The Pace Trustees have reviewed the way the three Pace DC Target investment options work, including the default ‘Target: Lump Sum’ option.
We took advice from our investment adviser and considered how much investment risk members are expected to be able to take at different ages and how much they might save for their retirement. Following this review, we decided that members who are more than 10 years from their chosen retirement date should have more of their pension account invested in equities (company shares). Although equities are expected to be higher risk, they also offer a higher expected return over the longer term. We have also shortened the ‘de-risking’ period from 25 to 20 years, meaning members who are 20 years or more from their selected retirement age will be invested for longer in assets with higher expected returns, such as shares, with the aim of improving their pot size at retirement.
Finally, the three Target options will now be invested in a slightly different way, using a mix of funds that are suitable for members at different ages. These funds allow the Trustees and their investment advisers to make any future changes to the investment strategy more quickly, better reacting to changes in market conditions or market developments, and with less disruption to members.
The funds used to create the Target options are:
- Pace – Build Your Pot
- Pace – Consolidate Your Pot
- Pace – Take Your Pot – as cash (lump sum) *default option*
– as an annuity (secure income)
– as flexible income/drawdown
Full details can be found in the new investment guide.
As a result of these changes, you’ll notice that the fund names shown on Manage Your Account and in your annual benefit statement will change in line with the above.
From payday on 27 July 2023, new joiners to Pace DC will be invested in the new Target options.
The change will take place for existing members of Pace DC in August and September 2023. As part of switching to the new Target options, there will be a short period of time where you’ll be unable to make changes to your account. This is known as a ‘blackout’ period. Details of the switches and blackout periods are shown below:
If you are an existing Pace DC member invested in the current Target options who is less than 10 years from your selected retirement date (as at 23 August 2023)
- The switch will take place in August 2023.
- The blackout period will run from 16 to 23 August 2023.
- The changes are expected to be complete by 23 August and you will be able to make changes to your account after this date.
If you are an existing Pace DC member invested in the current Target options who is more than 10 years from your selected retirement date
- Your investments will be switched in two stages to the new Target option, taking place on 21 August 2023 and 23 September 2023.
- There will be two blackout periods: 21–23 August and 20-22 September 2023.
- Between the two blackout periods, you may see you have units in the “L&G PMC Transitioning Fund A” – this is a temporary fund being used to efficiently implement the switch to the new Target options.
- The changes are expected to be complete by 23 September 2023 and you will be able to make changes to your account after this date.
From 23 September 2023, all affected members are expected to have been moved to the new Target funds and this will be visible through L&G’s Manage Your Account (MYA).
The updated investment guide for new joiners sets out the details of the updated investment strategy. If you joined Pace on or after payday on 27 July 2023, these changes apply to you now. The investment guide for existing members will be updated shortly.
If you’re currently invested in one of the Target investment options but have less than 10 years until your chosen retirement date, you’ll notice that the fund names shown on Manage Your Account and your annual benefit statement will change to refer to the new ones mentioned above, but the funds you will be switched into have the same underlying asset mix as your current investments.
The timing of these changes may vary, and we will update the pensions website and MYA if this is the case.