Intended for pension fund trustees and their investment ... · • Project the size of their...

Defined Contribution Pension SolutionsSupporting you on every step of the journey

Intended for pension fund trustees and their investment consultants only. Not to be distributed to pension scheme members.

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WelcomeThe landscape for DC is changing – for savers and retirees, for employers and for trustees, and for those who are responsible for managing client assets. At Legal & General Investment Management, we are committed to helping you navigate this changing world on every step of the journey, whatever the size of your scheme and whatever the challenges you face.

With over 3,3001 schemes and more than 2.5 million1 members to look after, we are driving innovation in the DC market for the benefit of today’s savers and tomorrow’s retirees.

Here you will discover our vision for the future of DC, how we can help you and your members, and more detail about the particular products and services we’ve developed in order to meet the evolving needs of your scheme.

Emma DouglasHead of Defined Contribution, LGIM

1. Source LGIM as at 30 June 2017

Defined Contribution Pension Solutions

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DC 2.0 Our vision for DC

The UK pensions and savings market is getting to grips with a much more flexible, but also more complex and uncertain retirement landscape. In this new world, finding the right solutions to take DC scheme members to, and through, retirement and support them along the way will be crucial.

Driven by rapidly evolving technology and changing regulation, this emerging era, that we call DC 2.0, will be much more focused on the needs of individual investors.

The customer experience will revolve around simplicity, personalisation and straightforward interaction across a range of channels, including digital media.

Providers will continue to innovate with new products to cater to all stages of the investment and savings journey.

Schemes will be able to offer flexible products for their members and decide what best meets their governance needs.

Legal & General Investment Management are market leaders in UK DC and we are committed to this market for the long term. This means delivering for our clients in three keys areas:

Communication: we are helping schemes engage more effectively with their members by listening to their needs, and providing bespoke and innovative member communications.

Administration: we have a range of highly automated, scalable products and services, that help to alleviate the operational, administrative and governance burdens DC schemes are facing.

Investment excellence: the most important outcome for members over the long term is the return on their savings. We have a wide range of award-winning DC investment strategies to fit our clients’ needs, and because of this our clients have entrusted us to manage more pension fund assets than any other UK asset manager1.

We have developed our platform to ensure that employers, trustees and employees alike have access to a competitively priced, high-quality and well-governed range of pension products that will endure as the savings and pensions landscape continues to change.1. Source LGIM as at 30 June 2017


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Designed with your members in mindWhen we think about DC investments, communications or administration systems, we start with the needs of DC savers. It boils down to a simple question: What is most important to your members at the different phases of their savings journey?

Clear

Unclear

First step On your way Getting there Arriving

• Register online account• Find out about how my money grows• Change my contributions

• Check fund value• Use retirement planner/budgeter/compass

tool/investor profiler tool• Find out where I’m invested• Select different investment fund• Transfer other pensions

• Check fund value• Model different retirement options • Change retirement age• Choose different investment fund • Get a state pension forecast• Take financial advice

• Use longevity calculator and total wealth estimator

• Consider my other income• Get financial advice• Review my income on an annual basis

• What option is right for me?• Who can help me understand my options?• How long will my money last for?• How much tax will I pay?• Should I take financial advice?• Can I change my mind?

“It seems like a good idea to me.”

“I should do this to plan for my future.”

“This is all a bit complicated.”

“I don’t think I can afford to do this.”

“I’ll look at my options.”

“Is this right for me?”

“I hope I can stop working soon.”

“I’m ready to retire.”

“Have I saved enough?”

• How does this all work?• What do I need to do now?• I’ve come into pensions late – is it for me?• I’ve got other priorities

• How much have I saved?• What’s that going to be worth when I retire?• Can I change where I’m invested?• How can I top up my pension?

• Is my retirement age correct?• What are my options for taking my pension?• Where am I currently invested and is that

right for me?• How much will I get from my state pension?• Where can I get some help?

“I’m in control and I know what I'm doing.”

Thinking

Doing

Feeling

“I got there in the end

and I’m really glad I did it!”


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Communication is keyWe understand the importance of engaging members to help them achieve better DC outcomes in retirement.

Your members will have access to a range of our bespoke online tools, videos and information to help them make more informed decisions, regarding the choice of investments available to them and the risk they are willing to take.

Members will be able to access their pension information on your own secure online microsite.

It allows them to manage their account, review their choices, and engage with a range of educational resources tailored to the specific stages of the DC savings journey.

Our retirement planner tool aims to help employees plan and model the income they could receive at retirement. For example, members can:

• Project the size of their pension pot at their selected retirement date

• Calculate the level of income they’ll need to maintain their desired standard of living

• Explore the options for taking their money

…for everything else, there’s our member helpline – around 100 skilled customer service specialists on hand to help your members whatever the issue, six days a week, from Monday to Saturday.


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Supporting your schemeWe know that running a DC pension scheme is challenging. We have invested in our capabilities in order to provide schemes with our award-winning outsourcing solutions, so that they can pass on the burdens of operation, administration, communication and governance to a skilled and well-resourced asset manager, comfortable in the knowledge that their members are in safe hands.

We have highly automated and scalable operations, capable of onboarding hundreds of thousands of employees and supporting them along the way.

Employer services staff

Helpline staff

Member administration staff

Investment operations professionals

Investment specialists/bulk fund switch specialists

Operational support staff

Staff processing quotes and payments

Outsourcing arrangement for your scheme

95

91

38

32

7

43

88

1Source LGIM as at 30 June 2017


pic


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Investment philosophyLGIM is a leading provider of solutions for DC pension schemes and we continue to innovate as the market evolves.

WHAT WE BELIEVE IN…Our overarching philosophy is to provide flexible and tailored solutions to meet our clients’ requirements. We think that an investment strategy for DC default funds should reflect trends in pensions and savings, changing markets and longevity. Our retirement solutions specialists have developed a range of innovative DC solutions all focused on delivering positive outcomes and value for money for DC members.

We also believe that growing DC assets should not just be passive money, but should influence the companies DC schemes are invested in. This is why we have a real focus on active engagement — using our scale as a major global investor to encourage the companies in which we invest to integrate environmental, social and governance factors into their everyday thinking.

COSTS AND FEES MATTERWe use our scale to keep costs and fees down within our funds, by reducing turnover and limiting the use of derivatives where possible. We do this because we know excessive costs can have a material effect on members’ returns over the long term.

SHARING OUR THINKINGWe believe that staying on top of current trends and leading research into long-term market drivers is essential for delivering good client outcomes. We divide our thought leadership into three streams: Market Insights, Long-term Thinking and Client Solutions.

We also share our knowledge and expertise through regular publications, newsletters, training days and industry events.


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Investment solutionsMembers say returns are what they care about most. Investments are a key driver of long-term DC outcomes, and we offer a wide range of solutions which can be used for a variety of DC investment needs – from targeting both income and growth, to solutions for managing your entire journey to and through retirement.

MULTI-ASSET FUNDSThe LGIM Multi-Asset Fund and the LGIM Diversified Fund are designed for investors seeking globally diversified funds that provide exposure to a wide range of asset classes in a cost-efficient manner. They are designed to help pension scheme investors who are looking for long-term growth with less volatility than a pure equity fund.

The LGIM Future World Multi-Asset Fund is a globally diversified fund designed for pension savers who wish to go further in integrating environmental, social and governance (ESG) factors into their investment strategy.

The LGIM Retirement Income Multi-Asset Fund provides long-term investment growth up to and during retirement, and facilitates the drawdown of retirement income.

PATHWAY FUNDSThe L&G Pathway Funds are the next step in the evolution of our offering to the DC pension market, designed in response to the ‘Freedom and choice’ pension reforms. The funds are target-date vehicles designed so that scheme members can invest for their entire journey to and through retirement. They help members to build retirement income and align asset allocation with their chosen retirement goals.

FUTURE WORLD FUNDThe Future World Fund is an innovative solution designed for pension schemes looking for an alternative to a traditional index strategy, while also addressing the long-term financial risks of climate change. The fund increases exposure towards companies which fulfil certain quantitative factors and also targets those which are likely to benefit from the transition to a low-carbon economy. It also incorporates LGIM’s Climate Impact Pledge, a targeted engagement process in which we work directly with companies to bring about positive change.

Funds in focusLGIM is one of the few investment managers equipped with the range of funds to help scheme members across the entire DC journey. We offer cost effective, reliable index-tracking products, including portfolios managed against alternatively weighted indices, as well as innovative multi-asset, active fixed income and active equity solutions.


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Your scheme’s needsWe offer a full range of DC solutions which can be tailored to meet the specific needs of your scheme. Whether you want to outsource your entire pension scheme, or just require access to a range of funds, we have a solution that’s right for you.

We work with trustees to help them navigate and adhere to The Pension Regulator’s DC Code. Our L&G WorkSave Mastertrust is on The Pensions Regulator’s approved list.

INVESTMENT FUNDS

• Access to the full range of LGIM DC investment funds

• Administration stays in-house or with a third-party provider

BUNDLED TRUST

• Scheme trustees work with us to access a ‘bundled’ solution that includes a broad range of funds and full scheme administration

• Governance remains the responsibility of the trustees

INVESTMENT ONLY

PLATFORM

• Access to the full range of LGIM DC investment funds as well as external manager funds

• Opportunity to build bespoke funds blended to meet your scheme’s needs

• Administration stays in-house or with a third-party provider

GROUP PERSONAL PLAN

• A completely outsourced solution

• Contract is with the individuals

• Overseen by LGIM’s Independent Governance Committee

MASTERTRUST

• LGIM’s most complete outsourcing DC solution

• Independent Mastertrust trustees have full respons-ibility for investment and administration

• Removes the need for your own trustee board

• Employers can opt for shared governance

££

£



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Active and influentialPositive engagement to enhance long-term value.

WE ALWAYS TRY TO DO THE RIGHT THINGCorporate governance: Our clients trust us to manage, safeguard and help grow the value of their assets and effective corporate governance can help us achieve this. We use our scale and influence to ensure that companies integrate material environmental, social and governance factors into their everyday thinking.

We are committed to holding boards to account, creating sustainable value and

promoting market resilience on behalf of our clients.

ACTIVE ENGAGEMENT IN 2016

500293

47%

39%

23%

meetings held

Companies met

Companies based outside of the UK

UK companies voted against (at least one resolution)

Meetings discussing environmental and social issues

UK board directors voted against 89

“LGIM exists to help clients achieve their long-term financial goals. We aim to make a real difference to their lives, as well as to our industry and the wider community. It is a testament to this approach that a significant proportion of our new business comes from existing clients”.

Mark Zinkula

CEO, LGIM

KEY ENGAGEMENT TOPICS IN 2016

Board accountability/diversity

Executive remuneration

Climate change


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LGIM at a glanceA major global investor, leading the market in UK defined contribution

£951bnA

2.9%B

3,300+

1836

17%C

#1

345+

2.5m

400+D

Assets under management

of the FTSE All-Share Index managed by LGIM

DC schemes

Legal & General Group founded

of UK corporate bond market managed by LGIM

UK DC pensions manager

Investmentprofessionals

DC members

Client servicing support staff

A. Source: LGIM internal data as at 30 June 2017. These figures include assets managed by LGIMA, an SEC Registered Investment Advisor. Data includes derivative positions.

B. Source: LGIM internal data and Bloomberg LP, as at 30 June 2017

C. Source: LGIM internal data as at 30 September 2017

D. Source: LGIM internal data as at Q4 2017.


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An award-winning investment manager



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CONTACT US

For further information please contact Rita Butler-Jones, Head of DC Sales:

07342 062 945 [email protected] lgim.com

Disclaimer

Important Information

There are no guarantees that objectives will be achieved. This document should not be taken as an invitation to deal in Legal & General investments or any of the stated stock markets.

Legal and General Assurance (Pensions Management) Limited (“PMC”) is a life insurance company and carries on the business using a linked policy (“the Policy”), it is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The policy is divided into a number of sections (“the Funds”).

Legal & General Investment Management Limited is authorised and regulated by the Financial Conduct Authority, it provides investment and marketing services to PMC.

You may not get back the amount you originally invested. The return from your investment is not guaranteed and therefore you may receive a lower or higher return than you anticipated. Past performance is no guarantee of future performance. Our charges may change. Tax rules and the treatment of income and capital gains could change in the future. Inflation will over time reduce the value of your investment in real terms. There will be a variation in performance between Funds with similar objectives due to the different assets selected. The degree of investment risk depends on the Funds you choose. In extreme market conditions it may be difficult to realise assets held for a Fund and it may not be possible to cancel Units at short notice.

We may have to delay acting on your instructions to sell or the price at which you cancel the Units may be lower than you anticipated. The value of a Fund’s assets may be affected by uncertainties such as international political developments, market sentiment, economic conditions, changes in government policies, restrictions on foreign investment and currency repatriation, currency fluctuations and other developments in the laws and regulations of countries in which investment may be made.

Document issued by Legal & General Investment Management, One Coleman Street, London, EC2R 5AA. To ensure quality of service and for the protection of all parties, telephone calls may be recorded.

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