Aviva



Aviva has provided the draft letter below to assist trustees who wish to inform their members of the change in fund structure. Trustees are responsible for whether they think this item is suitable for their scheme members.Dear MemberAviva will be closing the Lifestyle Retirement Funds 2015, 2020 & 2025, which means if you are invested in these funds there will be changes to where your pension savings are invested. Aviva believes these changes will deliver more flexibility and options for scheme members. The Lifestyle Retirement funds were designed to prepare you for taking an annuity when you retire, but changes in pensions legislation mean more options are now available. Details of the changes are set out over the page.There is no action you need to take as a result of these changes. If you have any questions about this please see the enclosed Questions and Answers or call us on [insert telephone number].Yours sincerelyYour questions and answersWhat is changing?Your pension scheme’s default investment option will no longer target an annuity purchaseYour investment in Lifestyle Retirement 2015, 2020 and / or 2025 funds will automatically be moved to the more flexible options set out in the below table. Current Fund Name and Risk RatingReplacement Fund DetailsLifestyle Retirement 2015 and 2020 AP fundsRisk Rating: 3 Low to Medium VolatilityAim: To provide an appropriate mix of assets for investors who wish to build capital to purchase an annuity in or around the year stated in the fund name.The funds allocation will change over time with the emphasis in the early years on growing the fund when the manager will invest in equities. As the expected year of retirement approaches the asset mix will change in favour of bonds and cash.My Future Consolidation AP fundRisk Rating: 3 Low to Medium VolatilityAim: To achieve a total overall return from capital growth and reinvested income by investing in a portfolio of predominately passively managed funds. As significant proportion of the fund’s assets invest in bonds, but can also be some investment in equities, property, money market instruments and cash.Lifestyle Retirement 2025 AP fund Risk Rating: 5 Medium to High Volatility Aim: To provide an appropriate mix of assets for investors who wish to build capital to purchase an annuity in or around the year stated in the fund name.The funds’ allocation will change over time with the emphasis in the early years on growing the fund when the manager will invest in equities. As the expected year of retirement approaches the asset mix will change to include some bonds and cash.Lifestyle Retirement 2030 AP fund Risk Rating: 5 Medium to High Volatility.Aim: To provide an appropriate mix of assets for investors who wish to build capital with the intention of making withdrawals from their pension savings in the form of a drawdown from the year stated in the fund name. The funds’ allocation will change over time with the emphasis in the early years on growing the fund when the manager will invest in equities. As the expected year of retirement approaches the asset mix will change to include some bonds and cash.What do the risk ratings mean?Aviva calculates its risk ratings using historical performance data, based upon the methods set by European Union rules. We also carry out further research using information from the fund's investment manager. We review each fund's risk rating annually and these may change over time. The timing of investment decisions is very important, and investors should consult a financial adviser. Past performance is not a guarantee of future performance. Our risk ratings go from 1 to 7, with 1 being the lowest and 7 the highest. As?a point of reference, a fund with a risk rating of 4 (medium volatility) would typically experience the volatility you would expect from a fund invested in a range of different investments (for example shares, property and bonds) without any bias to a particular investment type. Remember that all investment funds carry some element of risk, but this varies from fund to?fund.The table below explains the risk ratings.Risk ratingRisk rating description7Highest volatilityThe historical performance of funds with this risk rating has typically experienced the highest volatility of all the funds Aviva has rated. This means that these funds have the highest potential for substantial changes in value compared with other Aviva insured funds.6High volatilityThe historical performance of funds with this risk rating has typically experienced high volatility compared with other funds Aviva has rated. This means that these funds have a high potential for substantial changes in value compared with other Aviva insured funds.5Medium to high volatilityThe historical performance of funds with this risk rating has typically experienced medium to high volatility compared with other funds Aviva has rated. This means that these funds have a medium to high potential for substantial changes in value compared with other Aviva insured funds.4Medium volatilityThe historical performance of funds with this risk rating has typically experienced medium volatility compared with other funds Aviva has rated. This means that these funds have a medium potential for substantial changes in value compared with other Aviva insured funds.3Low to medium volatilityThe historical performance of funds with this risk rating has typically experienced low to medium volatility compared with other funds Aviva has rated. This means that these funds have a low to medium potential for substantial changes in value compared with other Aviva insured funds.2Low volatilityThe historical performance of funds with this risk rating has typically experienced low volatility compared with other funds Aviva has rated. This means that these funds have a low potential for substantial changes in value compared with other Aviva insured funds.1Lowest volatilityThe historical performance of funds with this risk rating has typically experienced the lowest volatility of all the funds Aviva has rated. This means that these funds have the lowest potential for substantial changes in value compared with other Aviva insured funds.Please note: These investment risk ratings are based on our interpretation of investment risk and are only meant as a guide. These levels of investment risk are not guaranteed and may change in the future. What are the Lifestyle Retirement Funds?The Lifestyle Retirement Funds, are structured as shown in the table below:FundInvestmentsDesigned forLifestyle Retirement Funds 2015, 2020 & 2025Bonds and cashMembers who intend to convert their pension savings into a regular income for life, by buying an annuity.Lifestyle Retirement Funds 2030, 2035, 2040, 2045 & 2050Primarily equities, but also bondsMembers who intend to take an income by making withdrawals from their pension savings while remaining invested, by buying a drawdown arrangement.What is My Future Consolidation?The My Future Consolidation could be suitable for those who have not yet decided how they want to use their pension savings and would prefer to keep their options open. My Future focuses on long-term volatility targets to help manage risk and reduce the likelihood of your savings experiencing large fluctuations in value. The volatility targets are set by Aviva. Like your previous fund the money you invest here can go down or up in value and is not guaranteed. My Future Consolidation is structured as shown in the table below:My Future ‘Universal’Component fundsInvestmentsAimDesigned forMy Future Consolidation(4% volatility target)Primarily bonds, but also equitiesThis fund aims to reduce the level of risk to which members’ pension savings are exposed, while continuing to provide the opportunity for growth. It seeks to generate a stable level of return.Members who have not yet decided how they want to use their pension savings and would prefer to keep their options open. Is there any cost to me as a result of these changes?No, there will be no cost to you or changes to charges.Is there anything I need to do?No action is required as a result of these changes.When will these changes take place?These changes will take place from between July and December 2019. ................
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