FREQUENTLY ASKED QUESTIONS

About the new default fund, the HL Growth Fund

What is a default fund?

In the UK, workplace pension schemes must offer a default investment fund into which pension contributions are invested on behalf of those members who don’t wish to make their own investment decisions. A fund is a type of investment that is professionally managed. The fund manager allocates the money from individual investors into assets such as shares and bonds.

What is the new default fund called?

The fund is called the HL Growth Fund. You will see this fund listed as ‘HL Growth Fund Accumulation GBP’ when searching for fund options.

Why is Hargreaves Lansdown changing the default fund?

Firstly, it’s important to stress that the change is not linked to the performance of the current default fund. Overall, we have been happy with how BlackRock Consensus 85/Schroder Managed Balanced has performed. However, a key part of our responsibility to our pension members is to try to ensure that they are getting the best possible outcomes with the money that they invest through Hargreaves Lansdown. The default fund is for pension holders who don’t necessarily have the time or the inclination to make their own investment choices. That’s why it is important that the default fund is appropriate for a broad range of pension investors. We felt that there was an opportunity to try and get better returns for members with a fund that takes a more adventurous approach with its investments than the current default fund. In addition, and in response to feedback from both employers and members using the Group SIPP, we know that more and more investors want to ensure their pension is invested with Environmental, Social, and Governance (ESG) considerations in mind. Taking this into account, we have worked with Legal & General to build a fund to help members meet their investment objectives of achieving capital growth in a responsible way.

About de-risking (Lifestyling)

What is ‘Lifestyling’?

‘Lifestyling’ is the name of a process designed to shelter the value of your pension as you get closer to retirement. Your pension investments are gradually switched into a fund with a balanced risk profile automatically as you approach your selected retirement age. Please remember that all investments, including during Lifestyling, can fall as well as rise in value. This means you could get back less than you invest.

How do I know if I have Lifestyling switched on?

We will be writing to you to let you know. If you were automatically enrolled into your pension, then it’s likely that you would have Lifestyling in place. If you joined before auto enrolment or have chosen to join the Group SIPP as an alternative saving option, then you may not have it in place. We will be writing to everyone with confirmation so please do keep an eye out for further information.

I opted out of Lifestyling, will it apply to me?

No, if Lifestyling has been previously switched off, we will not automatically switch it back on. We will write to you to give you the option to change your mind. We will do that again a year before your selected retirement age.

If I choose not to have Lifestyling set up, can I change my mind?

Yes, you can switch Lifestyling on (or off) at any time by contacting our Pension Helpdesk on 0117 314 1795, or online, via the secure message centre.

How the changes work

Is the new fund higher risk than the current default fund?

The fund has a greater exposure to shares. This is because we expect shares to give the strongest performance over time, but it does mean it may be more volatile. This is why we have also chosen to increase the de-risking period (when Lifestyling takes) place from 5 to 10 years.

Will I go into this fund automatically?

This depends on your situation. For anyone who is 100% in the default fund, and that is their sole investment excluding any cash they may have, future contributions will automatically be invested into the new HL Growth Fund from April 2022. If you do not wish for this to happen then please let us know using the response methods provided within your letter pack. If your monthly contributions are not invested 100% in the existing default fund, or you have any other holding within your Group SIPP, your future contributions will not change automatically to the HL Growth Fund. You can choose to do this if you wish, otherwise you will not see any changes to your account. This is because you have previously made an active investment choice within your pension, so it would not be appropriate for us to override your choice on this occasion.

Is there a charge for going into it?

There is no charge for buying or selling this fund. If you do choose to switch your existing investments then please be aware that you will be out of the market while the switch goes through. The HL Growth Fund has an annual management charge of 0.10%, this does not include the annual HL platform fee of up to 0.45%.

ESG (Environmental, Social and Governance) in the HL Growth Fund

What is ESG and how does it affect the HL Growth Fund?

ESG stands for Environmental, Social, and Governance. A fund which takes ESG into account means that it looks at these areas when deciding where to invest. In the case of the HL Growth Fund, when Legal & General Investment Management (LGIM) are choosing their underlying investments, they will consider a company’s ESG position. Quite simply, if they are choosing whether to invest into company A or company B, all things being equal, they are likely to invest more into the company that demonstrates better ESG principles.

Does this mean it will be an ethical fund?

Whilst exclusions apply to a large part of the fund, it wouldn’t be accurate to describe it as an ethical fund. You can find more information on responsible investing here.