Severn Trent Pension Scheme - PRAG

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Spotlight on investments....... Is it time to review your investment choices? When you joined Pension Choices, you were given the choice of investing your contributions using either FreeModel (where you make some of the investment decisions) or LifeModel (where you leave all of the decision making to the Scheme’s investment manager). Here is a reminder of how LifeModel works: • You tell us when you want to retire (your Target Retirement Age). • In the early days, when you are more than 10 years away from your Target Retirement Age, your contributions are invested in equity funds (eg, company shares), with the aim of maximising the growth of your personal account. • During the 10-year period before you reach your chosen retirement age, your investments will be gradually switched out of shares and into bonds. • In the final three years, your contributions are switched into the Cash Fund, so that at your retirement 75% is invested in the Pre-Retirement Fund and 25% in the Cash Fund. 8 Things to consider LifeModel aims to minimise the impact of a downturn in the stock markets on your pension when you are nearer your Target Retirement Age, by switching your personal account over to less volatile investments such as bonds and cash in the 10 years before you retire (known as the ‘lifestyling period’). However, if stock markets rise in the 10 years before you retire, this can mean that your account will not be as large as it would otherwise have been. Also, if you enter this ‘lifestyling period’ at a time when share prices are low (as they are now), then you will to some extent be ‘locking in’ the losses to your account caused by the stock market falls. On the other hand, you will be giving your account some degree of protection against further falls in the stock market. The Trustee has set up LifeModel in a way it believes will work well for the majority of Pension Choices members, but it may not be the best option for your individual circumstances. If you are unsure whether LifeModel is the right strategy for you, we recommend you speak to an independent financial adviser.
.. continued Moving out of equities? Given the recent stock market falls, you may be tempted to switch your personal account out of equities and into lower-risk investments, such as bonds and cash (some of which, after all, delivered positive growth in the past year). However, it is important to remember that your pension is a long-term investment. Unless you are close to retirement, the return on equities has historically tended to be higher than that from bonds and cash over the medium to long term. A knee-jerk reaction to stock market falls, such as moving out of equities into cash, may not be in your best long-term interests. Want to know more? The secure member website for Pension Choices was launched last year and is a great source of information about the Scheme. You can go online to view your investment choices and find out the latest value of your account. If you’ve not already registered to use the website, please contact Capita Hartshead: https://addvantage.capitahartshead.co.uk/severntrent tel: 0114 229 8234 You can also find out more about your investment choices by logging onto Legal & General’s website: www.lgim.com/clientsite user name: severntrent_member password: severntrent 9
Page 1 and 2: Spotlight on pensions June 2009 The
Page 3 and 4: Inside Money & membership page 4 hi
Page 5 and 6: Membership statistics Pension Choic
Page 7: Pre-Retirement Fund The Trustee reg
Page 11 and 12: Top up your pension pot In light of
Page 13 and 14: The tax benefits of having a pensio
Page 15 and 16: Trustee & Advisers The Scheme Trust

Severn Trent Pension Scheme - PRAG

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