Other ways to invest your retirement savings
Investment fund
An investment fund can invest in different things such as property, company shares, bonds and cash. These are known as asset classes.
It is run by a fund manager who makes sure the fund(s) is/are being run in the right way on behalf of the investors.
You can invest in a range of different investment funds.
What happens when I invest in a fund?
Each fund is divided into units. When you invest in one of our funds, you buy units in that fund.
The price of units will change as the value of the underlying assets purchased by the fund changes.
If the unit price goes up, the value of your investment will increase. Similarly, if the unit price falls, so will the value of your investment.
For more information about investing and the choices available to you, see Your investment range.
Lifestyle profile
This is an investment strategy that automatically adjusts where your retirement savings are invested as you approach your selected retirement age.
A typical lifestyle profile is designed to automatically move your money into funds that reflect the way you want to take your money when you get to your selected retirement date, such as taking regular income or cash lump sums.
You can only invest in one lifestyle profile at a time and cannot invest in any other funds at the same time.
To see the lifestyle profiles that you can choose from, please go to your investment range.
For more information about investing and the choices available to you, see your investment range. For specific details about your funds such as their up-to-date performance, visit Manage Your Account.
Tesco Lifestyle Investment Options
If you want to take a lifestyle profile approach to investing, depending on how you wish to take your savings, you can select from three different Tesco Lifestyle Options. These options are designed in the same way, but the key difference is that your investments target either taking your savings all as cash when you retire, as a regular income or a bit at a time (drawdown). Details of the three Tesco Lifestyle Options are provided in the following sections.
In addition, we also offer a lifestyle option that aims to grow your money while only making investments that comply with the principles of the Islamic faith and Shariah Law. For example, investments in alcohol, pork products and interest-bearing securities will be avoided. Find out more about the Islamic Lifestyle Option and Islamic Investment.
1. All as cash
Your savings are automatically invested in the Tesco Lifestyle Cash Option. This is designed for you to take all of your retirement savings as cash, quite soon after retiring (e.g. within three years). The first 25% will normally be tax-free and the rest will be subject to Income Tax. Be careful, though. If you take all of your savings as cash and spend it, you may not have enough to live on later in your retirement.
If you think you’ll be taking all of your savings within 3 to 6 months of retirement and you want to be more certain of how much you’ll get, you might want to consider moving your money into the Tesco Cash Fund when you’re getting close to retirement.
2. A bit at a time (drawdown)
If you want to take your savings a bit at a time (drawdown) you can choose the Tesco Lifestyle Drawdown Option.
This option is designed for you to take 25% of your savings as tax-free cash and then take what’s left, every so often as you want it. It will automatically leave more of your savings invested in funds that might give you a higher return after you retire. However, there is a risk your savings could fall in value (find out more about fund specific risks).
3. Regular guaranteed income (pension)
Regular Income Option. This option is designed for you to take 25% of your savings as tax-free cash, and use the rest to buy an annuity (pension). An annuity is a type of insurance policy you can buy with your savings at retirement which will pay you a guaranteed income for life.
This option will make sure that as you approach your target retirement age, your savings will aim to track the cost of buying an annuity. However, there is a risk your savings could fall in value (find out more about fund specific risks).
What are the charges?
At Tesco, we want our colleagues to get the best value for money for their savings. That’s why we’ve negotiated lower charges for investing your savings than you would be able to find elsewhere.
There are two types of charge, which are included in the value of your retirement savings:
- An annual management charge (AMC), of 0.10% of the value of your account, which covers the costs of running the Plan.
We aim to maintain this annual rate but there is a possibility it could change if the costs of running the Plan change. - A fund management charge (FMC), which covers the cost of investing your
retirement savings. The level of fund management charge depends on which fund(s) you invest in and can vary from time to time.
You can see the FMCs for each of your investment options on the investment range page.
