Investing by Age (heritage Equitable pensions)

A simple solution for the journey to retirement

Investing by Age is designed to provide a simple solution for pension policyholders. You don’t need to make any choices about what to invest in yourself. Instead, investment professionals spread your money across a broad range of investments based on your age.

J.P. Morgan Asset Management are the asset managers for the funds which make up the Investing by Age Strategy.

The strategy aims to help you grow your savings while you are younger, by investing more of your money in shares. As you get older, your money gradually shifts into more conservative investments such as government bonds and cash, with the aim of protecting you from significant falls in the value of your savings.

The value of unit linked funds can go down as well as up and you may not get back the amount you invested. You should ensure that you are comfortable with the level of risk and reward associated with any fund you invest in.

Although Investing by Age is designed to reflect the needs of pension policyholders, it may not be suitable for you, depending on your retirement plans, your other savings and investments, your goals, and your feelings about taking risk. If you choose Investing by Age, you will still need to review your investments regularly to ensure that they remain suitable for your circumstances.

Achieve peace of mind with your policy

Before you make a choice, we encourage you to review the investment options available to you carefully and consider your financial circumstances, goals and attitude to risk.

Your time horizon

This simply means how long you want to be invested.

Higher risk funds can fluctuate more over short time periods, but over the longer term they have the ability to provide higher returns and can protect your savings from the effects of inflation. When investing in higher risk funds, you should be prepared to invest for five years or more to give you more time to ride out the bumps.

Cautious funds tend to experience smaller fluctuations in value and can therefore be more suitable if you have a shorter time horizon. However, potential returns are likely to be lower and may not keep up with inflation.

Your attitude to risk

Whenever you make an investment, you expose your savings to a degree of risk. Working out how much risk you can afford to take, and how much risk you are prepared to take, is important in helping you to select the fund or funds most suitable for your needs.

Balancing risk and reward

A general rule is that the more risk you are prepared to take, the greater your potential returns could be over time. On the downside, your potential losses may also be greater. The less risk you are prepared to take, the lower your potential returns could be over time—but your potential losses may also be reduced.

However, even if you are able to invest over a long period of time, you may not be comfortable with large fluctuations in the value of your investment.

Alternatively, you may be able to accept higher levels of investment risk if it helps you to meet your investment goals.

Spreading your risk

You can spread your risk and reduce the impact of market fluctuations by investing in a combination of different asset types, for example through one of our multi-asset funds.

It’s important to bear in mind that the value of unit-linked funds can go down as well as up and you may not get back the amount you invested. You should ensure you are comfortable with the level of risk associated with any fund you invest in.

Pension case studies

Case studies are for illustrative purposes only.

Case Study Profile 1

Margaret doesn’t feel confident about making an investment choice

Margaret could look at our Investing by Age strategy, in which investment professionals would spread her money across a broad range of investments based on her age. She could also consider our multi-asset funds, which would let her make one decision based on her goals and attitude to risk.

Sarah Case study image

Sarah, 43, is an experienced investor who is saving for retirement

Sarah’s relatively long time horizon and her investment experience suggest that she may want to consider equity funds and/or Multi-Asset Growth as part of her investment choice. She could also consider the Investing by Age strategy, which is designed to help her money grow while she can afford to take some risk, and then focus on protecting her savings as she nears retirement.

Bob Case Study Image

Bob is just two years from retirement

At this stage in his retirement planning, Bob may consider cash and money market funds, or UK Gilt funds, which offer greater protection for his savings, although growth may be modest and the value of his savings may not keep up with inflation. He could also consider Multi-Asset Cautious, which emphasises capital preservation rather than growth.

Richard Case Study Image

Richard, 60, isn’t relying on his heritage Equitable Life savings in retirement

Although he is nearing retirement, Richard’s strong financial position means he can potentially afford to take some risk with some of his savings. He may therefore be able to consider equity and corporate bond funds within his investment choice. He could also look at Multi-Asset Moderate, which is designed for investors seeking moderate growth.

Glossary

Corporate bond funds

These funds invest in bonds issued by corporate borrowers. Returns may be higher than government bonds, for a higher level of risk. Returns may not keep pace with inflation.

Diversification

A term used to describe spreading your investments across a range of different assets classes, regions or industry sectors, to avoid concentrating your risk and potentially reducing the impact of market movements on the value of your investments.

Equity funds

Equity funds invest in a range of company shares. The price of shares can be volatile and go up or down based on how well the company is currently doing, or what its prospects are.

Government bond funds

These funds invest in bonds issued by governments. While interest rates remain low, returns are likely to be low and may not keep pace with inflation.

Money market or cash funds

Money market or cash funds invest in securities with a very short maturity, usually issued by governments, financial institutions or large companies. These are conservative investments in low-risk instruments, with the aim of protecting the value of your investment. Returns will likely be low and may not keep pace with inflation.

Multi-asset funds

These funds can invests across a wide range of equities, bonds and other assets. We seek to provide diversification.

Secure cash investment

A temporary cash fund in which the unit price is guaranteed not to decrease from the price at the initial investment date, although its value is unlikely to keep pace with inflation.

Unit-linked investment fund

Unit-linked funds allow you to combine your money with other investors so that you can access a diversified range of investments within a single portfolio. They can provide a cost-effective way of investing in a range of securities and assets, including shares of UK and overseas companies, corporate bonds, government bonds, money market instruments and cash deposits.

It’s important to bear in mind that the value of unit-linked funds can go down as well as up and you may not get back the amount you invested. You should ensure you are comfortable with the level of risk and reward associated with any fund you invest in.

If you are unsure whether Investing by Age is the right choice for you, please speak to an independent financial adviser.

Your other investment choices

In addition to our Investing by Age strategy, you have two other choices of investment funds for pensions and one for life, which you can use individually or combine.