A CLEAR AND SIMPLE GUIDE. Pension Investment Options. Investments. royallondon.com

Transcription

1 A CLEAR AND SIMPLE GUIDE Pension Investment Options Investments royallondon.com

2 CONTENTS Royal London who we are and what we do 3 Decisions needn t be difficult 4 Your pension investment options 5 Understanding risk 6 Balancing your investment options 8 A strong governed range 11 Choosing your own investments 17 Asset classes explained 19 range 21 2

3 WHO WE ARE AND WHAT WE DO Ever since we started as a friendly society over 150 years ago, at Royal London we believe that our difference is our strength, and that there s strength in everyone. That s one reason why today, we re the UK s largest mutual life and pensions company. And it s also why, whoever you are and whatever your aims, whether it s pensions, insurance or wealth management, we look to provide you with great long-term value and first class service and support at all times. 3

4 DECISIONS NEEDN T BE DIFFICULT Today there are more investment choices available than ever before. While choice is a good thing, you may find it difficult to decide on the best option for you. That s why we ve put together this guide to choosing your pension investments. It sets out the options available to you when you invest in a Royal London pension and some of the points to consider when making your decision. What we can t do here is take your personal circumstances into account. So if you re still unsure what to do after reading this, you should talk to a financial adviser. Advisers may charge for providing advice and should confirm any costs beforehand. 4

5 YOUR PENSION INVESTMENT OPTIONS Royal London offers a comprehensive range of investment options to help provide the best opportunity to grow your retirement savings. We ve also designed the range to help you balance the level of risk you re willing to take with the potential rewards you want to achieve. You have two main options*: You can invest in one of our specially developed risk-graded portfolios or lifestyle strategies from our Range. Alternatively, you can create and manage your own investment strategy by selecting from our Range. Remember that the value of investments can go down as well as up and you could get back less than the amount paid in. This guide explains the different options available within the Range. They are designed for those who prefer to select a ready-made investment that we review on an on-going basis for added peace of mind. If you prefer to pick your own funds and have more control over your investments, this guide also shows you how to do this. We list the funds available and give you some information about each one. Whichever option you choose, there are a number of points you should consider before you proceed we ve listed these on pages 17 and 18. At any time during your plan you can change your investments by switching to another investment option available in our range. One point you should consider is your attitude to risk. This will play a big part in determining the mix of investments that s right for you. If you prefer to pick your own funds and have more control over your investments, this guide also shows you how to do this. *Additional options, including a fund supermarket and direct investment in stocks and shares, are also available exclusively with our Pension Portfolio personal pension. Additional charges apply for these investments. For details, please see our Pension Portfolio Customer Guide. 5

6 UNDERSTANDING RISK Everybody s view of risk is different. Some people are comfortable taking risks while others are naturally more risk-averse. You may already know your attitude to risk, but if not, don t worry. We can help give you an idea of what it is. Simply complete our online risk questionnaire at royallondon.com/pensioninvestments All you have to do is answer twelve simple questions about your current situation, feelings and attitude to risk. We then produce a report which confirms your answers and gives you an idea of your risk category. We have seven possible risk categories you ll find these opposite. 6

7 Understanding how you feel about levels of risk is one of the most important factors when choosing the right investment. It means you can aim to maximise returns in a way you re comfortable with. Below, we ve identified seven different categories for you to consider. RISK CATEGORY Very Cautious Knowing your capital is safe is more important to you than high returns. You aren t comfortable with the thought of investing in the stock market and would rather keep your money in the bank. Cautious You generally don t like to take risk with your investments. You would prefer to keep your money in the bank, but would be willing to invest in other types of investments if they were likely to be better for the longer term. Moderately Cautious You re usually uncomfortable taking risk with your investments, but would be willing to do so to a limited extent. You realise that risky investments are likely to be better for longer term returns. Moderately Adventurous You re willing to take on investment risk and understand that this is crucial in terms of generating long-term returns. You re willing to take a risk with a substantial proportion of your available assets. Adventurous You re happy to take on investment risk and understand that this is crucial in terms of generating long-term returns. You re willing to take a risk with most of your available assets. Very Adventurous You re looking for the highest possible return on your capital and are willing to take considerable amounts of risk to achieve this, usually with all of your available assets. Balanced You appreciate that you have to take investment risk in order to be able to meet your long-term goals. You re willing to take a risk with at least part of your available assets. 7

8 BALANCING YOUR INVESTMENT OPTIONS Our aim is to maximise your investment returns in line with your attitude to risk. We do this by focusing on asset allocation. This means creating a balance of investments from the various asset classes available. So, for example, if you had a Balanced attitude to risk, you might invest in a mix of assets such as property, cash deposits and equities, also known as shares. Because these asset classes perform differently, if one type is falling in value, others may be rising. Getting this balance right can make a huge difference to how your investments perform. Indeed, an independent academic study showed that up to 90% of performance can be due to the asset allocation.* However, it s not just about getting the asset allocation right at the start. Over time, returns between different asset classes will vary, which means the percentage invested in each asset class will also change. So it s important to review the asset allocation regularly to make sure it still matches your risk attitude. If this all sounds a bit complicated and too much like hard work, you might prefer to invest in our Range. This consists of ready-made model portfolios and lifestyle strategies designed to automatically deal with these types of issues. An independent academic study showed that up to 90% of performance can be due to asset allocation.* 8 *Source : Financial Analysts Journal, Ibbotson, Kaplan, January 2000.

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11 A STRONG GOVERNED RANGE We explained earlier why it s important to match your asset allocation to your risk attitude. The Range does this for you. Each option has been designed for a particular risk attitude, which means we take care of the asset allocation for you. However, if you re in either the Very Cautious or Very Adventurous category you should seek more specialist advice from your adviser. All of our options in the Range have on-going governance. This simply means that our investment experts review it regularly. It allows us to maintain an appropriate asset allocation to match your risk attitude and to make sure it s performing in line with its objectives aiming to maximise real returns for the level of risk taken. Please note that investment returns may fluctuate and are not guaranteed. If our experts decide that a change to the asset allocation should be made, it will take place automatically on your behalf; you don t need to do anything. What s more, this service comes at no extra cost. 11

12 12 AVOIDING THE UNEXPECTED

13 Lifestyle Strategies Our range of Lifestyle Strategies have been designed to gradually switch from higher to lower risk portfolios as you approach retirement age. For each risk category you can choose a Target Lifestyle Strategy to target either cash, annuity or drawdown at retirement. The Target Cash, Target Annuity and Target Drawdown strategies share a similar asset allocation journey until five years before the retirement date. At that point, each strategy takes off on their unique glidepath with their aim of delivering a fluid and gradual descent to your desired outcome, as shown in the table below. There are three Target Lifestyle Strategies to choose from, depending on the equity fund you prefer. We explain these below: Target Lifestyle Strategy Your Lifestyle Journey Risk Category At 15 yrs + At 10 yrs At 5 yrs Retirement Cautious Portfolio 1 Portfolio 2 * Portfolio 3 * Target Cash, Target Annuity, Target Drawdown Moderately Cautious Portfolio 4 Portfolio 5 * Portfolio 3 * Target Cash, Target Annuity, Target Drawdown Balanced Portfolio 4 Portfolio 5 * Portfolio 6 * Target Cash, Target Annuity, Target Drawdown Moderately Adventurous Portfolio 7 Portfolio 5 * Portfolio 6 * Target Cash, Target Annuity, Target Drawdown Adventurous Portfolio 7 Portfolio 8 * Portfolio 9 * Target Cash, Target Annuity, Target Drawdown Target Lifestyle Strategy This lifestyle strategy invests the equity portion in the RLP Global Managed fund. This is an actively managed global equity fund that s automatically blended between UK and overseas equities as part of our governance review process. Target Lifestyle Strategy Tracker option This tracker version invests the equity portion in the RLP/BlackRock Aquila Global Blend fund. This is a global equity tracker fund that s automatically blended between UK and overseas equities as part of our governance review process. *The asset allocation of each Portfolio will depend on what the strategy is targeting at retirement. Please refer to the Strategy factsheets available on our website at royallondon.com 13

14 Target Lifestyle Strategy Active option This active version invests the equity portion of each portfolio in a specialist fund of funds, the RLP Global Blend Core Plus (Rathbone Global Alpha) fund. This is an actively managed global equity fund that s automatically blended between UK and overseas equities as part of our governance review process. Flexible Lifestyle Strategy A flexible lifestyle strategy allows you to choose which Portfolios to switch into as you near retirement, rather than using one of our pre-determined routes. You can choose to target either cash, annuity or drawdown at retirement. Portfolios If you re unsure when you are retiring or are not comfortable investing in a lifestyle strategy, you can invest in any of the nine Portfolios individually. Remember that as time passes the amount in each fund will grow at different rates. This could change the suitability of your chosen Portfolio. To avoid this we ll automatically rebalance your funds on a monthly basis. This means the mix of funds within the portfolio which matched your original attitude to risk and time to retirement is maintained. This service as well as the ongoing governance doesn t cost you anything extra. We ve included some details about each of the Portfolios and Target Lifestyle Strategies opposite. If you choose to invest in either a Portfolio or a Target Lifestyle Strategy, please note that this investment choice must apply to all contributions into your plan. You can find out more by viewing our portfolio factsheets at royallondon.com/pensionportfolio 14

15 Portfolios Charge 1 Style Risk Category Time Period Individual Stakeholder 2 Group Stakeholder Portfolio % Active Cautious Long N Y Portfolio % Active Cautious Medium N Y Portfolio % Active Cautious / Moderately Cautious Short N Y Portfolio % Active Moderately Cautious / Balanced Long N Y Portfolio % Active Moderately Cautious / Balanced / Moderately Adventurous Medium N Y Portfolio % Active Balanced / Moderately Adventurous Short N Y Portfolio % Active Moderately Adventurous / Adventurous Long N Y Portfolio % Active Adventurous Medium N Y Portfolio % Active Adventurous Short N Y Within each Portfolio there s an option to replace the default equity fund, the RLP Global Managed Pension fund. This could result in an additional fund management charge, depending on the fund chosen. Target Lifestyle Strategies Charge 1 Style (equity portion) Risk Category Individual Stakeholder 2 Group Stakeholder Cautious Lifestyle Strategy 1.00% Active Cautious N Y Cautious Tracker Lifestyle Strategy 1.00% Tracker Cautious N Y Cautious Active Lifestyle Strategy Active Cautious N N Moderately Cautious Lifestyle Strategy 1.00% Active Moderately Cautious N Y Moderately Cautious Tracker Lifestyle Strategy 1.00% Tracker Moderately Cautious N Y Moderately Cautious Active Lifestyle Strategy Active Moderately Cautious N N Balanced Lifestyle Strategy 1.00% Active Balanced N Y Balanced Tracker Lifestyle Strategy 1.00% Tracker Balanced N Y Balanced Active Lifestyle Strategy Active Balanced N N Moderately Adventurous Lifestyle Strategy 1.00% Active Moderately Adventurous N Y Moderately Adventurous Tracker Lifestyle Strategy 1.00% Tracker Moderately Adventurous N Y Moderately Adventurous Active Lifestyle Strategy Active Moderately Adventurous N N Adventurous Lifestyle Strategy 1.00% Active Adventurous N Y Adventurous Tracker Lifestyle Strategy 1.00% Tracker Adventurous N Y Adventurous Active Lifestyle Strategy Active Adventurous N N Managed Lifestyle Strategy 1.00% Active Balanced Y Y 1 The range of Active Lifestyle Strategies has a variable annual management charge applicable dependent on the time to retirement and proportion invested in each fund. The Active Lifestyle Strategies invest in the RLP Global Blend Core Plus (Rathbone Global Alpha) fund which has a fund management charge of 1.45%. 2 These options might be available for existing Individual Stakeholder Pension Plans. If you have an Individual Stakeholder Pension Plan you should check with our customer service team what investment options are available for you. Please note that for each Target Lifestyle Strategy you have the option to target cash, annuity or drawdown at retirement. For more information about the Target Lifestyle Strategies, including details of the individual funds within each strategy and their fund management charges, please visit royallondon.com/pensioninvestments 15

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17 CHOOSING YOUR OWN INVESTMENTS Alternatively, you might prefer to select your own investments. This can be very rewarding, but it takes skill and commitment on your, or your adviser s, part. Not surprisingly, this option is most suited to people with good investment knowledge who want lots of control over their investments. To help you make this important decision, we ve listed seven points below that you should consider. If you decide to create an investment portfolio by picking your own funds, it will be up to you, in conjunction with your adviser, to monitor their performance and decide whether you need to change them. You may also need to adjust your portfolio regularly to keep it in line with your changing risk attitude. 1. Make sure you re paying enough into your pension The amount you will need to pay into your pension will obviously be different for everyone. However, generally the more you pay into a pension plan, the more you can expect to receive when you retire. So you should try to save as much as you can, as early as you can. For detailed information and to work out your personal requirements you should speak to your adviser. In our opinion: People often ask, How much will I get when I retire?. The truth is that all the choices you make now and at retirement will influence the value of your pension. The amount you get back depends on: how much you pay into your plan, how long your payments are invested, what funds you are invested in, how those funds perform, and also the plan charges. 2. Spread your investments Most financial experts agree that the best way to invest your retirement savings is to have a spread of investment types. So for example you might invest in a mix of property, cash deposits and equities. This way, if one particular investment performs poorly, you wouldn t be as badly affected. In our opinion: The balance of the different types of investment is called asset allocation by the City experts. Getting that balance right can make a huge difference to how your investments perform. Our view is that up to 90 percent of performance stems from asset allocation rather than from just picking a star performing fund. 17

18 3. Consider the impact of inflation Over time, inflation can erode the purchasing power of your savings. For example, the higher prices of goods rise, the less you can buy with your money over time. In our opinion: If the return on your investment is below the rate of inflation, your investment could lose value in real terms. Some asset classes, such as equities, property and indexlinked gilts, could offer better protection from the effects of inflation over the longer term than others such as cash. 4. Choose funds that match your attitude to risk The more risk you re willing to take with your investments, the higher your potential return but the greater your chance of loss. Lower risk investments on the other hand offer greater security but lower potential returns. You need to decide how much risk you want to take with your pension savings. A weakness of constructing a portfolio of funds to match your risk profile is that it almost immediately drifts away from your initial allocation. This can expose you to more risk than you may be comfortable with. In our opinion: If you re looking for a way of achieving high returns with low risk, you can save yourself a frustrating search: there isn t one! If you want to chase high returns, you ll need to accept risk. You ll also need to review your portfolio regularly and make any changes necessary to maintain your original asset allocation. You can do this by selecting the automatic rebalancing option on your investment. There s a choice of rebalancing frequencies monthly, quarterly, half yearly and annually and they re available at no extra cost. 5. Think about how long you have to save How suitable a particular investment is for you depends in part on how long you have until you retire. For example, someone in their twenties will probably want to achieve maximum capital growth so may invest in more aggressive funds. An investor only a few months from retirement will probably want to take far less risk or no risk at all. In our opinion: Some people may be tempted to make up for lost time as they approach retirement by going for really risky options. It s your choice. but if you go down this road, make sure you re prepared for any consequences. 6. Think about any specific requirements you have You might want to invest in a particular geographic area or in small companies rather than multinationals. Whatever your requirements, it s possible to choose funds that reflect your preferences. In our opinion: You ll find descriptions of all our funds in Factsheets available on our website at royallondon.com. Reading these will help you make an informed decision. 7. Monitor your investments regularly It isn t enough to select appropriate funds at the start of your plan. You also need to monitor the performance of your funds regularly to make sure they suit your changing needs. This can help you protect your savings from market falls and take advantage of growth opportunities. In our opinion: With us, you can change your investments free of charge. You might even be able to do it online. But be careful about shifting investments around too often it s a marathon, not a sprint. 18

19 ASSET CLASSES EXPLAINED 19

20 Some of our investment options hold a mix of assets, such as company shares, bonds, property and cash. Others may invest in a single type of asset. We ve summarised the main asset types below. Deposits This term is used to describe investments such as cash. They work in much the same way as a bank or building society account. Investments are put on deposit with a financial institution where they earn interest. Deposits are generally considered safer than other asset classes; however, over the longer term they are likely to provide lower returns. Corporate bonds and gilts Corporate bonds are loans to companies for a set period. During this period the company pays interest and eventually returns the original amount. The main risk with a corporate bond is that the company to which the loan has been made might go bankrupt and fail to pay it back. Corporate bonds tend to be less volatile investments than company shares, but provide the opportunity for higher growth than deposits. Gilts are loans to the Government and work in much the same way as corporate bonds. However, gilts are considered very safe investments, since the Government is unlikely to go bankrupt. To date, the British Government has never defaulted on a gilts issue. Like corporate bonds, gilts tend to be less volatile than company shares but provide greater opportunities for growth than deposits. Property There are two main types of property funds: Direct property funds invest in bricks and mortar properties such as retail outlets, industrial sites and office buildings. One proviso: because the property in a fund may not be readily saleable, it s possible that you might not be able to cash in your investment in a property fund when you want to. Also the value of property is generally a matter of a valuer s opinion rather than fact. Property security funds invest in Real Estate Investment Trusts and shares in property companies. These funds typically experience short-term price movements similar to equity funds but would be expected to have characteristics similar to direct property funds over the longer term. They are also less likely to place restrictions on cashing in your investment than direct property funds. Equities Equities are company shares. Limited companies can sell their shares to raise capital, paying a share of their profit (known as a dividend) to the buyer in return. Shares are bought and sold on the stock market, and their prices fluctuate based on a number of factors including the company s potential profitability. As a result, they tend to be too volatile for short-term investors. However, it s widely accepted that equities have the potential for better returns over medium and longer terms. It s also worth bearing in mind that equities traded on some overseas stock exchanges can be more volatile than UK equities. They are also affected by fluctuations in currency exchange rates. Mixed assets Some funds will invest in a mixture of different asset classes, such as company shares, property and deposits. This way, if one particular investment performs poorly, you won t be as badly affected because your risk is spread more widely. Specialist Some funds have an investment universe that is not accommodated by the mainstream sectors. These will be included in the specialist sector. This sector is hugely diverse and will contain funds with various investment objectives and styles. If you ve read this and decided that taking charge of your investments is right for you, you ll find a list of the funds you can choose from on pages

21 FUND RANGE We have over 160 funds available from a wide range of fund managers. The range of funds and fund managers gives you a choice of different investment styles and exposure to different geographical areas. If you would like to know more about any of the fund managers please visit our website royallondon.com/pensioninvestments The full fund range is listed by asset class on the pages that follow. ASSET MANAGEMENT 21

22 FUND RANGE Deposit Name Additional Charge 1 Investment Expenses 2 Total Expense Ratio 3 Style Volatility 4 Stakeholder Can be used within Portfolios 5 RLP Deposit 0.00% 0.00% 1.00% Active 0.03 Y N Government and Corporate Bond Name Additional Charge 1 Investment Expenses 2 Total Expense Ratio 3 Style Volatility 4 Stakeholder Can be used within Portfolios 5 RLP Annuity 0.00% 0.00% 1.00% Active N/A Y N RLP Corporate Bond 0.00% 0.00% 1.00% Active 4.94 Y N RLP Ethical Bond 0.00% 0.00% 1.00% Active 5.27 Y N RLP Fixed Interest 0.00% 0.00% 1.00% Active 5.12 Y N RLP Global High Yield Bond 0.00% 0.00% 1.00% Active N/A Y N RLP Global Index Linked 0.00% 0.00% 1.00% Active 5.30 Y N RLP Index Linked 0.00% 0.00% 1.00% Active 7.82 Y N RLP International Government Bond RLP Long (15yr+) Corporate Bond 0.00% 0.00% 1.00% Active 2.31 Y N 0.00% 0.00% 1.00% Active 9.26 Y N RLP Long (15yr+) Gilt 0.00% 0.00% 1.00% Active 8.76 Y N RLP Long (15yr+) Index Linked 0.00% 0.00% 1.00% Active 6.71 Y N RLP Medium (10yr) Corporate Bond 0.00% 0.00% 1.00% Active 6.94 Y N RLP Medium (10yr) Gilt 0.00% 0.00% 1.00% Active 5.89 Y N RLP Medium (10yr) Index Linked 0.00% 0.00% 1.00% Active 4.11 Y N RLP Short (5yr) Corporate Bond 0.00% 0.00% 1.00% Active 3.65 Y N RLP Short (5yr) Gilt 0.00% 0.00% 1.00% Active 2.80 Y N RLP Short (5yr) Index Linked 0.00% 0.00% 1.00% Active 2.76 Y N RLP Short Duration Global High Yield 0.00% 0.00% 1.00% Active N/A Y N RLP Sterling Extra Yield Bond 0.00% 0.00% 1.00% Active 4.01 Y N RLP UK Government Bond 0.00% 0.00% 1.00% Active 5.20 Y N RLP/Baillie Gifford High Yield Bond RLP/BlackRock Aquila Long Gilt Index RLP/BlackRock Aquila Over 5 years Index linked Gilt Index RLP/BlackRock Aquila UK All Stocks Corporate Bond Index RLP/Fidelity Moneybuilder Income 0.30% 0.03% 1.33% Active 4.64 N N 0.00% 0.00% 1.00% Tracker Y N 0.00% 0.00% 1.00% Tracker 8.99 Y N 0.00% 0.00% 1.00% Tracker 5.92 Y N 0.25% 0.20% 1.45% Active 5.83 N N RLP/Fidelity Strategic Bond 0.45% 0.21% 1.66% Active 4.43 N N RLP/Invesco Perpetual Corporate Bond RLP/Invesco Perpetual Global Bond RLP/Invesco Perpetual Monthly Income Plus RLP/Investec Emerging Markets Local Currency Debt 0.45% 0.16% 1.61% Active 3.45 N N 0.45% 0.17% 1.62% Active 4.33 N N 0.58% 0.09% 1.67% Active 3.26 N N 0.70% 0.16% 1.86% Active N N RLP/M&G Corporate Bond 0.45% 0.16% 1.61% Active 5.26 N N RLP/M&G High Yield Corporate Bond 0.58% 0.16% 1.74% Active 4.11 N N RLP/M&G Optimal Income 0.58% 0.16% 1.74% Active 3.41 N N RLP/M&G Strategic Corporate Bond 0.45% 0.16% 1.61% Active 4.90 N N 22

23 Property Name Additional Charge 1 Investment Expenses 2 Total Expense Ratio 3 Style Volatility 4 Stakeholder Can be used within Portfolios 5 RLP Property 0.00% 0.00% 1.00% Active 1.86 Y N RLP/Schroder Global Property Securities 0.70% 0.17% 1.87% Active N N Mixed Asset Name Additional Charge 1 Investment Expenses 2 Total Expense Ratio 3 Style Volatility 4 Stakeholder Can be used within Portfolios 5 Royal London With Profits 0.00% N/A N/A Active N/A Y N RLP Adventurous Managed 0.00% 0.00% 1.00% Active 5.66 Y N RLP Defensive Managed 0.00% 0.00% 1.00% Active 3.65 Y N RLP Managed 0.00% 0.00% 1.00% Active 5.16 Y N RLP Sustainable Diversified Trust 0.45% 0.04% 1.49% Active N/A N N RLP/7IM AAP Adventurous 0.45% 0.23% 1.68% Active 7.90 N N RLP/7IM AAP Balanced 0.45% 0.18% 1.63% Active 5.64 N N RLP/7IM AAP Moderately Adventurous RLP/7IM AAP Moderately Cautious 0.45% 0.20% 1.65% Active 6.82 N N 0.45% 0.19% 1.64% Active 4.34 N N RLP/BlackRock Aquila Consensus 0.00% 0.00% 1.00% Tracker 7.02 Y N RLP/BMF Balanced 0.45% 0.89% 2.34% Active 6.11 N N RLP/BMF Cautious Growth 0.45% 0.79% 2.24% Active 4.69 N N RLP/BMF Defensive Income 0.45% 0.79% 2.24% Active 3.71 N N RLP/GLG Balanced Managed 0.45% 0.18% 1.63% Active 6.10 N N RLP/GLG Stockmarket Managed 0.45% 0.18% 1.63% Active 6.88 N N RLP/Invesco Perpetual Distribution 0.64% 0.13% 1.77% Active 4.22 N N RLP/Investec Cautious Managed 0.58% 0.09% 1.67% Active 5.17 N N RLP/Jupiter Merlin Balanced Portfolio RLP/Jupiter Merlin Growth Portfolio RLP/Jupiter Merlin Income Portfolio 0.70% 0.89% 2.59% Active 7.37 N N 0.70% 0.92% 2.62% Active 8.12 N N 0.70% 0.79% 2.49% Active 6.18 N N RLP/Neptune Balanced 0.70% 0.03% 1.73% Active 7.36 N N RLP/Neptune Global Alpha 0.95% 0.08% 2.03% Active N N RLP/Newton Balanced 0.45% 0.11% 1.56% Active 6.80 N N RLP/Newton Managed 0.45% 0.11% 1.56% Active 7.83 N N RLP/Rathbone Enhanced Growth 0.45% 1.47% 2.92% Active 8.48 N N RLP/Rathbone Strategic Growth 0.45% 0.85% 2.30% Active 4.76 N N RLP/Rathbone Total Return 0.45% 0.86% 2.31% Active 3.85 N N RLP/Schroder Managed Balanced 0.35% 0.10% 1.45% Active 6.13 N N RLP/Schroder MM Diversity 0.35% 0.65% 2.00% Active 3.70 N N RLP/Schroder MM Diversity Balanced RLP/Schroder MM Diversity Tactical 0.35% 0.74% 2.09% Active 5.60 N N 0.35% 0.81% 2.16% Active 5.86 N N RLP/UBS Global Allocation 0.40% 0.15% 1.55% Active 6.22 N N 23

24 UK Equity Name Additional Charge 1 Investment Expenses 2 Total Expense Ratio 3 Style Volatility 4 Stakeholder Can be used within Portfolios 5 RLP Equity Income 0.00% 0.00% 1.00% Active 8.49 Y Y RLP UK Equity 0.00% 0.00% 1.00% Active 9.07 Y Y RLP UK Ethical 0.00% 0.00% 1.00% Active Y Y RLP UK Mid Cap 0.00% 0.00% 1.00% Active Y Y RLP UK Smaller Companies 0.00% 0.00% 1.00% Active 7.79 Y Y RLP UK Opportunities 0.00% 0.00% 1.00% Active Y Y RLP/Baillie Gifford UK Equity 0.50% 0.00% 1.50% Active 9.44 N Y RLP/BlackRock Aquila UK Equity Index % 0.00% 1.00% Tracker 9.08 Y Y RLP/BlackRock UK Equity 0.35% 0.02% 1.37% Active 8.98 N Y RLP/Dimensional UK Core Equity 0.12% 0.11% 1.23% Tracker N/A N Y RLP/Fidelity UK Growth 0.95% 0.21% 2.16% Active N Y RLP/Invesco Perpetual High Income 0.70% 0.17% 1.87% Active 7.62 N Y RLP/Investec UK Special Situations 0.70% 0.09% 1.79% Active 8.26 N Y RLP/M&G Recovery 0.70% 0.15% 1.85% Active 8.66 N Y RLP/Schroder Income Maximiser 0.70% 0.16% 1.86% Active 7.59 N Y RLP/Schroder MM UK Growth 0.35% 0.87% 2.22% Active 7.92 N Y RLP UK Equity Core Plus (Close Teams UK Equities (1%)) % 0.03% 1.38% Active 9.62 N Y RLP UK Equity Core Plus (Close Teams UK Equities (2%)) % 0.05% 1.65% Active N Y RLP UK Equity Core Plus (Schroder Core UK Equity) % 0.04% 1.74% Active N Y RLP UK Equity Core Plus (Schroder UK Equity) % 0.16% 1.86% Active 9.26 N Y RLP UK Equity Specialist (Artemis UK Special Situations) % 0.06% 1.76% Active 8.39 N Y RLP UK Equity Specialist (Invesco Perpetual UK Growth) % 0.16% 1.76% Active 9.53 N Y RLP UK Equity Specialist (Schroder UK Alpha Plus) % 0.15% 1.85% Active 9.63 N Y RLP UK Income Core Plus (Artemis Income) % 0.10% 1.80% Active 8.41 N Y RLP UK Income Specialist (Fidelity Moneybuilder Dividend) % 0.17% 1.47% Active 7.54 N Y RLP UK Mid Cap Specialist (Franklin UK Mid Cap) % 0.07% 1.77% Active N Y RLP UK Small Cap Specialist (Investec UK Smaller Companies) % 0.09% 1.79% Active 9.75 N Y US Equity Name Additional Charge 1 Investment Expenses 2 Total Expense Ratio 3 Style Volatility 4 Stakeholder Can be used within Portfolios 5 RLP American 0.00% 0.00% 1.00% Tracker 9.90 Y Y RLP/BlackRock Aquila US Equity Index % 0.00% 1.00% Tracker 9.85 N Y RLP/Legg Mason US Smaller Companies 0.70% 0.25% 1.95% Active N Y RLP/Neptune US Opportunities 0.70% 0.04% 1.74% Active N Y RLP/Schroder US Mid Cap 0.70% 0.16% 1.86% Active N Y RLP US Core Plus (Fidelity American) % 0.20% 2.15% Active N Y RLP US Specialist ( JPMorgan US) % 0.18% 1.88% Active N Y 24

25 European Equity Name Additional Charge 1 Investment Expenses 2 Total Expense Ratio 3 Style Volatility 4 Stakeholder Can be used within Portfolios 5 RLP European 0.00% 0.00% 1.00% Active Y Y RLP/BlackRock Aquila European Equity Index % 0.00% 1.00% Tracker N Y RLP/Schroder European Opportunities RLP/Jupiter European Special Situations 0.70% 0.18% 1.87% Active N Y 0.70% 0.28% 1.98% Active N Y RLP Europe Core Plus (Fidelity European Blended) % 0.22% 2.17% Active N Y RLP Europe Specialist (Neptune European Opportunities) % 0.07% 1.77% Active N Y Asian Equity Name Additional Charge 1 Investment Expenses 2 Total Expense Ratio 3 Style Volatility 4 Stakeholder Can be used within Portfolios 5 RLP Far East (ex Japan) 0.00% 0.00% 1.00% Tracker Y Y RLP Japan 0.00% 0.00% 1.00% Tracker Y Y RLP Pacific 0.00% 0.00% 1.00% Tracker 9.09 Y Y RLP/BlackRock Aquila Japanese Equity Index RLP/BlackRock Aquila Pacific Rim Equity Index 0.00% 0.00% 1.00% Tracker N Y 0.00% 0.00% 1.00% Tracker N Y RLP/Fidelity South East Asia 0.95% 0.26% 2.21% Active N Y RLP Asia Pacific Core Plus (First State Asia Pacific Leaders) % 0.04% 1.84% Active N Y RLP Asia Pacific Core Plus (Invesco Perpetual Asian) % 0.20% 1.90% Active N Y RLP Japan Core Plus (Schroder Tokyo) % 0.17% 1.87% Active N Y RLP Japan Specialist (Invesco Perpetual Japan) % 0.18% 1.88% Active N Y Global Equity Name Additional Charge 1 Investment Expenses 2 Total Expense Ratio 3 Style Volatility 4 Stakeholder Can be used within Portfolios 5 RLP Global Equity 0.00% 0.00% 1.00% Active 7.99 Y Y RLP Global Managed 0.00% 0.00% 1.00% Active 8.05 Y Y RLP Worldwide 0.00% 0.00% 1.00% Active 8.05 Y Y RLP/Baillie Gifford Worldwide Equity (50:50) 0.50% 0.00% 1.50% Active 8.58 N Y RLP/BlackRock Aquila Global Blend % 0.00% 1.00% Tracker 8.33 Y Y RLP/BlackRock Aquila Global Equity Index (50:50) 0.00% 0.00% 1.00% Tracker 8.50 Y Y RLP/BlackRock Aquila Global Equity Index (60:40) % 0.00% 1.00% Tracker 8.77 Y Y RLP/BlackRock Aquila World (ex UK) Equity Index RLP/Dimensional Global Core Equity RLP/Dimensional Global Targeted Value RLP/Fidelity Special Situations Blended RLP/First State Global Listed Infrastructure RLP/HSBC Amanah Global Equity Index 0.00% 0.00% 1.00% Tracker 8.54 Y Y 0.25% 0.11% 1.36% Tracker N/A N Y 0.45% 0.12% 1.57% Tracker N/A N Y 0.95% 0.19% 2.14% Active 8.16 N Y 0.70% 0.08% 1.78% Active 8.64 N Y 0.00% 0.25% 1.25% Tracker 8.72 N Y RLP/Jupiter Ecology 0.70% 0.05% 1.75% Active 8.41 N Y RLP/Jupiter Merlin Worldwide Portfolio 0.70% 1.02% 2.72% Active 9.02 N N RLP/M&G Global Basics 0.70% 0.18% 1.88% Active 8.18 N Y 25

26 Global Equity continued Name Additional Charge 1 Investment Expenses 2 Total Expense Ratio 3 Style Volatility 4 Stakeholder Can be used within Portfolios 5 RLP/M&G Global Dividend 0.70% 0.16% 1.86% Active N/A N Y RLP/M&G Global Leaders 0.70% 0.17% 1.87% Active 9.75 N Y RLP/Neptune Global Equity 0.70% 0.08% 1.78% Active N Y RLP/Newton Global Higher Income RLP/Sarasin Food & Agriculture Opportunities 0.70% 0.12% 1.82% Active 7.98 N Y 0.70% 0.24% 1.94% Active N/A N Y RLP/Schroder MM International 0.35% 0.99% 2.34% Active 8.81 N Y RLP/UBS Global Blend (50:50) 0.60% 0.22% 1.82% Active 8.13 N Y RLP Global Blend Core Plus (Rathbone Global Alpha) % 0.85% 2.30% Active 8.42 N Y RLP Global Managed Equity Specialist (Invesco Perpetual 0.60% 0.17% 1.77% Active 8.81 N Y Global Equity ) 6 RLP Global Managed Equity Specialist (Investec Global Free 0.70% 0.12% 1.82% Active 9.72 N Y Enterprise) 6 Emerging Market Equity Name Additional Charge 1 Investment Expenses 2 Total Expense Ratio 3 Style Volatility 4 Stakeholder Can be used within Portfolios 5 RLP/BlackRock Emerging Markets Tracker RLP/Dimensional Emerging Markets Core Equity RLP/Fidelity Emerging Europe, Middle East and Africa RLP/Henderson China Opportunities 0.15% 0.05% 1.20% Tracker N/A N Y 0.50% 0.22% 1.72% Tracker N/A N Y 0.95% 0.39% 2.34% Active N Y 0.70% 0.25% 1.95% Active N Y RLP/JPMorgan New Europe 0.70% 0.18% 1.88% Active N Y RLP/Jupiter India 0.70% 0.32% 2.02% Active N Y RLP/Threadneedle Latin America 0.70% 0.25% 1.95% Active N Y RLP Emerging Markets Core Plus ( JPM Emerging Markets) % 0.18% 1.88% Active N Y 26

27 Specialist Name Additional Charge 1 Investment Expenses 2 Total Expense Ratio 3 Style Volatility 4 Stakeholder Can be used within Portfolios 5 RLP Absolute Return Government Bond 0.00% 0.00% 1.00% Active N/A Y N RLP Cash Plus 0.00% 0.00% 1.00% Active 0.24 Y N RLP/BlackRock Gold and General % 0.17% 2.00% Active N Y RLP/Investec Global Energy % 0.12% 1.82% Active N Y RLP/JPMorgan Cautious Managed 0.58% 0.18% 1.76% Active 3.71 N N RLP/JPMorgan Natural Resources % 0.18% 1.88% Active N Y RLP/Jupiter Financial Opportunities % 0.28% 1.98% Active N Y RLP/Newton Real Return 0.70% 0.11% 1.81% Active 4.80 N N RLP/Standard Life Global Absolute Return Strategies RLP/Threadneedle Absolute Return Bond 0.70% 0.09% 1.79% Active N/A N Y 0.58% 0.14% 1.72% Active 3.97 N N 1 These charges are added to the annual management charge for your plan. 2 The expenses shown are the typical costs incurred by the investment management company, which are deducted from the value of the fund. The level of these expenses is not in Royal London s control and may vary from year to year. 3 Total Expense Ratio (TER), covering calendar year The TER is a measure of the overall cost of a fund to the investor. It includes the Charge plus any audit, custodian, registration or compliance fees paid out of the fund s assets. It does not include the costs of buying and selling securities, which would still be paid if investing directly in securities instead of through an investment fund. 4 Source: Lipper. The Volatility figure shown is the annualised standard deviation of the monthly returns on the fund over a 3 year time period to Standard deviation is a measure of the spread of monthly returns around the average (mean) return. A higher volatility figure indicates that the fund has produced a wider range of returns over the three year period while ab fund with a lower volatility figure has been more stable. Matrix funds Our Matrix funds are a range of equity funds which come with extra governance to ensure they continue to behave as you first expected. With clear risk categories and equity sectors each fund is monitored by our Investment Advisory Committee to ensure it does not veer from these set criteria. Under some circumstances this governance process may lead to a change of the 5 The indicated funds can be used to replace the default equity content, RLP Global Managed Pension fund, of our Portfolio options. Further details or our Portfolio options can be found on pages 14 and 15 of this guide. 6 The indicated funds are part of our Matrix fund offering and come with an extra layer of governance. Further details on these Matrix funds can be found on the following page. 7 Please note the underlying investment of this fund changed on 7 May Please note the underlying investment of this fund changed on 19 October Please note the underlying investment of this fund changed on 3 May Please note the underlying investment of this fund changed on 28 November Please note the underlying investment of this fund changed on 14 December Please note the underlying investment of this fund changed on 26 May underlying fund, to a suitable alternative fund meaning that you continue to be invested as initially expected. Any change to a Matrix fund would be communicated to you in advance giving you, and your adviser, time to review your options. The following table shows the funds that currently populate the Matrix, within their risk category and equity sector. Sector Core (<1%) * Core Plus (1 5%) * Specialist (>5%) * UK Equity BlackRock Aquila UK Equity Index Close TEAMS UK Equities (1%), Close TEAMS UK Equities (2%), Schroder Core UK Equity Schroder UK Equity Artemis UK Special Situations, Invesco Perpetual UK Growth, Schroder UK Alpha Plus UK Income Artemis Income Fidelity MoneyBuilder Dividend UK Mid Cap UK Small Cap Franklin UK Mid Cap Investec UK Smaller Companies Global Blend BlackRock Aquila Global Blend Rathbone Global Alpha Global Managed Equity BlackRock Aquila Global Equity Index (60:40) Invesco Perpetual Global Equity, Investec Global Free Enterprise Europe BlackRock Aquila European Equity Index Fidelity European Blended Neptune European Opportunities US BlackRock Aquila US Equity Index Fidelity American JP Morgan US Japan Schroder Tokyo Invesco Perpetual Japan Asia Pacific Emerging Markets Invesco Perpetual Asian, First State Asia Pacific Leaders JPM Emerging Markets First State Global Emerging Markets Leaders closed to new business * Our three categories of risk are Core, Core Plus and Specialist and we have used a measure called tracking error to determine these categories. Tracking error is a figure that tells us how close the performance of the fund is to its benchmark. In general terms the greater the tracking error the more risk the fund manager is taking. Consequently the greater the potential risk and reward for investors in these funds. For the purposes of the Matrix, the tracking error is an annualised measurement over rolling 36-month periods and this is updated every month. Further details on the governance and the review process surrounding the Matrix funds can be found in our Matrix Consumer Guide. 27

28 The next step We hope you ve found this guide useful. If after reading it you re still unsure of what to do, speak to a financial adviser who ll be able to help you select an investment that s suitable for you. Advisers may charge for providing such advice and should confirm any costs beforehand. Royal London 1 Thistle Street, Edinburgh EH2 1DG royallondon.com All literature about products that carry the Royal London brand is available in large print format on request to the Marketing Department at Royal London, 1 Thistle Street, Edinburgh EH2 1DG. All of our printed products are produced on stock which is from FSC certified forests. The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number It provides life assurance and pensions. Registered in England and Wales number Registered office: 55 Gracechurch Street, London, EC3V 0RL. Royal London Marketing Limited is authorised and regulated by the Financial Conduct Authority and introduces Royal London s customers to other insurance companies. The firm is on the Financial Services Register, registration number Registered in England and Wales number Registered office: 55 Gracechurch Street, London, EC3V 0RL. Royal London Corporate Pension Services Limited is authorised and regulated by the Financial Conduct Authority and provides pension services. The firm is on the Financial Services Register, registration number Registered in England and Wales number Registered office: 55 Gracechurch Street, London, EC3V 0RL. October G15/31