Short Fund Guide. Flexible Retirement Plan

Transcription

1 Short Fund Guide Flexible Retirement Plan

2 Introduction This short fund guide gives you a list of funds you can choose from, an indication of the potential reward and risk of each fund and information on fund charges. Your financial adviser will give you a full fund guide when you take out the plan. This guide provides more information on the funds available, including the objective of each fund and its risk profile. Alternatively, you can visit our website pru.co.uk/funds. Potential reward and risk indicator Investing is about balancing the risk you are comfortable with alongside the potential rewards that you want to achieve. Your attitude to investment risk is personal to you and may change in the future. The table opposite can help illustrate this concept. It s not exhaustive, but covers a wide range of funds and investments and shows the general principle that, as the level for potential higher returns increases so does the level of risk. On pages 5 to 6 you can see how these potential reward and risk indicator numbers relate to our funds. Some key considerations: > The value of our funds may fluctuate. You may not get back the full amount of your original investment. > These risk rating categories have been developed by Prudential to help provide an indication of the potential level of reward and risk that is attributable to a fund based on the type of assets which may be held within the fund. > Other companies may use different descriptions and as such these risk rating categories should not be considered as generic to the fund management industry. > Prudential will keep the risk rating categories under regular review and as such they may be subject to change in the future. > Where a risk rating is amended as a result of a material change in our view of the level of risk for the fund, for example due to a significant change to the assets held by the fund or in the way the fund is managed, information will be provided on the new risk rating. > Please remember that the name of a fund is not indicative of the risk that it may take. > We strongly recommend that before making any fund choice in the future you ensure you understand the appropriate risk ratings at that time. You will find this information in our Fund Guides, along with further information, at pru.co.uk/funds. For further details of recent fund changes then please visit pru.co.uk/funds/changes. You should also consider discussing your decision with your financial adviser. It is important to also note that your adviser may make their own assessment of the risk rating of funds when considering your needs and objectives, and this may differ from Prudential s own internal assessment. The information included in this guide is correct as at 25 January 2016 unless otherwise stated. 2 Short Fund Guide: Flexible Retirement Plan

3 Potential reward and risk indicator Higher Potential Rewards Lower Types of Fund * Single Country Equity Funds, International Equity Funds Flexible Investment Funds, Global Property Funds Mixed Investment 40-85% Shares Funds, Direct Property Funds, Global High Yield Funds Mixed Investment 20-60% Shares Funds, Distribution Managed Funds, Sterling High Yield Funds, Global Fixed Interest Funds, With-Profits Funds** Mixed Investment 0-35% Shares Funds, Sterling Fixed Interest Funds, Corporate Bond Funds, Protected/Guaranteed Funds Deposit & Treasury Funds, Money Market Funds Higher Risks Lower *Types of Fund These are predominantly based on sector classifications by the Association of British Insurers (ABI). The description used may match an individual ABI sector name or be a Prudential suggested description for a grouping of similar sectors. The only exception to this is With-Profits which is not classified by the ABI. Where a fund is classified by the ABI then we will use the sector it is in as a starting point to consider its appropriate position in the scale above, however each fund is considered individually and membership of an ABI sector does not automatically imply a particular potential reward and risk indicator number. ** With-Profits Funds Some funds invest in our With-Profits Fund and appear in a lower or higher potential reward and risk indicator category. This is because of the different asset mix that applies to each PruFund Fund. Please refer to the specific PruFund potential reward and risk indicator on page 5. Our full fund guide provides further information on these funds. Short Fund Guide: Flexible Retirement Plan 3

4 Fund information Important explanations The Fund Value The value of an investment can go down as well as up and the value in future may be less than the amount invested. For investments in the With-Profits Funds, the value of the plan depends on how much profit the Funds make and how we decide to distribute it. For the PruFund Range of Funds what you receive will depend upon the value of the underlying investments, the Expected Growth Rates set by the Prudential Directors having regard to the expected long term investment returns on the assets of the funds, the smoothing process, whether you have chosen a Protected Fund and when you take your money out. The guarantee, if applicable, is applied to your plan on the guarantee date. Fund Charges Annual Management Charge We take an Annual Management Charge (AMC) from each of the funds you invest in. These are shown on pages 5 to 6. The amounts quoted are the basic AMC. The actual AMC rate applicable is determined by the total funds under management held within the Flexible Retirement Plans (excluding self-invested funds and the holding account) and the number of years invested in the plan. Also, for plans set up with fund related commission this will also be included in the actual AMC. Fund related commission may apply to Flexible Retirement Plans where advice to set up the plan was given prior to 31 December If the AMC exceeds the return earned, the fund will go down in value. In general the AMC is taken by the deduction each day of 1/365th of the applicable Annual Management Charge, from the relevant unit linked fund. This differs slightly for With-Profits and PruFund. For With-Profits the AMC will depend on the returns we achieve on our funds. We expect the AMC quoted on page 5, if the fund returns are 5% a year. The AMC, and charges to cover the cost of guarantees, are already taken into account when we calculate the bonus rates for our With-Profits Fund. For further details of the charges for this fund, please refer to the Key Features document. The AMC for the PruFund Funds is taken by the monthly cancellation of units from each investment. If you select a Protected PruFund Fund, you will be able to select from a range of guarantee terms, where the guarantee will only apply on the plan anniversary of the selected term or at the date you reach your Selected Retirement Age. Each guarantee term has its own charge and will be payable for the whole of the term. For full details of the guarantee terms available and the associated charges, please refer to the document PruFund Range of Funds: Guarantee Options INVS You can get a copy of this from your adviser or from pru.co.uk. There is a charge to pay for the guarantees the With-Profits Fund supports. Please refer to your Key Features document for more information. Additional Fund Charges for Investment Linked-Funds In addition to our management charges, there are further costs which impact the overall performance of the fund. These costs are known as trading or dealing costs and property expenses. When a fund manager trades the investments in your fund (for example, makes a decision to sell one holding and buy another) there are associated costs, for example taxes, which the fund pays. These costs are paid for out of the overall performance of the fund, are not rebated by Prudential and are over and above the charges included in the Additional Charge section on subsequent pages. There are additional costs which are currently rebated back by Prudential to the fund and therefore will not impact the long term performance of the fund. We reserve the right to explicitly charge for them in the future. For funds that invest directly or indirectly in property managed by M&G, there are additional costs incurred for the development, maintenance, operation and renovation of the properties held. These costs are known as property expenses, are paid for out of the overall performance of the fund and are not rebated by Prudential. These costs are included in the Additional Charge section on subsequent pages. For other property funds, property expenses are currently rebated back to the fund. Your illustration will show the charges applicable to your chosen fund(s). Charges may vary in future and they may be higher than they are now. Please see your full fund guide for further information. If you are in any doubt about this product option, your fund choice or the charges applicable then we recommend you speak to your financial adviser. The Fund Charges listed in this guide are correct as at 25 January Further Information You should also consider that the effect of inflation may reduce what you could buy in the future with your pension. If inflation is particularly high it could cancel out returns that you make on your pension investment. These Prudential funds may hold an element of cash due to the short delay between new investments being received by the Prudential fund and being placed in the underlying investment(s), and this may have an impact on the performance of the Prudential fund when compared to the underlying investment(s). You can find details of how we manage our Unit-Linked Funds at pru.co.uk/ppfm/ul. You will also find there a shortened customer friendly version, our Customer Guide, which explains briefly how the Prudential unit-linked funds work, our current approach to managing them, and the standards and practices we use to manage the funds. Principally, this Customer Guide will explain: > the nature and extent of the decisions we take to manage the funds, and > how we treat customers and shareholders fairly. 4 Short Fund Guide: Flexible Retirement Plan

5 Funds Prudential Multi-Asset Funds Potential reward and risk indicator Base AMC (%) Additional Total Prudential PruFund 0-30* Prudential PruFund 10-40* Prudential PruFund 20-55* Prudential PruFund 40-80* Prudential PruFund Cautious* Prudential PruFund Growth* Prudential PruFund Protected Cautious* Prudential PruFund Protected Growth* Prudential With-Profits Prudential Dynamic Focused Portfolios** Prudential Dynamic Focused 0-30 Portfolio (previously known as Prudential Managed Defensive) Prudential Dynamic Focused Portfolio (previously known as Prudential Cautious Managed Growth) Prudential Dynamic Portfolios** Prudential Dynamic 0-30 Portfolio Defensive Portfolio) Prudential Dynamic Portfolio Cautious Portfolio) Prudential Dynamic Portfolio Cautious Growth Portfolio) Prudential Dynamic Portfolio Balanced Portfolio) Prudential Dynamic Portfolio Adventurous Portfolio) The PruSelect Range Prudential Artemis European Growth Prudential Artemis Global Growth Prudential Artemis High Income Prudential Artemis Income Prudential Artemis Strategic Bond Prudential Artemis UK Growth Prudential Artemis UK Smaller Companies Prudential Artemis UK Special Situations Prudential Aviva Property Trust Prudential AXA Framlington Monthly Income Prudential AXA Framlington UK Select Opportunities Funds Potential reward and risk indicator Base AMC (%) Additional Total The PruSelect Range continued Prudential Baillie Gifford High Yield Bond Prudential BlackRock Gold & General Prudential BlackRock UK Prudential BlackRock UK Special Situations Prudential Fidelity European Prudential Fidelity MoneyBuilder Income Prudential Fidelity South East Asia Prudential Henderson Cautious Managed Prudential Henderson China Opportunities Prudential Henderson European Selected Opportunities Prudential Henderson Preference and Bond Corporate Bond Distribution Global Bond High Income Income Monthly Income Plus Prudential Investec Cautious Managed Prudential Investec Global Strategic Equity Prudential JP Morgan Europe Dynamic (ex UK) Prudential JP Morgan Natural Resources Prudential Jupiter European Special Situations Prudential Jupiter Merlin Balanced Portfolio Prudential Jupiter Merlin Growth Portfolio Prudential Jupiter Merlin Income Portfolio Prudential Jupiter Merlin Worldwide Portfolio Prudential Jupiter UK Growth Prudential Kames Ethical Equity Prudential Kames High Yield Bond Prudential Kames Investment Grade Bond Prudential Kames Strategic Bond * The Annual Management Charge for these Funds is taken by monthly cancellation of units from each investment. ** Each portfolio is a single fund choice, although each portfolio will invest in a number of underlying funds. For consistency and transparency we show the Total Charges including the Property Expense Ratio (PER). The PER captures all nonrecoverable expenses associated with the management and operation of the property portfolio. Short Fund Guide: Flexible Retirement Plan 5

6 Funds The PruSelect Range continued Potential reward and risk indicator Base AMC (%) Additional Total Prudential Kames UK Opportunities Prudential M&G Corporate Bond Prudential M&G Global High Yield Bond Prudential M&G Global Leaders Prudential M&G Recovery Prudential M&G Strategic Corporate Bond Prudential Man GLG Japan CoreAlpha Prudential Neptune Global Alpha Prudential Neptune Global Equity Prudential Newton Global Income Prudential Newton Multi-Asset Balanced Prudential Old Mutual UK Mid Cap Prudential Royal London Sustainable Leaders Prudential Schroder Income Prudential Schroder Tokyo Prudential Schroder UK Smaller Companies Prudential Schroder US Mid Cap Prudential Standard Life Global Absolute Return Strategies Prudential Stewart Investors Asia Pacific Leaders Additional Fund Choice Prudential 95% Safeguard Prudential BlackRock UK Absolute Alpha ^^ Prudential BlackRock UK Smaller Companies Prudential Cash Prudential Corporate Bond ^ Prudential Equity Prudential European Prudential Fixed Interest Prudential FP Verbatim Portfolio Prudential FP Verbatim Portfolio Prudential FP Verbatim Portfolio 5 Growth Funds Potential reward and risk indicator Base AMC (%) Additional Total Additional Fund Choice continued Prudential FP Verbatim Portfolio 5 Income Prudential FP Verbatim Portfolio Prudential FP Verbatim Portfolio Prudential Global Emerging Markets Portfolio Prudential Henderson European Growth Prudential International Managed Growth Prudential Investec American Prudential Japanese Prudential Jupiter Financial Opportunities Prudential Jupiter Income Prudential M&G Dividend Prudential M&G Gilt & Fixed Interest Income Prudential M&G Global Basics Prudential M&G Managed Growth Prudential M&G North American Dividend Prudential M&G Smaller Companies Prudential M&G UK Equity Income ^ Prudential M&G UK Growth Prudential Managed Prudential Managed Distribution Prudential Neptune Balanced Prudential Newton Global Equity Prudential North American Prudential Pacific Markets Prudential Property Prudential Schroder Core UK Equity Prudential Schroder UK Alpha Plus Prudential Threadneedle American Prudential Threadneedle American Select Prudential UK Equity and Bond ^ ^^ This fund is only open to existing investors. In addition to the total charge, the fund manager charges a performance-related fee of 20% of the amount by which the fund s performance exceeds that of the three-month GBP London Interbank Offered Rate (LIBOR). For consistency and transparency we show the Total Charges including the Property Expense Ratio (PER). The PER captures all non-recoverable expenses associated with the management and operation of the property portfolio. Further information For more information on a particular fund speak to your financial adviser or go to pru.co.uk/funds 6 Short Fund Guide: Flexible Retirement Plan

7 SIPP Options A Self Invested Personal Pension (SIPP) is a personal pension that allows you to access a wide choice and type of investments when it comes to saving for your retirement. With so many investment options available a SIPP allows you with your financial adviser or an investment manager to build up and manage your investment portfolio. We offer a choice of SIPP options through the Self Invested Fund option on the Flexible Retirement Plan: > Full SIPP provides an extensive range of investment options with the ability to invest directly into commercial property, stocks, shares, unit trusts, OEICs and the Cofunds fund range. > Fund SIPP is a lower cost option, providing access to up to 20 funds from the Cofunds supermarket. Like any personal pension plan, a SIPP is a long-term commitment and the value of your investment can fall as well as rise. Investing your SIPP in certain asset categories may expose you to increased levels of risk and, in particular, the sale of commercial property may be a long process at certain times due to prevailing market conditions. The charges for a SIPP are usually higher than for a conventional personal pension. Also, the charging structure of a SIPP has a proportionately greater effect on smaller funds than it does on larger funds. So if you are not intending to make larger investments the effect of charges will mean the SIPP might not be right for you. You should discuss this with your financial adviser. Lifestyle Options To assist you in managing risk, we offer a pre-defined lifestyle option for both our Personal Pension and Income Drawdown options. If you would like to discuss these options further please speak to your financial adviser. Lifestyling aims to protect your investments as you move closer to retirement. During the last 10 years in the run up to your selected retirement age we will make automatic monthly switches to gradually reposition the fund choice towards funds that are generally lower risk. The risk profile of funds can be judged in different ways and may change. Our Lifestyling options, from time-to-time, may not match to our Prudential risk ratings, in terms of the movement from higher to lower risk, as our Prudential risk ratings may change. For further details of the advantages and disadvantages of Lifestyling then please visit pru.co.uk/lifestyling. Personal Pension This option can be selected when the plan is taken out or at any time during the term of the plan. It can also be cancelled immediately on request or resumed. This option does not apply to investments in With-Profits, PruFund Protected Funds or the Self-Invested Fund (including its cash feeder account). Time to selected retirement age Greater than 10 years You decide (or default to our Prudential Managed Pension Fund) Between 10 and 5 years Monthly phased switch from the fund you choose to 100% Prudential Fixed Interest Pension Fund Less than 5 years Monthly phased switching to hold 75% Prudential Fixed Interest Pension Fund and 25% Prudential Cash Pension Fund Retirement Short Fund Guide: Flexible Retirement Plan 7

8 Lifestyle Options (continued) Income Drawdown For our income drawdown plan we offer three lifestyle options. The asset allocation is updated each year depending on your age on the plan anniversary. The starting asset allocation is also based on your age when selecting the option. Lifestyle rebalancing stops on your 75th birthday. Income Drawdown Lifestyle Option cannot be selected if you are aged 74 or over, or within 10 years of your Anticipated Annuitisation Age (AAA). These graphs demonstrate the changing position for investors in each of the three lifestyle options available. 100% 100% 100% 80% 80% 80% 60% 60% 60% 40% 40% 40% 20% 20% 20% 0% Age 0% 0% Age Age Prudential With-Profits Pension Fund Prudential M&G Corporate Bond Pension Fund Prudential M&G Managed Growth Pension Fund Further information For more information on a particular fund speak to your financial adviser or go to pru.co.uk/funds "Prudential" is a trading name of The Prudential Assurance Company Limited, which is registered in England and Wales. This name is also used by other companies within the Prudential Group. Registered office at Laurence Pountney Hill, London EC4R 0HH. Registered number Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. PENB /2016