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Pension Sterling Fund - important information

Update 11 February 2009
Update 28 January 2009
Update 14 January 2009

Update - 19th August 2009

In our recent communications to Pension Sterling Fund customers we included an updated Customer Information Guide for the Pension Sterling Fund and advised that further information regarding the fund would be available online.

The following sections give you more information about the fund and its performance.

Performance Graph

The performance graph shows the latest performance information for the Pension Sterling Fund and allows you to view it over different time periods as well as compare it against different indices you may be interested in. Figures are based on units which contain 1.0% Annual Management Charge (AMC). For the relevant charges on your policy please refer to you policy documentation.

Fund Factsheet

The Pension Sterling Fund Factsheet provides further information on the fund, including a list of the top ten holdings.

Other Funds

You can also see the performance information for other Standard Life funds.

Further Information

The performance graph and fund factsheet contains some investment terminology.

If you require further information about your investment, or the terminology used in our fund information, we suggest you speak to your financial adviser if you have one. Alternatively, you can discuss this with us by calling one of the following numbers, according to which type of plan you have.

PPS, Stakeholder, FSAVC, IBOP, S226
UK - 0845 27 85 602
Overseas - +44 131 246 1866

EPP, SSAS & Transfer Plan
UK - 0845 60 60 008
Overseas - +44 131 245 7100

SIPP & FPP
UK - 0845 0845 000
Overseas - +44 131 246 1866

Group Pension
UK - 0845 60 60 075
Overseas - +44 131 245 0896

Telephone lines are open between 9am and 5pm, Monday to Friday. Call charges may vary.

Update - Pension Sterling Fund - Customer Information Guide
Portable Document Format download PDF

Update - 11 February 2009

A few weeks ago, we wrote to customers invested in the Pension Sterling Fund regarding a 4.8% fall in the value of their units on 14 January.

After careful consideration we have decided to restore the value of the fund and put our customers back to the position they would have been in had we not made this change.

The reason we have taken this action is that having conducted our own review of literature for the Pension Sterling Fund, and listened carefully to what customers and advisers have been saying to us, it is clear that many people were not fully aware of the nature of the fund. Furthermore, some customers would not have anticipated that units in the fund could fall by such an amount in one day.

In the first instance, we would just like to say sorry. With hindsight, some of the literature we provided in respect of this fund fell short of our own high standards.

Against this background, we feel strongly that the right thing to do is to put all our customers back to the position they would have been in had we not reduced the value of units on 14 January. This action reflects the importance we attach to the long-term relationships we have with our customers.

No action required by customers

The changes described above will be made automatically. For customers who wish to remain invested in the fund, there is no requirement to take any action. We will also be writing to customers to confirm the action we are taking.

For customers who switched to another Standard Life fund on or after 14 January but before 12 February (the effective date of the new unit price), we will adjust the value of their current investment to reflect this change. Customers who retired or transferred during this period will receive a separate letter to explain how they will benefit from the action we have taken.

This does not in any way restrict the right of customers to pursue a formal complaint should they wish to do so. All complaints will be considered on a case by case basis and treated fairly. Complaints already received by us will be dealt with in the normal way.

More information for investors in the Pension Sterling Fund

We continue to believe the Pension Sterling Fund is a good investment choice for many of our customers. Overall, the assets held within the fund are considered to be of high quality and, based on current expectations, to represent sound investments. However, customers invested in the fund should be aware that its value can fluctuate and in some circumstances may fall. A new fund guide for the Pension Sterling Fund will be available on our website in the next few days.

For customers who feel the fund no longer meets their needs, there are other options available such as the Managed Cash Fund. This fund is intended to offer lower levels of volatility and generate investment returns (before charges) that are closely aligned to cash deposit rates.

If you are a customer invested in the Pension Sterling Fund we strongly recommend that you obtain financial advice before taking any action. Switching funds is a major decision which will determine the future performance of your pension plan and eventual income in retirement.

Further information

If you require any information about your investment, we suggest you speak to your financial adviser if you have one. Alternatively, you can discuss this issue with us by calling one of the following numbers, according to which type of plan you have.

Update - 28th January 2009
We address some of the issues raised following the announcement.

14th January 2009

As a result of market volatility and a re-evaluation of available market data, the price of our Pension Sterling Fund has fallen by approximately 5%. Customers invested in this fund may experience a reduction in the overall value of their pension funds, depending on the number of units held.

We are currently writing to those customers who may be affected to explain the reason for the fall in the price of the units in the Pension Sterling Fund, how it may affect them and what action they may wish to take.

What is the issue?

Economic and financial conditions in the UK have become increasingly turbulent over recent months. This turmoil has manifested itself in many ways, including a worsening of the investment environment, which has reduced asset values and investment returns.

The Pension Sterling Fund holds a mixture of assets, including cash deposits, Treasury bills and money market instruments, known as asset-backed securities. The reason for this investment mix is to aim to provide better returns than a bank or building society account over time.

As is typical with this type of fund, the Pension Sterling Fund does not come with a guarantee that the unit price will not fall, as the value of the assets will go up and down in line with market movements. We have re-evaluated the available market data and this has indicated that the value of some asset-backed securities held within the Pension Sterling Fund has fallen substantially.

We have re-valued these assets to reflect current market values and this has resulted in the price of units in the Pension Sterling Fund being reduced by approximately 5% on Wednesday 14 January - a bigger fall than has previously been experienced by this fund.

What is the investment outlook?

Despite the current difficult market conditions, we continue to believe the Pension Sterling Fund is a good investment choice for many customers. Overall, the assets held within the Fund are considered to be of high quality and, based on current expectations, to represent sound investments.

It is impossible to predict with certainty when markets will improve and there may be a possibility of further deterioration. However, we believe that the strong underlying credit quality of the asset backed securities within the fund mean that it will generally recover over time. In the shorter term, the fund will continue to fluctuate in line with market movements.

What action should customers take?

We anticipate that many customers will wish to remain invested in the Pension Sterling Fund. However, we also recognise that some customers, particularly those seeking greater short-term certainty, may prefer an alternative investment with a higher degree of predictability.

With the needs of these customers in mind, we are offering the option of a deposit based fund called the Managed Cash Fund. This fund is designed to produce lower levels of volatility and investment returns, before charges, that are closely aligned to deposit rates. You can find out more about this fund from your financial adviser.

If you are a customer invested in the Pension Sterling Fund we strongly recommend you obtain financial advice before taking any action. It is important that you understand the nature and the characteristics of the funds in which you may invest. Switching funds is a major investment decision which will determine the future performance of your pension plan and eventual income in retirement.

If you require any information about your investment, we suggest you speak to your financial adviser if you have one. Alternatively, you can discuss this issue with our specialist team by calling one of the following numbers, according to which type of plan you have.