Understanding Investments Webcast

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Hello and welcome to this webcast recording provided by Aviva who provide your pension.  You may pause or rewind this recording at any time.

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Before we go any further there is some important information that we need to share with you. The following presentation should not be regarded as giving any form of financial or investment advice. You shouldn't make decisions on the basis of this presentation alone. If you require advice, you should contact a financial adviser. You can find one using the website shown on the screen.

This presentation is based on Aviva’s interpretation of present laws and HM Revenue & Customs practice for the current tax year. The tax benefits may change at any time and their value depends on your personal circumstances.

The value of an investment can fall as well as rise and it is not guaranteed. You may get back less than the amount that’s been invested.

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Aviva has been helping people plan for the future for a long time: Our history dates back over 300 years We currently manage billions of pounds worth of savings and investments for our customers we are a leading provider of company pensions schemes in the UK.

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So, what are we going to be covering today and how can we help you? Please pause and take a moment to read the screen before moving on.

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What about workplace pensions? How do they work?

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A great way to save could be through your company pension scheme. This is because it's tax-efficient; your employer pays in, too; their your pension savings - so if you leave your employer, you can take them with you, And It’s flexible, meaning you can decide how much you would like to contribute, where the contributions are invested, and at what age you would like to take the benefits.

You can access your savings from the 'minimum pension age' set by the government. This is currently 55 but is rising to 57 from 6 April 2028. You may be able to access it earlier such as when you have a protected pension age or can't work due to ill health or incapacity.

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Your pension contributions will be sent to Aviva and invested in either the default investment solution or your chosen investment funds. Charges will be deducted whilst your money is invested. When you get to retirement you can then use the fund to provide yourself with an income, with various options available from the minimum pension age.   

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Making choices that suit you.

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Your pension scheme offers a range of investments, and you can choose where your money goes. Let's look at how investments work, and what investments are available in your scheme.

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The money you save into your pension is invested to help it grow but do remember that the value of investments can fall as well as rise and is not guaranteed - you could get back less than the amount invested.

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All types of investments work on a risk and reward basis. Generally speaking, the riskier an investment is, the greater its potential for providing higher returns. The downside is that the value is likely to go up and down more, so there is a greater chance of losing money especially over the short term. With lower risk investments there’s less chance of you losing money, but the returns they’re capable of achieving generally tend to be lower and could possibly struggle to keep up with inflation. Towards the bottom of the risk and reward scale you would typically have Money Market investments, also known as Cash. They are not to be confused with deposit accounts with bank or building societies. Although less risky than other types of investments, there could be circumstances when these investments fall in value, for example if an organisation fails. The value of Money Market investments could also be eroded over time due to the effects of fund charges, product charges and inflation. At the other end of the scale, you have Company Shares, also known as Equities. While there is more opportunity for potential gains with shares than with other investment types, there is also greater risk that they will fall in value. Generally, each fund offered by Aviva invests in one or more of the investment types shown. There is more information about these investment types in your Investment booklet.

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It’s important to remain focused on the long term. The chart on the screen shows the performance of the FTSE 100 Index - which is made up of the share prices of UK's largest 100 companies - over the past 30 years. Whilst there will be ups and downs with investment performance, it is important to focus on the bigger picture - your long-term goals.

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When stock markets are volatile it can be tempting for investors to stop contributing to their pension, but if they do this they may potentially miss out on any upside. This may also mean that they end up not saving enough to meet their retirement goals. Contributing a fixed amount on a regular basis may be an effective way, not only of saving towards your retirement over time, but also ‘smoothing out’ the fluctuations in the value of a pension. Whenever you make a contribution, you buy units in a fund. A unit is essentially a stake in a fund. So, for the same fixed contribution, the lower the unit price for the fund, the more units will be purchased and when the unit price for the fund rises, less units will be purchased. The beauty of this approach means that the risk of paying for all of the units, perhaps with a lump sum, at the highest price is reduced. In the investment world, regular investing or ‘drip feeding’ is more commonly referred to as ‘Pound Cost Averaging’.

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To help you understand your attitude to risk you can use our risk profiler.

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If you haven’t made a choice your money will be invested in the default investment solution. The default automatically manages your investments in the run-up to retirement and has been designed for the majority of members, however this may not suit your personal circumstances and retirement aims. More information on the funds used in the default, including their risks and charges, can be found in your investment booklet.

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Here we see which funds are used in an example default investment programme, and how the proportion of each fund in the pension changes in the run up to retirement. Please pause here and take a moment to read the information on the default investment programme on the screen before moving on.

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The governance of our investment funds is a responsibility we take seriously. To ensure that the funds our customers invest in continue to perform in line with expectation, we apply a rigorous and disciplined process for selecting and monitoring funds and have a dedicated governance team with qualified and experienced analysts.

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Invest to create change

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Some funds will take into consideration Environmental, Social and Governance factors before investing in a company. These are non-financial aspects of their performance, here are some examples. Please pause for a moment to read the information on the screen before moving on.

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It is very easy to get ESG considerations and ethical investing confused. There are differences between the two approaches though. Ethical factors are increasingly being used as negative screens and are based on personal values. Investment performance is not the main objective for most in ethical investments. However, ESG investing is based on a belief that companies that perform better than their peers on environmental, social and governance factors will also fair favourably when it comes to investments.

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When people invest in some of our funds, we use that money to invest in companies. This investment provides us with the opportunity to work with these companies, to try and ensure they are considering and taking action on the ESG issues they face. Here are some examples of changes we have helped mould. Please pause and take a moment to read the information on the screen before moving on.

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All of the funds that are available to you will have their own charge associated with them. These charges cover costs such as setting up the plan, fund management and plan administration. If you choose your own investment funds, please make sure you are aware of the charges associated with them.

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We currently don’t charge you for switching to new funds. We will tell you if this changes.

You can switch your funds online (if available), or by post using the Aviva switch and redirection form.

In exceptional circumstances we may need to delay cashing in or switching funds; however, we will not do this at your selected retirement date or on death.

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As a member you will have access to an online account making it easier for you to plan and save for your future. In addition to giving you information about your pensions value and where your money is invested you will also have access to our tools and calculators.

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Sadly, unscrupulous individuals look to take advantage of consumer fears. If someone offers you a great deal, be very cautious. On screen are some of the common scams we see. 

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Thank you for listening we hope this presentation has been useful.