PERSONAL RETIREMENT SAVINGS ACCOUNT INVESTMENT REPORT

Transcription

1 PENSIONS INVESTMENTS LIFE INSURANCE PERSONAL RETIREMENT SAVINGS ACCOUNT INVESTMENT REPORT FOR PERSONAL RETIREMENT SAVINGS ACCOUNT () PRODUCTS WITH AN ANNUAL FUND MANAGEMENT CHARGE OF 1% - JULY 201 Thank you for taking out a policy with Irish Life. This is your investment report, which lets you know how the funds under your have performed. We will send you one of these investment reports every six months. Stock market returns always involve a certain level of risk and can show considerable variation in year to year returns. Our funds each have a risk indicator that helps show what levels of volatility could typically be expected for that fund. Volatility is the measure of the level of fluctuations in the price of the fund over time, and is based on each fund s past performance. It is important to note that you can change your investment choices at no cost at any stage. Warning: If you invest in this product you will not have access to your money before you reach age 0 or until you retire. If you use your purely for Additional Voluntary Contributions you will not have access to your money until you retire. CONTENTS 1. INVESTMENT MARKET INFORMATION 2 2. FUND DESCRIPTIONS AND RISK RATINGS. DEFAULT INVESTMENT STRATEGY. PERFORMANCE UPDATE You should remember that the aim of your pension fund is to achieve long term returns as the investment time frame until retirement for most people is for the long term. 1

2 1. INVESTMENT MARKET INFORMATION (FOR THE SIX MONTH PERIOD TO END OF JUNE 201) IRELAND 10 year bond yields rose to 1.2% having fallen to a low of 0.% in April. Yields rose from their mid-april lows following an upward move in core German 10 year yields as deflation fears began to ease with a move from deflation to positive inflation again across the Eurozone and a rebound in oil prices from their January lows. Irish economic data remained strong with Gross Domestic Product (GDP) growth of.8% in 201 with domestic demand up 2.9% year on year and consumption growing 2.1% year on year in Quarter. Unemployment fell to 9.7%. Exchequer returns remained strong with the budget deficit target of 2.% of GDP for 201 likely to be beaten. EUROZONE German 10 year yields rose to 0.7% having reached an all-time low of 0.0% in April. Yields rose from mid-april and peaked at 1.0% before falling back in late June following a flight to safety as Greek bailout negotiations collapsed and fears grew over a possible Greek exit from the Euro. Peripheral bond spreads widened on fears of contagion from the Greek uncertainties. Eurozone economic news flow surprised to the upside with Quarter 1 GDP of 1.% annualised. Consensus Eurozone growth forecasts for 201 were revised up to 1.%. The European Central Bank s (ECB) policy announcements contributed to further weakness in the Euro which fell to 1.11 against the US dollar. US The US economy contracted by -0.2% annualised in the first quarter due to another severe winter in the east coast, a port strike in the west coast and the negative impact of the stronger dollar. In the second quarter however, the labour market remained strong and retail sales and the housing market began to recover. Expectations regarding the timing of the first US rate rise fluctuated through the period with investors now expecting the first interest rate rise to occur in December this year. The Federal Reserve indicated the pace of the upcoming tightening cycle would be more gradual than previously suggested. UK Growth slowed somewhat in the UK but remained relatively firm with Quarter 1 GDP rising 0.% quarter on quarter or 2.9% year on year. Despite inflation falling to a relatively low level of 0.1% year on year, expectations for the first UK interest rate rise were pulled forward to the second quarter of 201 as wage inflation rose to 2.7%, the Bank of England indicated productivity growth was sluggish and that potential supply growth in the economy was lower than previously estimated. The surprise Conservative victory in the UK election removed short term uncertainties surrounding the formation of a potentially less stable coalition government but gave rise to new uncertainties surrounding the planned referendum on EU membership. JAPAN Economic growth surprised to the upside in the first quarter, rising.9% annualised boosted by a 2.7% quarter on quarter rise in business spending. Growth is likely to remain positive although below the pace in the first quarter on improving sentiment surveys, employment gains, wage growth and improving retail sales and machine orders. Continued low levels of inflation close to zero compared to the Bank of Japan s target of 2.0% suggest additional monetary stimulus is possible even though the Bank of Japan remains upbeat regarding the achievement of its inflation target. CHINA Economic data deteriorated through the period with most leading indicators showing a significant slowing in momentum. GDP growth in the first quarter slowed to 7.0% year on year or.2% annualised. The Peoples Bank of China responded to the slowdown with a number of interest rate cuts and reserve requirement reductions. These measures contributed to some stabilisation in economic data towards the end of the half year. Source: Irish Life Investment Managers.. 2

3 2. FUND DESCRIPTIONS AND RISK RATINGS Your contributions are invested in one (or more) of the following funds. Your fund choice is listed in your communication statement. Funds are categorised by the level of risk involved. We have a risk ratings system from 1 to 7, with 1 being the lowest risk and 7 the highest risk level. For the latest fund prices and fund descriptions visit our website Risk Rating Fund Risk 1 2 low risk low risk low risk This medium is a very low high risk fund. While there will be a very low level risk of volatility in risk fund returns, there is also only a very low potential for gains. It is suitable for investors who are very close to retirement or have a very low appetite for risk. This is a low risk fund. While there will be a low level of medium high volatility risk in fund returns, risk there is also only a low potential for gains. It is suitable for investors who are very close to retirement or have a low appetite for risk. medium This high is a medium risk fund which can have some level of risk volatility. risk The potential return from the fund will also be medium. It is suitable for investors who will accept some risk level of risk. Fund Name Cash Fund Pension Stability Fund Flexible Fund Consensus Cautious Fund Years to Retirement Typically ok for 100% Investment CAUTION Need to consider DANGER Urgent need to consider This is a medium to high risk fund with expected volatility in the medium to high range. Therefore it may not be suitable for investors who have less risk than 7 years to retirement. Years to Retirement Typically ok for 100% Investment CAUTION Need to consider DANGER Urgent need to consider This is a high risk fund which can have a high level of volatility. Therefore it may not be suitable for investors who have less than 10 years to retirement. risk The fund is most suitable for long term investment. Years to Retirement Typically ok for 100% Investment CAUTION DANGER Need to consider Urgent need to consider This is a very high risk fund which can have a very high level of volatility. Therefore it may not be suitable for investors who have less than 1 years to retirement. The fund is most suitable for long term investment. Fixed Interest Fund Pension Protection Fund Pension for Life Fund* *When used as part of the Default Investment Strategy, this fund may be considered to be medium risk as it is generally used to track long-term interest rates which are a factor in the annuity rate calculation. Consensus Plus Fund Consensus Fund Active Managed Fund Equity Fund Indexed North American Equity Fund Indexed 0/0 Equity Fund Indexed European Equity Fund Indexed Global Equity Fund Indexed Japanese Equity Fund Indexed UK Equity Fund Indexed World Equity Fund Indexed Pacific Equity Fund

4 1 2 CASH FUND The Cash Fund invests 100% in cash and short-term deposits and aims to give investors a stable and predictable return.the Cash Fund invests in bank deposits and short-term investments. These funds are intended to be low risk investments but investors should be aware that the funds could fall in value. This could happen if, for example, the fund has a deposit with a bank that cannot be repaid, or if the fund charges are greater than the growth rate of the assets in the fund. PENSION STABILITY FUND Is mainly invested in short term bonds and cash, with small holdings in equities and alternative assets. FLEXIBLE FUND Is mainly invested in bonds, with some investment in cash, equities and alternative assets such as emerging markets equity and corporate bonds. CONSENSUS CAUTIOUS FUND Is split between the Consensus Fund (%) and European fixed interest securities. The Consensus Fund invests in the same assets as the main Irish pension investment managers, i.e. it mirrors their choice of shares, property, bonds and cash. The European fixed interest securities are Eurozone bonds that typically have less than five years to maturity. The aim of the Consensus Cautious Fund is to provide low to mid range managed fund returns with lower levels of volatility. FIXED INTEREST FUND Mainly invests in government securities. The Pension Protection Fund, the Pension for Life Fund and the Fixed Interest Fund should broadly follow the long term changes in annuity prices due to interest rates i.e. if long-term interest rates fall, the value of these funds will increase to roughly compensate for the rise in annuity prices. Long term interest rates are just one of the main factors that determine the cost of an annuity. However, there will be times when the funds will not track annuity prices closely and no guarantee can be given in relation to such movements. PENSION FOR LIFE FUND Is a passively managed fund, which invests entirely in long-dated Eurozone securities. These securities are effectively loans to governments with repayment dates of ten years or more. PENSION PROTECTION FUND Invests predominantly in long-dated Euro-denominated government securities. The returns on these assets come from a combination of the interest paid and any capital appreciation or depreciation on the value of the securities. ACTIVE MANAGED FUND Is an actively managed fund investing in equity, bonds, property, alternatives and cash. The fund is targeting an annual return of Cash +% over any economic cycle. CONSENSUS FUND Aims to deliver performance that is consistently in line with the average of all managed funds in the marketplace by replicating the average asset allocation of the Irish fund managers. The Consensus Fund is considered a high risk fund for short term investors e.g. 10 years or less. However, generally the longer investments are held the less volatile they become, so the fund is considered medium risk for longer term pension investors, especially if used as part of the Default Investment Strategy. CONSENSUS PLUS FUND Is a passively managed fund that aims to provide performance that is consistently in line with the average of all managed funds in the Irish marketplace. The assets of this fund are predominantly invested on a consensus basis, replicating the average asset allocation of the Irish fund management industry. The remainder of the fund is invested in other assets to help improve the investment diversity of the fund. The Consensus Plus Fund is considered a high risk fund for short term investors e.g. 10 years or less. However, generally the longer investments are held the less volatile they become, so the fund is considered medium risk for longer term pension investors, especially if used as part of the Default Investment Strategy.

5 EQUITY FUND Is 100% invested in shares, and aims to deliver higher than average equity fund returns by investing in those shares that represent value in the marketplace. This fund is managed by Setanta Asset Management. INDEXED NORTH AMERICAN EQUITY FUND Is 100% invested in North American equities. The fund aims to track the FTSE North America Index. The stock selection within the fund is on an indexed basis. The fund is designed to achieve average North American equity fund returns on a consistent basis, eliminating manager selection risk. INDEXED 0/0 EQUITY FUND Is 100% invested in equities. The fund invests 0% in Eurozone assets and 0% in assets from the rest of the world. The stock selection within each market is on an indexed basis. INDEXED EUROPEAN EQUITY FUND Is 100% invested in European equities. The fund aims to track the FTSE Europe (excluding UK) and Eurobloc indices. The stock selection within the fund is on an indexed basis. The fund is designed to achieve average European equity fund returns on a consistent basis, eliminating manager selection risk. INDEXED GLOBAL FUND Aims to achieve consistent average global equity fund returns. It is 100% invested in shares, with the country allocation based on the composition of the average managed pension fund. INDEXED JAPANESE EQUITY FUND Is 100% invested in Japanese equities. The fund aims to track the FTSE Japanese Index. The stock selection within the fund is on an indexed basis. The fund is designed to achieve average Japanese equity fund returns on a consistent basis, eliminating manager selection risk. INDEXED UK EQUITY FUND Is 100% invested in UK equities. The fund aims to track the FT All World UK Index. The stock selection within the fund is on an indexed basis. The fund is designed to achieve average UK equity fund returns on a consistent basis, eliminating manager selection risk. INDEXED WORLD EQUITY FUND Is 100% invested in global equities, with country allocation based on the composition of the FTSE World Index. The stock selection within each market is on an indexed basis. INDEXED PACIFIC EQUITY FUND Is 100% invested in Pacific equities. The fund aims to track the FTSE Asia Pacific basin excluding Japanese index. The stock selection within the fund is on an indexed basis. The fund is designed to achieve average Pacific equity fund returns on a consistent basis, eliminating manager selection risk. Source: Irish Life Investment Managers. Warning: If you invest in this product you will not have access to your money before you reach age 0 or until you retire. If you use your purely for Additional Voluntary Contributions you will not have access to your money until you retire. Warning: If you invest in these funds you may lose some or all of the money you invest. Warning: The value of your investment may go down as well as up. Warning: These funds may be affected by changes in currency exchange rates.

6 . DEFAULT INVESTMENT STRATEGY The Default Investment Strategy in our products is our Personal Lifestyle Strategy (PLS). The strategy s aims are to; Initially invest in assets that are expected to achieve a return that is greater than inflation Help protect fund values from fluctuations in the market as the holder gets closer to retirement Direct holdings into funds that will appropriately match how the holder is likely to take their retirement benefits To help achieve these aims PLS is split into two phases: Phase 1 Growing Safely Period This puts you in funds suitable to achieve investment growth while at the same time balancing investment risk. Initially funds are completely invested in the Consensus Plus Fund. With 20 years to retirement we start to gradually move some of your funds into the Pension Stability Fund. This helps to protect the fund against volatile markets. Phase 2 Switches into Benefit Target Funds This moves your fund into investment funds that will be most suitable to match how you are most likely to use your pension savings upon reaching retirement. You may, for example, be taking a lump sum benefit, purchasing a pension for life or keeping part of the fund for a post-retirement investment. Depending upon your individual circumstances we will switch your savings into investment funds that target the benefits most suitable to you. The Default Investment Strategy is suitable for contributors who intend to use their to take a tax-free lump sum* and use the balance to secure a pension for life (annuity) up to 2% of their final earnings, before investing any remainder in a more flexible post retirement vehicle such as an Approved Retirement Fund (ARF). *The lifetime limit for a tax-free lump sum is 200,000 effective from December 200. PHASE 1: GROWING SAFELY PERIOD PHASE 2: SWITCHES INTO BENEFIT TARGET FUNDS Contributions and Investment Growth CONSENSUS PLUS FUND PENSION STABILITY FUND CONSENSUS PLUS FUND PENSION STABILITY FUND CONSENSUS PLUS FUND PENSION STABILITY FUND CONSENSUS PLUS FUND CASH FUND Depending on: Age Salary Retirement Date Fund value PENSION FOR LIFE FUND FLEXIBLE FUND 20 years to Retirement years to Retirement RETIREMENT

7 . FUND PERFORMANCE UPDATE The following figures reflect the performance of Irish Life s funds up to 0 June 201, taking into account the fund management charge of 1% p.a. The actual value of your contract is outlined in your communication statement. For more information on the funds and monthly fund factsheets please visit the section of our online investment centre or check out our Fund Centre app on your smartphone. fund performance details are provided by Irish Life Investment Managers. FUNDS Fund Name Date of 1 yrs yrs 10yrs Since Risk Launch mths mths year p.a.d p.a.d p.a.d Launch p.a.d RatingN Cash Fund 11/02/200 Pension Stability Fund 0/10/2011 Consensus Cautious Fund 17/08/2009 Flexible Fund 0/10/2011 Fixed Interest Fund 11/02/200 Pension for Life Fund 0/10/2011 Pension Protection Fund 11/02/200 Active Managed Fund 2/02/200 Consensus Fund 11/02/200 Consensus Plus Fund 0/0/201 Equity Fund 2/02/200 Indexed 0/0 Equity Fund 12/08/2009 Indexed European Equity Fund 12/08/2009 Indexed Global Equity Fund 12/08/2009 Indexed Japanese Equity Fund 12/08/2009 Indexed North American Equity Fund 12/08/2009 Indexed Pacific Equity Fund 12/08/2009 Indexed UK Equity Fund 12/08/2009 Indexed World Equity Fund 12/08/ % -0.% -0.9% -0.8% -0.% 1.1% 1.1% -2.% 1.%.7%.% F F.% -2.%.8% 11.7% 10.7% 8.1% F 8.% -2.% 2.8%.9%.8% F F.0% -9.7% -2.% 7.% 9.%.8%.9%.% -12.9% -.% 9.% 9.0% F F 8.0% -1.7% -.% 8.7% 10.8% 7.9%.2%.0% -2.7% 8.% 17.7% 1.8% 11.0%.0% 7.% -.2% 9.2% 18.% 1.% 11.7%.% 7.% -.% 8.9% 17.2% F F F 1.% -.0% 9.2% 22.0% 19.% 1.%.7% 8.% -.1% 11.7% 17.% 18.1% 12.% F 12.1% -.% 1.2% 12.9% 18.% 11.2% F 10.% -.1% 11.8% 21.7% 18.0% 1.8%.9% 10.1% -0.% 2.7% 2.7% 17.% 10.1% F 10.% -.% 9.0% 28.% 20.2% 17.2% F 18.0% -.% 8.% 12.7% 10.2% 9.0% F 11.% -0.% 11.1% 12.7% 1.% 11.9% F 12.1% -.% 10.9% 22.% 17.% 1.7% F 1.% These returns are based on the standard annual management charge of 1.00% per annum. Source: Irish Life Investment Managers. Annual fund management charges are calculated and deducted based on the offer price of the fund. D Yearly figures have been annualised. F Historic Information not available. N Funds are categorised by the level of risk involved. The risk ratings system ranges from 1 to 7, with 1 being the lowest risk and 7 the highest risk level. 1 2 Warning: If you invest in this product you will not have access to your money before you reach age 0 or until you retire. If you use your purely for Additional Voluntary Contributions you will not have access to your money until you retire. Warning: If you invest in these funds you may lose some or all of the money you invest. Warning: The value of your investment may go down as well as up. Warning: These funds may be affected by changes in currency exchange rates. Warning: Past performance is not a reliable guide to future performance. Securities Lending: The assets in these funds (except the Cash Fund) may be used for the purposes of securities lending in order to earn an additional return for the fund. While securities lending increases the level of risk within the fund it also provides an opportunity to increase the investment return. 7

8 PENSIONS INVESTMENTS LIFE INSURANCE Please Note: Every effort has been made to ensure that the information in this publication is accurate at the time of going to press. Irish Life Assurance plc accepts no responsibility for any liability incurred or loss suffered as a consequence of relying on any matter published in or omitted from this publication. Readers are recommended to take qualified advice before acting on any of the matters covered. CONTACT US PHONE: FAX: code@irishlife.ie WEBSITE: WRITE TO: Irish Life Assurance plc, Lower Abbey Street, Dublin 1 71cb (Rev 7-1) Irish Life Assurance is regulated by the Central Bank of Ireland. In the interest of customer service we may record and monitor calls. Irish Life Assurance plc, Registered in Ireland number 127, Vat number 9F92G. For more up-to-date information, see 8