The Penfold Plan: Auto Enrolment Default Plan

The “Penfold Plan” is the default investment plan offered by Penfold to its customers. This plan automatically invests customer pension savings in a portfolio with a particular risk level depending on the number of years until their retirement. As the customer approaches retirement, the customer pension savings are automatically switched to a lower risk level.

This type of plan is known as a lifestyle strategy and is very common in the investment industry. It’s suitable for those who would prefer not to make their own decisions as to which level of risk is appropriate for them throughout their lifetime. The Default Plan is offered as the default investment option for all auto enrolment members of the Penfold Pension. It is also available as an investment option for individual customers.

Strategic asset allocation and investment strategy

The Default Plan uses three custom portfolios designed in collaboration with BlackRock for Penfold’s members.

Customers are allocated to one of these portfolios depending on the number of years to their retirement. They’re called Protect, Balance and Growth.

As customers grow older they are automatically moved to lower risk levels in order to better protect their savings, as shown in the chart and information below:

Growth: Over 8 years until planned retirement

• Asset split: 90% equities, 10% listed real assets
• Risk Level: Level 4
• Risk Level Overview: Highest growth potential and highest risk, may see significant short-term value drops

Balance: Between 8 and 3 years until planned retirement

• Asset split: 62% equities, 31% fixed income, 5% listed real assets, 2% liquid alternatives
• Risk Level: Level 3
• Risk Level Overview: Medium to high growth potential, may see larger dips to get larger gains

The Balance portfolio is made up of 50% funds from Growth and 50% funds from Protect. Every quarter, we'll rebalance the portfolio to realign the 50/50 split.

Protect: Less than 3 years until planned retirement

• Asset split: 34% equities, 62% fixed income, 4% liquid alternatives
• Risk Level: Level 2
• Risk Level Overview: Low to medium growth potential, may see smaller dips in value

When the customer reaches each designated number of years to retirement, their savings are reinvested in the corresponding risk level. No further input is required from the customer.

Penfold has assumed a consistent retirement age of 68 unless otherwise advised. If a customer does not retire at age 68 they will remain invested in the Protect portfolio.

Underlying funds

The underlying investment funds are mostly made up of the BlackRock MyMap ESG range, with added funds designed to grow and protect investments at different stages:

Environmental, social and governance (ESG) integration

All three BlackRock MyMap Select ESG funds used by the Penfold Plan aim to: Invest at least 80% of their government bonds* with sovereigns with improved ESG credentials** Achieve a carbon emission intensity score of 30% less than an appropriate comparator fund.***

* The % of government bonds that each underlying MyMap fund invests in differs. For example, MyMap ESG Select 7 invests 100% in equities.

** Sovereigns with improved ESG credentials are those who have an ESG rating of BB or higher (as defined by MSCI or another third party data vendor). See here for more detail: https://www.msci.com/web/msci/esg-ratings;

*** The carbon emission intensity score aim applies to companies that are invested in that make up the 'Other CIS' part of the fund portfolio only.

Dynamic allocation

The underlying funds are built to react dynamically to the market, providing investors with an extra layer of protection in times of market volatility. The investment manager may change the exact allocations of the funds over time and introduce or remove individual funds to respond to market conditions and opportunities – while maintaining the overall strategy and risk level of the portfolio.

Strategic diversification

The Penfold Plan enhances the existing MyMap funds by combining them with other funds which use additional asset classes. This increases the diversification of the Plan – which reduces the overall risk of your investments.

The Penfold Plan  is broadly diversified across asset classes, including stocks and shares from across the globe, as well as government and corporate bonds and new alternative assets such as listed real assets and liquid alternatives.

Our charges

Penfold’s Default Plan has an all-in fee of 0.75% of the total value of your pension savings up to £100,000 and 0.4% on amounts over £100,000. You can read more in our Charges Guide.

At any point customers can still select from Penfold’s full range of investment options including our Sustainable Plan, Sharia Plan and our Standard Plan. More details can be found here: http://getpenfold.com/pension-fund.

About BlackRock

BlackRock is the world’s largest money manager. We’ve designed these funds with BlackRock specifically for long-term retirement savings.

You can read more about Penfold’s partnership with BlackRock here: https://getpenfold.com/news/how-your-savings-are-invested.

More information from BlackRock on the MyMap range can be found here: https://www.blackrock.com/uk/solutions/mymap

Penfold has taken independent investment advice to ensure the Default Plan is suitable for the majority of customers and ensures good value. However, it may not be the most appropriate option for everyone. If a customer believes that the Default Plan is not suitable for them, they are still able to self-select an alternative option from the Penfold range.

In particular, the self-select range includes Standard Level 1, which aims to reduce the risk and volatility further for customers who wish to increase protection for their savings further than the Default Plan. Changing investments may incur a small transaction charge as part of the trading process.

As with all investments, value can go down as well as up and your capital is at risk. However, the Default Plan has diversified sources of risk and return, and we would therefore expect to see a positive return over the long term.