Upcoming changes to My Future Plus and Future Focus · Future Plus and Future Focus pension...

Upcoming changes to My Future Plus and Future FocusJune 2019

For adviser, employer and trustee use only.

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2 My Future Plus and Future Focus

Contents

This brochure explains the upcoming changes to the funds which make up the My Future Plus and Future Focus pension investment solutions.

It summarises how My Future Plus and Future Focus currently work, provides details about the component funds of both solutions and explains how the management and asset allocation of the funds, and some of the funds’ structures, will be changing.

3 My Future Focus – a new investment solution

5 How it looks now – My Future Plus

6 How it looks now – Future Focus

7 My Future Focus – the new solution

9 How My Future Plus and Future Focus solutions will change

10 The new funds

13 Appendix: Asset allocation changes

16 Appendix: Benchmarks and comparators

17 Appendix: New glide paths

21 Appendix: Fund risk ratings and warnings

23 Contact us


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My Future Focus – a new investment solutionAs part of our ongoing commitment to provide members with robust investment solutions, we have reviewed the My Future Plus and Future Focus solutions and will be making changes to the management and composition of the funds used within them.

We have decided to align the My Future Plus and Future Focus investment solutions into a new solution which will be called My Future Focus.

What will change?The My Future Plus and Future Focus investment solutions currently use fund of funds structures. The funds used within My Future Plus are managed by the Aviva UK Insurance Investment team, while the Diversified Assets funds used within Future Focus are managed by the Aviva Investors Multi-Asset Team.

The two investment solutions will be combined into a single new solution called “My Future Focus” and the funds used within this solution will be managed by the Aviva Investors Multi-Asset team. The exception will be the annuity targeting fund (My Future Focus Annuity) which will invest in the L&G Pre-Retirement fund, as the My Future Plus Annuity Fund does currently.

Why is this happening?We are simplifying our solutions and ensuring consistency of approach across the existing My Future Plus and Future Focus solutions and, at the same time, providing clients and members with an enhanced investment solution. For those members currently invested in the My Future Plus funds this will also result in a reduction in fund charges.

In addition, we will be making alterations to the glide paths which form the investment options available under both My Future Plus and Future Focus. Under My Future Focus, the glide paths will operate from ten years before a member’s selected retirement date, instead of the current 15 years for My Future Plus. We will be removing the Aviva Deposit and BlackRock Over 15 Year Corporate Bond Index Tracker Funds from the current glide paths under Future Focus.

Will there be any increase in charges?No, there will be no increase in the charges currently in place for the My Future Plus or Future Focus funds. For members currently invested in the My Future Plus funds, the changes will result in a reduction in fund charges.

Is there any cost to members?The changes in the funds’ asset allocations will incur transaction costs, which will be borne by the funds. We believe the changes being made will ultimately improve the investment outcome that My Future Focus will deliver. The exception is the existing My Future Plus funds where, owing to the extent of change in fund structure and asset allocation that the funds will experience, Aviva will cover the costs.

Which funds are affected?The following My Future Plus funds are affected:

●● My Future Plus Growth

●● My Future Plus Consolidation

●● My Future Plus Cash Lump Sum

●● My Future Plus Drawdown

The following Future Focus funds are affected:

●● Diversified Assets Fund (DAF) I

●● Diversified Assets Fund (DAF) II

●● Diversified Assets Fund (DAF) III

●● BlackRock Over 15 Year Corporate Bond Index Tracker

●● Aviva Deposit Fund

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How will the funds be managed?The My Future Focus funds will be managed by Aviva Investors’ multi-asset team. Multi-asset capability has been at the heart of Aviva’s asset management business for more than 30 years, with the multi-asset team managing and advising on over £100bn of assets for a global network of clients.

The multi-asset team employs the following structured three step process:

●● Step 1: Strategic asset allocation

The funds follow a globally unconstrained approach, enabling the asset allocation to be determined using the widest opportunity set and relieving the funds of home bias. Aviva Investors builds portfolios looking beyond traditional asset class groupings such as “equities” and “bonds” and instead digs deeper to understand the drivers of risk behind the asset. By categorising assets as “Growth”, “Defensive” or “Uncorrelated” Aviva Investors can better quantify risk and build more robust portfolios.

●● Step 2: Dynamic asset allocation

Aviva Investors uses a team-based approach underpinned by firm-wide collaboration in idea generation and decision making. The approach combines human judgement with the support of quantitative analysis.

The starting point is the development of Aviva Investors’ house view, which is generated quarterly and reflects the views of all investment teams across the business (over 400 investment professionals). The Asset Allocation Committee (AAC) then translates these views into fund positioning, tilting the portfolios towards favoured areas and away from those which are less attractive. Market conditions can change considerably from quarter to quarter, so the process is continuous, responding as conditions change. The multi-asset team meets formally on a weekly basis to discuss and challenge positioning, but on-going conversation and the monitoring of data analytics are part of the day-to-day dynamic process.

●● Step 3: ImplementationAviva Investors places significant focus on the construction of its portfolios and has invested in best in class systems and a dedicated implementation team. Each portfolio manager has a risk analysis toolkit, enabling them to stress test portfolios (looking at both historical and hypothetical events) before making an allocation change. In this way they can identify the risk or bias a new position may bring to a portfolio before deciding if they should proceed with the decision. A dedicated team of implementation specialists ensures trades are placed in the most cost-effective manner, freeing up the portfolio managers’ time to focus on making investment decisions.

How are ESG considerations incorporated into My Future Focus?There is growing recognition that incorporating environmental, social and governance (ESG) factors alongside active ownership is key to delivering a successful investment strategy, ultimately helping to improve outcomes for workplace pension scheme members.

Aviva Investors has always believed that companies that conduct their business in a responsible and sustainable way are more likely to succeed over time. It has a track record, dating back to 1970, of using its influence and experience to support and promote the long-term sustainability of capital markets, economies and society. A dedicated Global Responsible Investment (GRI) Team of 19 professionals with significant experience in ESG manages the two key elements to Aviva Investors’ approach:

●● Firstly, ESG considerations are integrated into Aviva Investors’ active management investment processes, incorporating macro, thematic, industry and stock specific insights and leveraging the best of both internal and external ESG data. This leads Aviva Investors to hold companies with higher ESG scores.

●● Secondly, Aviva Investors takes an active approach to stewardship to promote good practice among those companies it invests in. Its engagement approach is designed to deliver impact across all portfolios.

Where My Future Focus invests in Aviva Investors’ actively managed funds, both these elements are reflected in the fund’s holdings.

Where My Future Focus invests in passively managed funds, they benefit from Aviva Investors’ active approach to stewardship. Aviva Investors will also use a combination of internal and external ESG data, together with its proprietary ESG research, to tilt the passively managed regional equity funds towards those companies with a higher ESG score.

Work is ongoing to evolve how ESG considerations are further incorporated into My Future Focus, ensuring we are effectively responding to the growing appetite for such integrated investment solutions.

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How it looks now – My Future Plus

My Future Plus The My Future Plus investment programme (also known as the “universal strategy”) comprises a growth stage and a consolidation stage, recognising that the balance between return and risk will change as the member moves towards retirement. The universal strategy is designed for members who have not yet decided how they want to use their pension savings and would prefer to keep their options open.

Alternative optionsMembers can choose one of the other three options designed to target the different ways that they can use their pension savings. Each option uses the My Future Plus Growth Fund. Members can move into one of these options at any time before retirement.

Target AnnuityThis option is designed for those members who intend to convert their pension savings into a regular income for life by buying an annuity. As a result, their savings will be adjusted over time to prepare for annuity purchase.

Target Cash Lump SumThis option is designed for those members who intend to take their pension savings as a cash lump sum (or sums).

Target DrawdownThis option is designed for those members who intend to take an income by making withdrawals directly from their pension savings, while remaining invested, by using a drawdown arrangement.

The four approaches and the component funds are shown below:

Approach Component funds

My Future Plus (“universal strategy”) My Future Plus Growth and My Future Plus Consolidation

My Future Plus Target Annuity option My Future Plus Growth, My Future Plus Consolidation and My Future Plus Annuity

My Future Plus Target Cash Lump Sum option My Future Plus Growth, My Future Plus Consolidation and My Future Plus Cash Lump Sum

My Future Plus Target Drawdown option My Future Plus Growth and My Future Plus Drawdown

The weightings in the funds change over time as members approach their retirement date.

Annual Management ChargesThe Annual Management Charges (AMCs) of the funds will reduce under My Future Focus, as shown in the table below.

Fund Current AMC New AMC

My Future Plus Growth 0.20% 0.10%

My Future Plus Consolidation 0.20% 0.10%

My Future Plus Annuity 0.15% 0.10%

My Future Plus Cash Lump Sum 0.15% 0.10%

My Future Plus Drawdown 0.20% 0.10%

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How it looks now – Future Focus

Future Focus There are five lifestage approaches available under Future Focus. The default option under Future Focus is “Future Focus II Drawdown”.

The five lifestage approaches and the component funds are shown below:

Approach Component funds

Future Focus I DrawdownDiversified Assets Fund I Aviva Deposit Fund

Future Focus II Drawdown (default)Diversified Assets Fund II Diversified Assets Fund I Aviva Deposit Fund

Future Focus III DrawdownDiversified Assets Fund III Diversified Assets Fund I Aviva Deposit Fund

Future Focus II AnnuityDiversified Assets Fund II BlackRock Aquila Over 15 Years Corporate Bond Index Tracker Aviva Deposit Fund

Future Focus II Lump SumDiversified Assets Fund II Diversified Assets Fund I Aviva Deposit Fund

For further information about My Future Plus and Future Focus please speak to your usual Aviva contact.

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My Future Focus – the new solutionMy Future Plus and Future Focus will align to become My Future Focus.

My Future Focus “universal strategy”This option is designed for members who have not yet decided how they want to use their pension savings and would prefer to keep their options open.

0102030405060708090

100

My Future Focus Consolidation

My Future Focus Growth

Years to retirement

10+ 9 8 7 6 5 4 3 2 1 0

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What will My Future Focus look like? My Future Focus will comprise a default strategy (‘universal strategy’) which recognises that the balance between return and risk will change as the member progresses from joining the scheme to their selected retirement date.

In the ‘growth’ phase the focus is on providing a balance between the member’s requirements for strong growth in excess of inflation and their aversion to suffering significant ‘ups and downs’ in the value of their savings. This will be achieved through investment in a range of asset classes, including ‘growth’ assets (both developed market and emerging market equities, and high yield and emerging market debt), ‘defensive’ assets (government and corporate bonds) and ‘uncorrelated’ assets (property).

In the ‘consolidation’ phase the focus is on providing a balance between the member’s need to grow the value of their savings ahead of inflation against the risk of suffering loss. This will be achieved through investment in a range of asset classes, with a greater focus on ‘defensive’ assets.

Alongside the default universal strategy there will be three alternative options, each with a ten-year glide path.

●● My Future Focus (the ‘universal strategy’)

●● My Future Focus Target Annuity option

●● My Future Focus Target Cash Lump Sum option

●● My Future Focus Target Drawdown option

The glide paths for each of the four strategies available are shown below and overleaf. The charts show the underlying funds which make up those strategies and how they are blended over time.

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My Future Focus – the new solution

My Future Focus Target AnnuityThis option is designed for members who intend to convert their pension savings into a regular income for life by buying an annuity. As a result, their savings will be adjusted over time to prepare for annuity purchase.

Years to retirement

10+ 9 8 7 6 5 4 3 2 1 0

100%

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

10%

80% 20%

60%

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20%

10%


My Future Focus Annuity


0102030405060708090

100

My Future Focus Target Drawdown optionThis option is designed for members who intend to take an income by making withdrawals directly from their pension savings, while remaining invested, by using a drawdown arrangement.

0102030405060708090

100

My Future Focus Drawdown


Years to retirement

10+ 9 8 7 6 5 4 3 2 1 0

100%

90%

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100%

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10%

My Future Focus Target Cash Lump SumThis option is designed for members who intend to take their pension savings as a cash lump sum (or sums).

100%

100%

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10%0102030405060708090

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My Future Focus Cash Lump Sum


Years to retirement

10+ 9 8 7 6 5 4 3 2 1 0

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Years to retirement

10+ 9 8 7 6 5 4 3 2 1 0

100%

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

10%

80% 20%

60%

30%

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40%

20%

50%

40%

30%

20%

10%


My Future Focus Annuity


0102030405060708090

100

0102030405060708090

100



Years to retirement

10+ 9 8 7 6 5 4 3 2 1 0

100%

90%

80%

70%

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Years to retirement

10+ 9 8 7 6 5 4 3 2 1 0

100%

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How My Future Plus and Future Focus solutions will changeThe differences between the new My Future Focus solution and the current My Future Plus and Future Focus solutions are summarised below. The current investment solutions will be aligned under My Future Focus.

My Future Plus (current approach)

My Future Focus (new approach) Component funds*

My Future Plus “universal strategy”

My Future Focus “universal Strategy”

My Future Focus Growth and My Future Focus Consolidation

My Future Plus Target Drawdown

My Future Focus Target Drawdown

My Future Focus Growth and My Future Focus Drawdown

My Future Plus Target Annuity

My Future Focus Target Annuity

My Future Focus Growth, My Future Focus Consolidation

and My Future Focus Annuity

My Future Plus Target Cash Lump Sum

My Future Focus Target Cash Lump Sum

My Future Focus Growth and My Future Focus Cash Lump Sum

Future Focus (current approach)

My Future Focus (new approach) Component funds*

Future Focus II Drawdown (default) Future Focus I Drawdown

Future Focus III Drawdown

My Future Focus “universal Strategy”

My Future Focus Growth and My Future Focus Consolidation

Future Focus II AnnuityMy Future Focus Target Annuity

My Future Focus Growth, My Future Focus Consolidation and My Future Focus Annuity

N/A (no current equivalent)My Future Focus

Target DrawdownMy Future Focus Growth and My Future Focus Drawdown

Future Focus II CashMy Future Focus

Target Cash Lump Sum

My Future Focus Growth and My Future Focus Cash Lump Sum

*Details of the component funds are given on the next page

With the exception of the My Future Focus Annuity Fund, the funds which underpin My Future Focus all have long-term volatility targets, set by Aviva, to help manage risk. These are described on the following pages.

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The new funds

Current fund name and risk rating Current underlying fund(s) New fund name

and risk rating New underlying fund

My

Futu

re P

lus

My Future Plus GrowthRisk rating: 4

Range of BlackRock and L&G passive funds

My Future Focus GrowthRisk rating: 4 Diversified Assets Fund 4

My Future Plus DrawdownRisk rating: 4


My Future Focus DrawdownRisk rating: 3 Diversified Assets Fund 3

My Future Plus Consolidation Risk rating: 3


My Future Focus ConsolidationRisk rating: 2 Diversified Assets Fund 2

My Future Plus Cash Lump SumRisk rating: 2


My Future Focus Cash Lump Sum Risk rating: 2

Diversified Assets Fund 1

My Future Plus AnnuityRisk rating: 3

L&G Pre-Retirement and BlackRock Sterling Liquidity

My Future Focus AnnuityRisk rating: 4 L&G Pre-Retirement

Current fund name Current underlying fund(s) New fund name New underlying fund

Futu

re F

ocus

Diversified Assets Fund IIIRisk rating: 5

Range of internal Aviva Investors managed funds


Diversified Assets Fund IIRisk rating: 4



Diversified Assets Fund I Risk rating: 3


My Future Focus ConsolidationRisk rating: 2 Diversified Assets Fund 2

The My Future Focus solutions will use My Future Focus branded funds which in turn invest in a revised set of Diversified Assets Funds (DAFs). DAFs are currently used within Future Focus and are managed by the Aviva Investors Multi-Asset Team. The solution will also use a specialist annuity targeting fund, managed by L&G.

What will change?My Future Plus - The existing My Future Plus Funds are funds of funds investing in a range of underlying index funds. This will change so that they invest into a single underlying fund (a Diversified Assets Fund), with the exception of the Annuity targeting fund. We will be renaming them, so they will use My Future Focus branding.

Future focus - We will be renaming the current Diversified Assets Funds (DAFs) used by Future Focus so they will use My Future Focus branding. These will, in turn, invest into new DAFs we are creating.

The table below summaries the new fund names and their risk ratings. Details of risk ratings can be found on page 20.

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The new funds

New fund New objective

My Future Focus Growth (this will invest in the Diversified Assets Fund 4)Risk rating: 4Risk warnings: A, B, C, E, F

This fund aims to provide long term growth, through exposure to a range of asset classes that can include, but are not limited to, equities, fixed interest, cash, and property. It may also use derivatives for investment purposes. The fund targets volatility of 75% of Global Equities (as measured on a rolling 5-year basis).

My Future Focus Drawdown (this will invest in the Diversified Assets Fund 3)Risk rating: 3Risk warnings: A, B, C, E, F

This fund aims to provide an appropriate balance between growth and risk reduction, through exposure to a range of asset classes that can include, but are not limited to, equities, fixed interest, cash, and property. It may also use derivatives for investment purposes. The fund targets volatility of 50% of Global Equities (as measured on a rolling 5-year basis).

My Future Focus Consolidation (this will invest in the Diversified Assets Fund 2)Risk rating: 2Risk warnings: A, B, C, E, F

This fund aims to provide growth with a reduced level of risk, through exposure to a range of asset classes that can include, but are not limited to, equities, fixed interest, cash, and property. It may also use derivatives for investment purposes. The funds targets volatility of 25% of Global Equities (as measured on a rolling 5-year basis).

My Future Focus Cash Lump Sum (this will invest in the Diversified Assets Fund 1)Risk rating: 2Risk warnings: A, E, F

This fund seeks to achieve a positive return by investing primarily in fixed interest and money market instruments. It may also use derivatives for investment purposes. The fund targets a volatility of 12.5% of Global Equities (as measured on a rolling 5-year basis).

My Future Focus Annuity(this will invest in the L&G Pre-Retirement fund)Risk rating: 4Risk warnings: A, B, E, J

This fund is designed for members approaching retirement and considering buying a fixed (or level) annuity. The fund will predominantly invest in UK Government and corporate bonds. Derivatives may be used by the underlying fund(s) for investment purposes.

We will be making changes:●● To the funds’ asset allocations, objectives and risk profiles.

●● To the range of asset classes used within the DAFs, which will expand to include high yield debt, emerging market debt and property, all of which will be accessed through actively managed Aviva Investors funds.

Details of risk warnings can be found on page 20.

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The new funds

Platform Fund Name

Underlying Diversified

Assets Fund (DAF)

Fund purpose Volatility target

My Future Focus Growth DAF 4This fund aims to grow the value of members’ pension savings ahead of inflation over the long-term.

75% of global equity market volatility (broadly equates to 12% volatility).


DAF 3

This fund aims to provide the potential for investment growth, but with a lower level of risk than the Growth Fund. It seeks to provide an appropriate balance between limiting downside risk and providing a level of growth for a member who wants to move into a drawdown arrangement.



DAF 2This fund aims to reduce the level of risk to which members’ savings are exposed, while continuing to provide the opportunity for growth.



DAF 1

This fund aims to preserve the values of members’ pension savings and lower the risk to their savings from the effects of inflation. It is designed for those members who intend to withdraw their pension savings as a cash lump sum (or sums).

12.5% of global equity market volatility (broadly equates to 2% volatility).

My Future Focus AnnuityL&G Pre-Retirement

This fund is designed for members approaching retirement and considering buying a fixed (or level) annuity. It aims to track changes in the cost of buying an annuity.

No volatility target.

The DAFs will continue to target volatility, but rather than targeting absolute levels of volatility they will target volatility relative to global equity market volatility (measured against the reference index MSCI World). The volatility targets for the funds are described below.

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Appendix: Asset allocation changes

Asset Class

Asset allocations of existing funds as at 31/3/2019 My Future Focus

Growth indicative asset allocationCurrent DAF II Current DAF III My Future

Plus Growth

UK Equities 5.4% 7.0% 33.8% 14.0%

Europe ex UK Equities 6.5% 10.3% 5.7% 6.0%

US Equities 34.0% 48.3% 20.8% 24.0%

Japan Equities 6.4% 7.9% 3.3% 3.0%

Asia Pacific ex-Japan Equities 1.1% 2.2% 2.3% 2.0%

Other regions (Canada and Israel) 0.0% 0.0%● 1.1% 0.0%

Emerging Markets Equities 7.8% 10.0% 5.0% 7.0%

All Stocks Sterling Corporate Bonds 19.4% 7.3% 2.1% 13.0%

All Stocks Gilts 19.2% 6.0% 7.1% 0.0%

Over 5 Year Index Linked Gilts 0.0% 0.0%● 2.4% 0.0%●

High Yield Debt 0.0% 0.0% 5.0% 6.0%

Emerging Market Debt 0.0% 0.0%● 5.0% 9.0%

Commodities 0.0% 0.0% 6.4% 0.0%

Property 0.0% 0.0%● 0.0% 10.0%

Cash 0.2% 1.1% 0.0% 6.0%

Total 100% 100% 100% 100%

Aviva Investors Multi-Asset Team will be responsible for the ongoing management of My Future Focus, with the exception of the My Future Focus Annuity Fund. The tables below show the asset allocation changes from the current funds to the new.

My Future Focus Growth Fund – DAF 4

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Asset Class


Drawdown indicative asset allocationMy Future Plus Drawdown

UK Equities 26.0% 7.0%

Europe ex-UK Equities 3.6% 3.0%

US Equities 13.2% 11.0%

Japan Equities 2.1% 1.0%

Asia Pacific ex-Japan Equities 1.4% 1.0%

Other regions (Canada & Israel) 0.7% 0.0%

Emerging Markets Equities 0.8% 4.0%

All Stocks Sterling Corporate Bonds 6.4% 28.0%

All Stocks Gilts 21.4% 6.0%

Over 5 Year Index Linked Gilts 7.1% 0.0%

High Yield Debt 5.0% 6.0%

Emerging Market Debt 5.0% 8.0%

Commodities 7.3% 0.0%

Property 0.0% 10.0%

Cash 0.0% 15.0%

Total 100.0% 100%

My Future Focus Drawdown Fund – DAF 3

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Asset Class


Consolidation indicative asset allocationCurrent DAF I My Future Plus

Consolidation

UK Equities 3.9% 13.6% 3.0%

Europe ex-UK Equities 2.9% 0.6% 1.0%

US Equities 19.7% 2.10% 4.0%

Japan Equities 4.3% 0.4% 1.0%

Asia Pacific ex-Japan Equities 0.1% 0.2% 0.0%

Other regions (Canada and Israel) 0.0% 0.1% 0.0%

Emerging Markets Equities 4.8% 0.0% 2.0%

All Stocks Sterling Corporate Bonds 31.2% 11.8% 17.0%

Short-dated Sterling Corporate Bonds 0.0% 0.0% 0.0%

Short-dated Conventional Gilts 0.0% 0.0% 21.5%

All Stocks Gilts 30.1% 39.5% 21.5%

Over 5 Year Index Linked Gilts 0.0% 13.1% 0.0%

High Yield Debt 0.0% 5.0% 2.0%

Emerging Market Debt 0.0% 5.0% 3.0%

Commodities 0.0% 8.6% 0.0%

Property 0.0% 0.0% 4.0%

Cash 3.1% 0.0% 20.0%

Total 100% 100% 100%

My Future Focus Cash Lump Sum Fund – DAF 1

Asset Class


Cash Lump Sum indicative asset allocationMy Future Plus Cash Lump Sum

Short-dated Sterling Corporate Bonds 27.0% 44.0%

Short-dated Conventional Gilts 48.0% 36.0%

Up to 5 Year Index Linked Gilts 5.0% 0.0%

Absolute Return Bond 20.0% 0.0%

Cash Fund 0.0% 20.0%

Total 100% 100%

My Future Focus Consolidation Fund – DAF 2

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Appendix: Benchmarks and comparators

Current New

Growth30% FTSE All-Share Index 40% FTSE World ex UK Index 30% BofA ML Sterling Broad Market Index

Primary: Bank of England Base Rate + 4% Secondary: 75% FTSE World & 25% BofA ML Sterling Broad Market Index

Drawdown

10% FTSE All-Share Index 25% FTSE World ex UK Index 10% FTSE Gilts All Stocks Index 55% iBoxx GBP Non-Gilt


Consolidation

20% FTSE World Index 35% FTSE Gilts Up to five years Index 30% iBoxx GBP Non-Gilt 1 to 5 Years Index 15% FTSE UK Index-linked Up to Five Years Index


Cash Lump Sum 3m LIBOR Bank of England Base Rate

Annuity

15% iBoxx Sterling Non-Gilts 1-5 Year Index 15% iBoxx Sterling Non-Gilt Index 5-15 Yr Index 20% iBoxx Sterling Non-Gilts Over 15 Years Index 20% FTSE UK Gilts 5-15 Years Index 30% FTSE UK Gilts Over 15 Years Index

FTSE UK Level Annuity Single Life Standard Retirement

Benchmarks and performance comparatorsThe table below shows the current benchmarks for the My Future Plus funds and the new benchmarks. These benchmarks are subject to change in future.

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Appendix: New glide paths

Under My Future Focus, the glide path will commence ten years prior to the member’s intended retirement date. This is the same length of time that has been used with Future Focus, but is different from My Future Plus, which has a glide path of 15 years.

We believe that a ten-year glide path, based on the content and management of the My Future Focus funds, offers an appropriate balance between the expected fund value at the member’s intended retirement date and the range of expected fund values.

Changes to My Future Plus – The graphs below show the current and future glide paths for members invested in My Future Plus.

Default My Future Plus investment glide path (the “universal strategy”)

Default My Future Focus investment glide path (the “universal strategy”)

Years to retirement

15+ 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0

My Future Plus Growth My Future Plus Consolidation

0%

20%

40%

60%

80%

100%

100%

93%

7%

13%

20%

27%

33%

40%

47%

53%

60%

67%

73%

80%

87%

93%

100%

87%

80%

73%

67%

60%

53%

47%

40%

33%

27%

20%

13% 7% 0%

20%

40%

60%

80%

100%

My Future Focus ConsolidationMy Future Focus GrowthYears to retirement

10+ 9 8 7 6 5 4 3 2 1 0

100%

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

20%

40%

60%

80%

100%

Years to retirement

15+ 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0

100%

100%

100%90%

90%

80%80%

80%

80%

70%

70%

60%

60%

60%

60%

50%

50%

40%

30%

20%

10%

40%

40%

30%

20% 20%

40%

20%

10%

My Future Plus Growth My Future Plus Consolidation My Future Plus Annuity

My Future Plus Target Annuity option My Future Focus Target Annuity option

0%

20%

40%

60%

80%

100%

Years to retirement

10+ 9 8 7 6 5 4 3 2 1 0

100%

100%

90%

80%

80%

70%

60%

60%

50%

50%

40%

40%

20%

10%

40%

40%

40%

30%

30%

30%

20%

20%

20%

10%

10%

10%

My Future Focus Growth My Future Focus Consolidation My Future Focus Annuity

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0%

20%

40%

60%

80%

100%

Years to retirement

15+ 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0

100%

100%

100%90%

90%

80%80%

80%

80%

70%

70%

60%

60%

60%

60%

50%

50%

40%

30%

20%

10%

40%

40%

30%

20% 20%

40%

20%

10%

My Future Plus Growth My Future Plus Consolidation My Future Plus Cash Lump Sum

0%

20%

40%

60%

80%

100%

My Future Focus Cash Lump SumMy Future Focus Growth

Years to retirement

10+ 9 8 7 6 5 4 3 2 1 0

100%

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

90%

80%

70%

60%

50%

40%

30%

20%

10%

My Future Plus Target Cash Lump Sum option My Future Focus Target Cash Lump Sum option

Years to retirement

15+ 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0%

20%

40%

60%

80%

100% 7%

13%

20%

27%

33%

40%

47%

53%

60%

67%

73%

80%

20%

87%

93%

100%

100%

93%

87%

80%

73%

67%

60%

53%

60%

40%

33%

27%

13%

7%

My Future Plus Growth My Future Plus Drawdown

0%

20%

40%

60%

80%

100%

My Future Focus DrawdownMy Future Focus Growth

Years to retirement

10+ 9 8 7 6 5 4 3 2 1 0

100%

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

90%

80%

70%

60%

50%

40%

30%

20%

10%

My Future Plus Target Drawdown option My Future Focus Target Drawdown option

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aviva.co.uk 19

Changes to Future Focus – The graphs below show the glide paths for members invested in Future Focus.

Future Focus I, II and III Drawdown move into the My Future Focus universal strategy

Future Focus II Drawdown

Future Focus I Drawdown

0%

20%

40%

60%

80%

100%

Deposit FundDiversified Asset Fund I

Years to retirement

10+ 9 8 7 6 5 4 3 2 1 0

100% 25%

15%5%

100%100%100%100%100%100%100%95%

85%

75%

Future Focus III Drawdown

0%

20%

40%

60%

80%

100%

DepositFund

DiversifiedAssets Fund I

DiversifiedAssets Fund III

Years to retirement

10+ 9 8 7 6 5 4 3 2 1 0

100%

25%

15%5%

70%

60%

50%

40%

30%

20%

10%

90%

80%

75%

70%

75%

60%

75%

50%

40%

30%

20%

10%

0%

20%

40%

60%

80%

100%

DepositFund

DiversifiedAssets Fund I

DiversifiedAssets Fund II

Years to retirement

10+ 9 8 7 6 5 4 3 2 1 0

100%

25%

15%5%

70%

60%

50%

40%

30%

20%

10%

90%

80%

75%

70%

75%

60%

75%

50%

40%

30%

20%

10%


0%

20%

40%

60%

80%

100%

My Future Focus ConsolidationMy Future Focus Growth

Years to retirement

10+ 9 8 7 6 5 4 3 2 1 0

100%

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

90%

80%

70%

60%

50%

40%

30%

20%

10%

My Future Focus investment glide path (the “universal strategy”)

AV234568_SP99719_0619.indd 19 07/08/19 5:33 PM

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Future Focus II Annuity approach

Future Focus II Lump Sum approach

My Future Focus Target Annuity option

My Future Focus Target Cash Lump Sum option


Years to retirement

Diversified Asset Fund II Diversified Asset Fund I Deposit Fund

0%

20%

40%

60%

80%

100%

10+ 9 8 7 6 5 4 3 2 1 0

100%

100%

75%

50%

50%

25%

60%

50%

40%

30%

20%

10%

90%

80%

40%

70%

75%

60%

50%

40%

25%

10%

0%

20%

40%

60%

80%

100%

Diversified Asset Fund II BlackRock Over 15yrsCorp Bond Index Tracker

Deposit Fund

Years to retirement

10+ 9 8 7 6 5 4 3 2 1 0

100%

25%

15%5%

70%

60%

50%

40%

30%

20%

10%

90%

80%

75%

70%

75%

60%

75%

50%

40%

30%

20%

10% 0%

20%

40%

60%

80%

100%

My Future Focus Growth My Future Focus Consolidation My Future Focus Annuity

Years to retirement

10+ 9 8 7 6 5 4 3 2 1 0

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

10%

80% 20%

60%

30%

40%

40%

20%

50%

40%

30%

20%

10%

100%

0%

20%

40%

60%

80%

100%

My Future Focus Cash Lump SumMy Future Focus Growth

Years to retirement

10+ 9 8 7 6 5 4 3 2 1 0

100%

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

90%

80%

70%

60%

50%

40%

30%

20%

10%

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aviva.co.uk 21

Appendix: Fund risk ratings and warningsHelping you to understand riskThe Aviva Investment Governance team allocates risk ratings and warnings for all funds. Please note that not all of the risk warnings listed apply to each fund and there is no direct relationship between the number of risk warnings and the risk ratings shown below.

Risk Ratings

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.

Risk rating Risk rating description7 Highest

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.

6 High volatility The 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.

5 Medium to high volatility

The 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.

4 Medium volatility

The 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.

3 Low to medium volatility

The 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.

2 Low volatility The 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.

1 Lowest volatility

The 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. The colours in this table may be different from those used online, but the ratings and approach to investment risk remain the same.

AV234568_SP99719_0619.indd 21 07/08/19 5:33 PM

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Appendix: Fund risk ratings and warningsFund risk warningsThere are risks associated with investing in funds, or types of funds. We recommend you read through these. On this page we show the risk warning or warnings that apply to the funds in the My Future Focus solution. Please note that not all of these warnings apply to each fund and there is no direct relationship between the number of fund risk warnings and the investment risk rating for each fund.

Risk warning code Risk warning description

A Investment is not guaranteed: The value of an investment is not guaranteed and can go down as well as up. You could get back less than you have paid in.

Specialist funds: Some funds invest only in a specific or limited range of sectors and this will be set out in the fund’s aim. These funds may carry more risk than funds that can invest across a broader range or a variety of sectors.

Suspend trading: Fund managers have the ability, in certain circumstances, to suspend trading in their funds for as long as necessary. When this occurs we will need to delay the ‘cashing in’ or switching of units in the relevant fund. You may not be able to access your money during this period.

Derivatives: Derivatives are financial contracts whose value is based on the prices of other assets. Most funds can invest in derivatives for the purpose of managing the fund more efficiently or reducing risk. Some funds also use derivatives to increase potential returns, known as ‘speculation’. For those funds we apply an additional risk warning (see Risk F).

B Foreign exchange risk: When funds invest in overseas assets the value will go up and down in line with movements in exchange rates as well as the changes in value of the fund’s holdings.

C Emerging markets: Where a fund invests in emerging markets, its value is likely to move up and down by large amounts and more frequently than one that invests in developed markets. These markets may not be as strictly regulated and securities may be harder to buy and sell than those in more developed markets. These markets may also be politically unstable which can result in the fund carrying more risk.

E Fixed interest: Where a fund invests in fixed interest securities, such as company, government, index-linked or convertible bonds, changes in interest rates or inflation can contribute to the value of the investment going up or down. For example, if interest rates rise, the value is likely to fall.

F Derivatives: Derivatives are financial contracts whose value is based on the prices of other assets.

The fund invests in derivatives as part of its investment strategy, over and above their use for managing the fund more efficiently. Under certain circumstances, derivatives can result in large movements in the value of the fund and increase the risk profile, compared to a fund that only invests in, for example, equities. The fund may also be exposed to the risk that the company issuing the derivative may not honour their obligations, which could lead to losses.

J Reinsured funds: Where a fund invests in an underlying fund operated by another insurance company through a reinsurance agreement, if the other insurance company were to become insolvent, you could lose some or all of the value of your investment in this fund.

AV234568_SP99719_0619.indd 22 07/08/19 5:33 PM

aviva.co.uk 23

Call: For NGP 0345 300 0484 Open Monday – Friday 8:30am to 6:00pm

For My Money 0345 604 9915 Open Monday – Friday 8:00am to 5:30pm

For Group Personal Pensions (GPP) 0800 145 5744 Open Monday – Friday 8:00am to 5:30pm, Saturday 8:30 am to 5:00 pm, Sunday 10:00am to 4:00pm

Please note, we may record calls to improve our service. Calls may be charged and these charges may vary; please speak to your network provider.

Email: For NGP please email [email protected] For My Money please email [email protected] For GPP please email [email protected]

Write to: For NGP please write to Aviva, PO Box 1550, Salisbury SP1 2TW For My Money please write to Aviva, PO Box 2282, Salisbury SP2 2HY For GPP please write to Aviva, Norwich BCC, PO Box 520, Norwich NR1 3WG

For more information on pension changes visit: Advisers: www.fundchanges.aviva.co.uk Employers and Trustees: www.avivamicrosite.co.uk/fundchanges.

Contact usIf you have any questions about any of the information in this brochure, please feel free to contact us using one of the methods below.

AV234568_SP99719_0619.indd 23 07/08/19 5:33 PM

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mailto:[email protected]



http://www.fundchanges.aviva.co.uk

http://www.avivamicrosite.co.uk/fundchanges

Aviva Life & Pensions UK Limited. Registered in England No. 3253947. Registered Office: Aviva, Wellington Row, York, YO90 1WR. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Member of the Association of British Insurers. Firm Reference Number 185896.

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SP99719 06/2019

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Upcoming changes to My Future Plus and Future Focus · Future Plus and Future Focus pension...

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