How smoothing works

When a client invests into the 'Standard Life Smoothed Return Pension Fund' their money is initially placed into the 'Standard Life Smoothed Return Feeder Pension Fund'. The investment amount will stay within the Feeder Fund for 10 working days before being automatically switched into the main fund, which happens 2 days later. This is a step that enables the fund manager to provide the smoothing mechanism for the Fund. The progress of a client's investment can be tracked using the transaction history page once an instruction has been submitted.

The investment return in the Standard Life Smoothed Return Feeder Pension Fund is always equal to the Estimated Growth Rate (EGR), minus fund charges.

The fund can be held within a Fidelity Pension Savings Account, a Fidelity Pension Drawdown Account and a Fidelity Junior Pension Savings Account.

This is a step that enables the fund manager to provide the smoothing mechanism for the fund.

The client will be able to retain the holding and sell down the smoothed fund but will not be able to purchase more units. However if the client has an RSP, this can continue at the current rate but cannot be amended.

It will be shown as the Standard Life Smoothed Return Pension Fund and will be visible in the holding section along with any other investments the client holds.

The value of the fund is smoothed and aims to increase at an Estimated Growth Rate (EGR) which reflects the longer-term growth expectations the fund manager has for the fund. If the unit price of the underlying fund drifts away from the smoothed fund unit price by more than a set amount, then the unit price of the smoothed fund will be adjusted to bring it closer to the underlying fund value. It is not an NAV fund.

The fund is intended to grow while providing some protection against the ups and downs of investing. Unlike traditional investments, the fund undergoes a ‘smoothing’ process which aims to shelter it from some of the short-term ups and downs often seen in the stock market. It’s important to understand that the fund carries no guarantees and an investor may get back less than was paid in.

The underlying NAV of the fund is not disclosed this is because of how this type of fund works. The unit price of the smoothed fund is based on the expected growth rate EGR rather than the NAV of the underlying assets supporting it. This approach differs from a traditional fund where unit prices are directly linked to the NAV of the assets of the fund which is due to the unique smoothing investment experience.

The fund has an Estimated Growth Rate (EGR) and it is anticipated that the fund will grow by this rate. The growth rate will be monitored regularly with adjustments made when needed. This rate is subject to regular and ad hoc adjustments.

Unlike traditional investments, the fund undergoes a ‘smoothing’ process which aims to shelter it from some of the short term ups and downs often seen in the stock market. It’s important to understand that the fund carries no guarantees and an investor may get back less than was paid in.

Other than in specific circumstances (detailed below), once an investment has been made into the feeder fund a client cannot sell or switch this investment into another fund.

Exemptions:

• Regular income payments (i.e. where automated income transactions are set up and processed by the platform)
• Pension Commencement Lump Sum
• Lump sum death benefits
• Serious ill-health benefits
• Small pension pot payments (up to £10,000)
• The deduction of fund charges
• Facilitation of adviser charges
• Customers exercising their right to cancel their Fidelity Pension 
• Customers subject to a Pension Sharing Order

The smoothing mechanism is the differentiating factor and this is reflected in the costs.

Yes, all fees can be facilitated from the Standard Life Smoothed Return Pension Fund (but not from the feeder fund).

Standard Life may suspend the smoothing process in the following circumstances:

• A change in law or regulation, or government directive that prevented us from providing smoothing
• Any circumstances outside of our reasonable control, as described in the section below
• An infrastructure failure preventing us from providing smoothing
• If the Smoothed Return Pension Fund is closed

In such an instance, the unit price would be reset to be the same as the unit price for the underlying fund. The price would then move in line with the Underlying Fund unit price for as long as the smoothing suspension remains in effect.

Where we have made the decision to suspend smoothing, we will review the decision on an ongoing basis. Once we are able to do so, we will reinstate the smoothing process as soon as it is reasonably practicable to do so.

If this happens you will be notified.

The fund manager requires this feature to be in place in order to be able to provide the smoothing mechanism for the Smoothed Return Pension Fund.