How is member's Pension Account invested?
The Construction Workers' Pension Scheme (CWPS) has a single investment strategy, which phases members’ Pension Accounts across a range of age-related investment funds. The Trustee invests members’ Pension Accounts in a range of age-related investment funds - when a member is many years from retirement, their Pension Account will be invested in growth focused funds and then as they near retirement their Pension Account is gradually invested in protection focused funds. This strategy is called Lifestyling and is done to protect the value of their fund as the members approach retirement.
All members' Pension Accounts are invested in funds that aim to:
- Provide greater protection for the benefits a member's Pension Account might provide
- Invest each member's Pension Account to match the options available to the member at retirement
The Trustee carries out regular reviews to make sure that CWPS continues to meet the needs of members and that it is run in line with current best practices. In a 2015 review, the Trustee looked at the way in which members’ Pension Accounts were invested across the range of age related investment funds within the Scheme and having taken advice from the Scheme investment consultants and pension advisers, the Trustee has now improved the way in which members’ Pension Accounts are invested to better provide for the benefits members might expect from the Scheme at retirement. The recent improvements to the age-related investment funds now takes into account what member's Pension Account value might be at retirement. Depending on the projected fund at retirement, the Trustee will then gradually move member's Pension Account into one of two investment paths. This is done to limit the exposure of the member's fund to sudden drops in investment markets which may reduce the value of the fund.
How members' accounts are invested
The majority of the fund's assets make up the value of each individual member's pension account. The assets are managed and invested by external specialist investment managers. All pension contributions are invested in a range of thirteen Sub Funds. The expenses incurred by the Scheme are met by a quarterly charge of 0.0875% applied to members' accounts and annuity funds and these are well below those which a member would be charged indiviually, mainly because the fund's assets are pooled (invested collectively), thereby producing cost savings.
The age-related investment funds take into account what the member's Pension Account value might be at retirement. Depending on their projected fund at retirement, the Trustee will then gradually move their Pension Account into one of the two investment paths. This is done to limit the exposure of the member's fund to sudden drops in investment markets which may reduce the value of their fund.
All members' funds are invested according to their age. From age 55, member funds are invested according to their projected fund at retirement - see Fig 1 and Fig 2 below.
Fig 1: At age 55, if a member is projected to have a balance of more than €30,000 by age 65 (after a payment of their estimated tax free lump sum):
Fig 2: At age 55, if a member is projected to have a balance of less than €30,000 by age 65 (after a payment of their estimated tax free lump sum):