle strategy. For example, if you’re in Flexible Access Lifestyle and your target retirement age is 65, but you actually retire at 60, your account will be invested in higher-risk options when you retire, not having had the time to switch to more balanced options. Investing in higher-risk options close to retirement puts your retirement savings at a higher risk of falling in value due to market movement.
If you wish to change the way your transferred monies are invested, once the transfer is complete you can do this by visiting the Investor Plan website, logging in and then selecting the change investment screen.
You can find more details on the Investor Plan on the My Pension website. A copy of the Investor Plan guide is also available in the resources area of the Investor Plan page of the website. The Investor Plan guide provides full details of all the funds available to you.
If you do want your funds to be transferred to the Investor Plan but do not want them invested in the default investment option, you should complete the form attached to the letter you received in October and return it by 31 January 2020.
If you choose this option, your funds will be transferred to the Investor Plan and invested in the cash fund. Once the transfer is complete you will be able to log on to the Investor Plan website and select your own investments from the full range offered.
If we do not receive a completed form, then your funds will be invested in the default investment option.
If you do not want your funds to be transferred in this way you can choose to transfer to another pension provider, provided you notify us before 31 January 2020.
Please be aware that if you elect to move your Unit Linked AVC funds to an alternative provider, then you will be moving them out of the Siemens Benefits Scheme and will not be able to include these funds in calculating your overall benefits or cash lump sum entitlements when you take your benefits from Siemens Benefits Scheme.
If you have not contacted us by 31 January 2020 your AVC holdings will be automatically transferred into the default investment fund in the Investor Plan.
On the login page, you can click on the ‘Forgotten username or password?’ link and follow instructions.
If you experience any further difficulties please call the Orbit helpline on 0207 204 1212 or email email@example.com It is worth noting that if you have registered but haven’t logged on for 90 days, you will need to reset your password.