How are pensions and investments linked?
Every month, you and the Company make contributions into your personal account. The money in your account is then invested with the aim of helping it to grow as much as it can until you retire. Apart from making these contributions in the first place, investing them could have the biggest impact on how much you’ll have in your account when you retire. That’s why it’s important to choose the right investment option for you.
Where can you invest?
Through the Scheme, you can select from a range of investment funds, which are designed to give you flexibility and choice.
If you’re confident making your own investment decisions, you can choose which funds to invest in yourself (Self-Select), but there are also three ready-made strategies (Lifestyle funds) you can choose from.
You can view the Annual Management Charges for the funds available in the Annual Management Charges document in the document library.
Lifestyle funds
Lifestyle funds use your Target Retirement Age (TRA) to determine where your benefits are invested and when.
Lifestyle funds aim to grow your money by investing in funds with higher returns when you’re further away from your TRA. As you approach your TRA, they’ll move into less volatile funds that may have lower returns to protect your money in line with how you want to take your benefits.
There are three Lifestyle Strategy funds available through the BRSS. You should choose the one that reflects how you want to access your money at retirement. You can only invest in one Lifestyle Strategy at a time.
Lifestyle Strategy funds
Target Lump Sum
Characteristics
This will initially invest in the Global Equity Fund before gradually switching to the Diversified Growth Fund 20 years before you reach your TRA.
Five years before your TRA, your fund will start to switch some contributions into the Money Market Fund so when you reach your TRA you are invested in the Money Market Fund and the Diversified Growth Fund.
Aims
The aim is to build up a suitable sized fund if you want to take all of your benefits as a cash lump sum at retirement.
Most suitable for?
Your funds are invested in a way that assumes you’ll take all your money as a cash lump sum when you retire.
Target Flexibility
Characteristics
This will initially invest in the Global Equity Fund before gradually switching to the Diversified Growth Fund 20 years before you reach your TRA.
Five years before your TRA, your fund will start switching into the Money Market Fund, the Diversified Growth Fund and the Target Level Annuity Fund.
Aims
The aim is to build up a suitable sized fund if you want to gradually draw down your benefits over a long period during retirement while keeping the balance of your funds invested.
You can take up to 25% of this as tax-free cash when you retire.
Most suitable for?
Your funds are invested in a way that assumes you’ll draw down on your investments once you retire in a flexible way to suit your circumstances.
Target Annuity
Characteristics
This will initially invest in the Global Equity Fund before gradually switching to the Diversified Growth Fund 20 years before you reach your TRA.
Seven years before your TRA, your fund will start switching into the Money Market Fund and the Target Level Annuity Fund.
Aims
The aim is to build up a suitable sized fund if you want to buy an annuity at retirement. You can take up to 25% of your fund as tax-free cash when you retire.
Most suitable for?
Your funds are invested in a way that assumes you’ll purchase an annuity when you retire.
Updating your TRA
Keeping your TRA up to date is important if you’re invested in a Lifestyle fund, because this age is used to determine how your personal account is invested. If you haven’t chosen a TRA, we will assume it is 65.
You can update your TRA by contacting Aviva or accessing your personal account.
Remember, if you decide to invest in one of the Lifestyle funds, you can’t invest in Self-Select funds at the same time.
Self-Select funds
If you’re confident making your own investment decisions, you can choose any combination of the funds available through Self-Select. You should be aware of the investment risks involved in the different funds and seek independent financial advice if you are unsure.
Growth Funds
Aviva Emerging Market Equity (BIGPS)
Characteristics
This fund is wholly invested in shares of companies that operate in emerging-market economies. It has the potential to produce strong returns but can also be volatile – more so than the Global Equity fund. Investments are spread over a range of underlying funds and countries so performance should be less volatile than a fund invested in one single country.
Aims
To produce strong long-term returns by investing in emerging-market equity funds.
Who is it likely to be suitable for?
Typically, you’ll be at least 10 years from retirement so you can absorb any risks associated with equity-market volatility.
You’ll be willing to accept more investment risk in anticipation of receiving strong, long- term returns.
If you’re approaching retirement, you’ll know that equities can be volatile in the short term so your fund may increase or decrease sharply.
Volatility
Highest
Aviva Global Equity (BIGPS)
Characteristics
This fund is wholly invested in shares of companies across the globe and has the potential to produce strong returns, but can also be volatile.
Investments are spread over a range of company shares and countries so performance should be less volatile than a fund invested in one single country or company
Aims
To produce strong long-term returns by investing in global equity markets.
Most suitable for?
Typically, you’ll be at least 10 years from retirement so you can absorb any risks associated with equity-market volatility.
You’ll be willing to accept more investment risk in anticipation of receiving strong long-term growth.
If you’re approaching retirement, you’ll know that equities can be volatile in the short term and your fund may increase or decrease sharply.
Volatility
Medium to High
Aviva Diversified Growth (BIGPS)
Characteristics
This fund invests in a diversified range of asset classes such as equities, property, commodities and fixed-interest securities.
Aims
The different mix of investments means your investment is spread across assets that are expected to behave differently from each other with the aim of reducing overall volatility.
Long-term growth may not be as high as the global- equity and emerging-market funds, but returns should be less volatile.
Most suitable for?
You’ll be prepared to sacrifice some long-term returns in comparison to equity funds in exchange for smoother year-on-year performance.
Volatility
Medium
Responsible Investment Funds
Aviva Stewardship
Characteristics
This fund aims to provide exposure to an ethically screened portfolio of assets while still growing the value of your account.
It will mainly be invested in the shares of UK companies. The ethical screening criteria of the fund will mean that its investments are more restricted than a non-ethical fund.
Aims
To generate long-term capital growth.
Most suitable for?
Typically, you’ll be at least 10 years from retirement to you can absorb the risks associated with performance volatility.
You may find this fund suitable if you want to invest in a range of company shares that have been selected for their sustainable business approaches and ethical criteria.
You may not consider it suitable if you’re approaching retirement.
Volatility
Medium to High
Islamic Global Equity Index (Shariah)
Characteristics
This fund aims to create long-term appreciation of capital through investment in a diversified portfolio of securities as defined by a relevant world index that meets Islamic investment principles.
Aims
To generate long-term capital growth.
Most suitable for?
You may wish to invest in specific funds because of your religious beliefs, or you want to invest in the underlying companies that make up the fund.
Typically, you’ll be at least 10 years from retirement so you can absorb the risks associated with equity-market volatility.
Volatility
Medium to High
Aviva (Pension) Climate-focused
Characteristics
This fund aims to provide exposure to a mixture of actively managed equities across companies that produce products and services that help reverse ecological damage, benefit from long-term sustainability-linked trends and the resultant increases in resource demand. These are well placed to grow strongly and generate compelling returns.
The fund focuses on companies that are committed to protecting the environment.
Aims
To generate long-term capital growth.
Most suitable for?
You want to use your investments to contribute towards positive environmental change.
Typically, you’ll be at least 10 years from retirement so you can absorb the risks associated with equity-market volatility.
You may find this fund attractive if you’re willing to accept more investment risk in anticipation of receiving strong long-term returns.
If you’re approaching retirement you’ll know that investing in equities can be volatile in the short term and your fund may increase or decrease sharply
Volatility
Medium to High
Approaching Retirement Funds
Aviva Target Increasing Annuity (BIGPS)
Characteristics
This fund invests in UK Index-Linked Gilts.
Aims
To generate a return that is consistent with the changing cost of buying an annuity at retirement which increases each year in line with inflation.
Most suitable for?
You’re planning on buying an increasing annuity when you retire.
Typically, you will have invested for the long term in one of the growth funds and you’ll switch gradually to this fund around five to 10 years before you retire.
Volatility
Low to Medium
Aviva Target Level Annuity (BIGPS)
Characteristics
This fund may invest in fixed-income securities, cash, deposits and money-market instruments.
Aims
To generate a return that is consistent with the changing cost of buying an annuity at retirement which does not increase each year in line with inflation.
Most suitable for?
You’re planning on buying a non-increasing annuity when you retire.
Typically, you will have invested for the long term in one of the growth funds and you’ll switch gradually to this fund around five to 10 years before you retire.
Volatility
Low to Medium
Aviva Money Market (BIGPS)
Characteristics
This fund may invest in cash, cash deposits, money-market instruments and fixed-income securities.
Aims
To achieve a return that is in line with short-term interest rates and to provide short-term liquidity.
Most suitable for?
You’re likely to be planning to take some or all of your benefits as cash when you retire. You’re aware that this fund is unlikely to generate substantial returns but may protect your fund.
Typically, you will have invested for the long term in one of the growth funds and you’ll switch gradually to this fund around five to 10 years before you retire.
Volatility
Lowest
You can read more in the investment fund factsheets in the document library.
What else should I consider?
Risk and return
Investing for your pension is all about seeking the highest possible returns (growth) for the long term. However, you need to decide how much risk you are willing to take to achieve that growth. Funds with low levels of risk (or volatility) – like the approaching-retirement funds shown above – are usually associated with lower potential returns. And funds with higher levels of volatility – like the growth funds also shown above – are usually associated with higher potential returns.
There are also other risks associated with investment. For example if you invest in overseas shares but the value of the overseas currency falls against the pound, this could affect your returns on that investment.
The two key risks though are: capital preservation, in other words trying to make sure that the value of your account doesn’t decrease too much if investments fall; and inflation risk, in other words trying to make sure your investments grow faster than the rate of inflation so their value increases in real terms.
The range of funds available through the Scheme is designed to mitigate these risks.
Changing your investments
Don’t forget that, once you’ve made a decision about how to invest your account, you aren’t stuck with it. You can change your investment choices at any time by logging on to your personal account and following the instructions. You can also make any changes by contacting Aviva.
From time to time the Scheme may change the investment choices available – you may wish to review and update your choices if this happens. There is no charge for changing your investments. See also the Charges section below.
Please note that the Trustee regularly reviews the investment choices available to you through the BRSS. It can also change the underlying managers, structure, operation and charges (see the Charges section below) of each fund. The Trustee can make these changes without letting you know beforehand. However, if you are affected by any such changes, Aviva will always let you know.
Financial advice
By law, neither the Trustee, your employer nor the Scheme Administrator can give you financial advice. If you are unsure about the investment decisions you’d like to make, we strongly advise you to speak to an independent financial advisor (IFA). You can find an IFA in your area on Unbiased.
Charges
While you won’t pay any charges for making changes to your investments, an amount will be deducted from your account over the year to pay for administration, investment management and the running of the Scheme’s investments.
This amount will depend on which funds you invest your contributions in and it can change. You can find details of the current charges in the Annual Management Charges sheet in the document library.
Next steps
Whatever investment choices you make, you should also consider the following points:
- How much am I currently paying?
- Can I afford to pay more?
- Do I need to pay more?
- Use our modeller to see what age you’d like to retire at and how much you need to contribute so you can live the lifestyle you want in retirement.
- Do you have a TRA in mind? The Pensions and Lifetime Savings Association (PLSA) has drawn up a helpful set of Retirement Living Standards that show how much income you’ll need in order to lead a minimum, moderate or comfortable lifestyle when you retire. You can find out more about these on the PLSA’s Retirement Living Standards website.
- Have you decided how you’d like to take your benefits when you retire? You can either buy an annuity, take your benefits as cash, or you can leave your account invested and gradually draw down on your account as and when you like. Or you can take a mixture of two or all three options.
Once you’re able to answer these questions, you can begin to plan:
- When you can retire,
- How much you’ll need to contribute between now and then, and
- How and where to invest your contributions.
What happens if I don’t make an investment choice?
If you do not choose one of the three Lifestyle funds or any Self-Select funds, your money will be invested in the Target Lump Sum Lifestyle fund. This means that your funds are invested in a way that assumes you’ll take all your money as a cash lump sum when you retire.
Don’t forget, you can change your investment choices at any time by logging into your Personal Account or contacting Aviva.
Pension scheme charges and governance reporting
You can find more information about charges and transaction costs for each fund available in the Scheme and how these may affect your benefits in the Charges and Governance section of this site.
This is where you’ll also find the most up-to-date versions of the following Trustee documents:
- Chair’s statement
- Statement of Investment Principles
- Value for Members – an assessment of how the charges and transaction costs of the Scheme’s funds represent good value for money for members
