INVEST
The contributions you and Cummins pay into the Plan are invested to help them grow. How much money you have in your pension fund when you retire depends on two key things:
- how much you’ve paid in
- how your savings have been invested.
You can choose how your savings in the Plan are invested. Whether you know lots about investing or very little, don’t worry – we’ve got an option for you. You can invest in a lifestyle option, where your investments are managed for you and tailored to your requirements automatically; or you can use the self-select fund range and manage your investments yourself.
Find out more in the investment guide.
When you join the Plan, your contributions are automatically invested in the lifestyle: continued growth option. Designed to be suitable for most members, it aims to grow your money while you’re a long way from retirement and then gradually reduce the investment risk as you get closer to your target retirement age. Everything is managed for you, and you don’t need to make specific investment decisions. The lifestyle: continued growth option gets your pension fund ready for you to take a flexible income at retirement, called drawdown.
There are two other lifestyle options, which target buying an annuity or taking a cash lump sum, but they all follow the same investment pathway until you’re 10 years from your target retirement age.
What does lifestyling do?
Lifestyling is a way of managing your investments for you. In the early years when you’re a long way from retirement, your money is invested in funds which aim to maximise growth – the accelerated growth fund and the moderate growth fund.
Then, in the 10 years leading up to retirement, your money is automatically and gradually switched from growth investments (equities, also called shares) into investments like bonds and cash. This aims to protect the value of your pension fund when you’re close to retirement.
Lifestyle investment options
Unless you’re a hands-on investor and are managing your investments yourself, you’re likely to be in your 30s or 40s when you’ll need to take a closer look at how your savings in the Plan are invested.
Starting from 20 years before your target retirement age, the lifestyle option will begin moving your money from the accelerated growth fund until it’s all in the moderate growth fund. This is a gradual process which takes 10 years. At this point, it’ll be 10 years before your target retirement age, and if you know how you want to use your pension fund, you can choose your preferred lifestyle option:
- Lifestyle: continued growth – if you’re going to use flexible income drawdown
- Lifestyle: annuity protection – if you’re going to buy an annuity
- Lifestyle: cash focused – if you’re going to take a one-off cash lump sum.
If you don’t tell us how you want to invest your contributions, we’ll automatically invest them for you in the lifestyle: continued growth option.
Target retirement age
It’s really important to choose a target retirement age and make sure you keep it up to date with your plans for retirement. If you’re using the lifestyle option, the automatic de-risking of your investments is based on when you plan to retire. If you don’t choose a target retirement age, we’ll assume that it’s the same as your State pension age.
If you leave your target retirement age at age 68, but you’re actually hoping to retire earlier than that, it could mean that your pension fund is still invested in a growth fund too close to your retirement. A sudden downturn in the financial markets could mean that your retirement savings don’t have enough time to recover.
Similarly, if you’ve chosen an earlier retirement age, say 57, but find you want to keep working a bit longer, your investments will have started switching away from growth assets (such as equities) into investments like bonds and cash too soon. This means that you might miss out on some investment growth.
You can change your target retirement age at any time by logging in via Manage my pension, going to View account and selecting Account details.
The alternative to the lifestyle option is to make your own investment decisions and use the range of 12 self-select funds. These are for you if you have the time and knowledge to manage your own investments. There are different asset classes, sectors and geographical areas, and each fund has its own level of risk.
There’s no programme in place to monitor your investments and no lifestyling as you approach retirement. You’ll need to have sufficient knowledge and time to make these decisions yourself and keep a close eye on what’s happening with your investments. You can make changes at any time via Manage my pension.
You can read more about all your investment options in our investment guide.
The following funds are available in the self-select range:
Cummins AAA-AA-A corporate bonds all stocks index fund
Cummins accelerated growth fund
Cummins amanah fund
Cummins annuity focused fund
Cummins cash fund
Cummins ethical global equity fund
Cummins moderate growth fund
Cummins property fund
Cummins UK equity fund
Cummins world emerging markets equity fund
Cummins world equity fund (hedged)
Cummins world equity fund (unhedged)
