Investment of Contributions
Contributions are invested within the Member’s Account in one or more of the investment funds available from the Scheme.
What investment choices are available?
There is a choice of 6 investment funds. When joining the Scheme, the Member is asked to choose one fund or a combination of the 6 funds available.
The investment funds are:
Enhance Growth Fund
Enhance Volatility Reduction Fund
Enhance Capital Protection Fund
Enhance Annuity Protection Fund
Enhance Diversified Fund
Enhance Index-Linked Gilts Fund
If the Member does not choose to invest in any of the 6 funds, contributions are invested in the default Lifestyle Strategy.
What is the default Lifestyle Strategy?
The default Lifestyle Strategy means that contributions are invested in a combination of the Enhance Growth Fund, the Enhance Capital Protection Fund and the Enhance Volatility Reduction Fund from joining the Scheme until retirement.
How does the default Lifestyle Strategy work?
The default Lifestyle Strategy is designed to meet the changing investment needs of a typical pension investor as they progress through life towards their Normal Retirement Age.
A Member’s contributions are initially split 50/50 between the Enhance Growth Fund and the Enhance Capital Protection Fund. From age 50, as a Member approaches Normal Retirement Age, the Member’s assets are gradually switched, on a quarterly basis, to a combination of the Enhance Growth Fund, the Enhance Volatility Reduction Fund and the Enhance Capital Protection Fund.
At age 65, members’ funds will be invested 100% in the Enhance Capital Protection Fund.
The default Lifestyle Strategy is in place to switch investments from an initial Foundation phase (up to age 30), through to the Growth phase (between the ages of 32-49) and finally to the Protection phase (from the age of 50), as a member approaches retirement.
Further information on the Lifestyle Strategy is available in the Scheme Booklet.
All Change for Pensions from April 2015
There are a number of legislative changes regarding pensions which took effect from April 2015. Key points are as follows:
1. Removal of Requirement to Purchase an Annual Pension
Members of defined contribution schemes, such as Enhance, have more flexible access to their pension funds from 6 April 2015. Members from age 55 are no longer required to buy an annual pension (annuity) and can take their fund as a lump sum as follows:
• 25% is tax free
• 75% is subject to tax
Annual pensions are still available.
Further details are available in the Retirement Benefits section of the Scheme Booklet.
2. Guidance Guarantee
Members are offered ‘free and impartial' web based guidance via Pension Wise. The Pensions Advisory Service (TPAS) will provide telephone guidance while the Citizens Advice Bureau will provide face-to-face guidance within their branches.
3. Charge Cap On Default Funds
A charge cap of 0.75% will apply to default funds in defined contribution schemes.
What are the implications for Enhance – Construction Pension Scheme?
These changes have implications for the Scheme’s default Lifestyle investment strategy which is decided by Enhance Trustee Limited based on professional investment advice and is designed to be appropriate for the majority of scheme members. In light of the changes, Enhance Trustee Limited has revised the default strategy which will be implemented during February 2015.
Members of Enhance – Construction Pension Scheme were informed of the changes in January 2015 as follows: