the legal & general independent governance committee (igc) · welcome to your annual update...

The Legal & General Independent Governance Committee (IGC)Annual report for the year ending 5 April 2019

Independent Governance Committee

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ContentsWelcome to your annual update from the IGC 3

Chair’s report 5

How we assess members’ value for money 10

Costs and charges 12

Default strategies 15

Investment choice and returns 18

Accessing your pension 24

Administration 27

Member engagement 30

Meet your IGC 34

Support team for the IGC 37

Important notes 60

Annual Report 2019

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Welcome to your annual update from the IGCWe’re the Independent Governance Committee (IGC), and it’s our job to make sure the money in your Legal & General pension scheme is safe and being well-managed. In this report you can read about the work we’ve done and what we’ve achieved over the last 12 months.

Our responsibility to youWe’re committed to protecting your pension. We use our combined knowledge, experience and skills to make sure you’re getting a good deal from your scheme. This includes (but isn’t limited to) checking that:

• your scheme is good value for money, and the costs and charges are reasonable

• the default funds (the ones you will invest in if you don’t choose something for yourself) are suitable

• the range of self-select investment choices can reasonably be expected to deliver the returns people are looking for to suit their own circumstances and timelines

• you can easily access your savings when you retire, and there are flexible options for taking your money

• you receive clear and regular communications about your pension

• you can easily access help and information when you need it, and that customer service is efficient and accurate

We measure how well Legal & General perform across these areas, offer impartial advice when they need an external view and suggestions on how they can improve where needed. And if they don’t deliver, we have the powers to hold them to account to the regulator, the Financial Conduct Authority.


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Who we areWe’re a group of six people who’ve been brought together to work on your behalf.

We’re independent of Legal & General, we keep your interests front and centre when overseeing your pension. And while we all share the necessary skills and experience to act in your interests, we’re fortunate to have a broad diversity of background, personality type, education, subject matter knowledge and career history. We believe that diversity (in the broadest sense) leads to better discussions and better decision-making on behalf of all our members

You can read more about each of us on page 34.

How to contact usIf you have any questions about this report, or you need to tell us about an important issue that affects your pension, you can get in touch by emailing [email protected].

The IGC oversees the following Legal & General business units:Workplace Pensions manages the current pension range that is available to new employers, the WorkSave Pension Plan.

In addition, the active members in two older products, the Group Personal Pension Plan 2000, and the Group Stakeholder Pension Plan, which are no longer available to new clients, are managed by Workplace Pensions.

Mature Savings manages the older pension range that is no longer available to new clients. This includes the active and deferred members in the Group Personal Pension Plan No. 1 and those deferred members in the Group Personal Pension Plan 2000 and the Group Stakeholder Pension Plan who have yet to draw their benefits.

In this report, we’ve highlighted which information is relevant to Workplace Pensions, and which is relevant to Mature Savings members. Keep an eye out for the headings to find the sections that apply to you.

If you are not sure which team looks after your pension, you can call Legal & General on 0345 070 8686.

If you have your policy number to hand, they will be able to tell you quickly (you can find it on your Annual Statement). But if not, don’t worry, they will still be able to help you – it may just take a little longer.

mailto:IGC%40lgim.com?subject=

Annual Report 2019

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Chair’s report I’m pleased to welcome you to the fourth annual report of the Independent Governance Committee (IGC). Over the last 12 months, we’ve made significant progress on some important issues for members. You can read about them below and find out where we’re focusing our efforts for the year ahead.

We’re assessing and reporting on whether you get value for moneyOur mission is to scrutinise the value for money provided by the Legal & General pension schemes that we oversee. It’s our duty to raise any concerns we have with Legal & General and, if necessary, to escalate those concerns to the Financial Conduct Authority (FCA).

In 2018, we reviewed how we assess ‘value for money’ – including what it means for members, and how we can measure Legal & General’s performance. We’ve split our assessment into the following areas:

• Costs and charges – are the costs that relate to your pension plan reasonable?

• Default funds – do the default funds (the ones you will invest in if you don’t choose something for yourself) offer good value and are they fit for purpose?

• Investment choice and returns – how are your investments performing and is there an appropriate range of investments available?

• Accessing your pension – are you able to access your pension savings in a flexible way?

• Customer service & administration – do you get good customer service, do Legal & General carry out your requests efficiently and accurately?

• Member engagement – are the communications you get from Legal & General clear and available in a variety of ways that suit you?

Dermot Courtier, Chair


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Our overall value assessmentThis year, we’ve carried out separate value assessments for Workplace Pensions and Mature Savings.

For Workplace Pensions, our overall judgement is that Legal & General have provided good value for money. This is especially true for members in the standard default fund, which offers particularly good value. One area where we highlighted a need for performance improvement was in administration. Following the relocation of much of the administration over the last couple of years from Kingswood to Cardiff, we are pleased that the restructuring of the senior-level management team is pretty much complete. New individuals are settling in and introducing fresh ideas. We now expect to see further improvements in the future.

For Mature Savings, our overall judgement is that Legal & General have provided fair value for money. However, these are older products, which were created with less flexibility than the more modern Workplace products. In that context, we think that Legal & General have done a reasonable job in doing as much as they can to overcome these hurdles.

Where we’ve been focusing our efforts during 2018Making sure default funds are still fit for purposeIn the past few years, the ways you can take the money in your pension pot has changed, so you have more options. Because of these changes, we’ve been discussing whether Legal & General’s default funds are still appropriate, or whether they need to adapt in light of the likelihood that most people are unlikely to simply convert their pension pot into an annuity at a fixed date in the future.

Legal & General made the L&G Multi-Asset Fund the standard default option in 2015 in response to the introduction of “Pension Freedoms.” This is more appropriate for today’s flexible retirement options and the possibility that you might take occasional lump sums or regular payments, or decide to stop taking money from your pot and leave what’s left in it to grow.

In recent years, the pensions industry as a whole has increasingly recognised the importance of considering Environmental, Social and Governance (ESG) factors in reducing risks to members. In 2018, Legal & General launched an ESG option, the Future World Multi Asset Fund, to the range of default funds available to employers. You can read more about how Workplace Pensions approach ESG on page 22.

Improving the way we communicate with membersWe’re always keen to understand the views of scheme members and employers. We also want to increase awareness and understanding of the IGC and our role in protecting your interests, so we’ve updated our IGC website with refreshed content, to make it easier for you to access and navigate.

We also held a Members’ Forum this year and carried out a survey of members’ views on ESG issues.

Pushing for greater clarity around transaction costsWhen investment managers buy and sell investments within your funds, transaction costs are incurred. We believe these costs should always be fully communicated to members in a comprehensive and accessible way. We’ve been supporting the various regulatory and industry initiatives pushing for full disclosure of transaction costs, and challenging these costs where needed.

Overseeing how your personal data is protected by Legal & GeneralLast year the government introduced new rules about how Legal & General deal with the data and personal information they hold on you. These are called the General Data Protection Regulations (GDPR). Legal & General have provided us with regular updates on the progress of the implementation of these rules and how it affects the data of pension scheme members.

Supporting the introduction of financial adviceWe have been recommending that financial advice should be available for members nearing (or at) retirement to help them decide what to do with their pension pots. So, we’re pleased that Workplace Pensions have brought in a facility, provided by an external financial adviser, to provide this service at a reasonable cost. Employers now have the option to make it available to their employees.

How we work with Legal & GeneralWe’ve continued to be impressed by the quality of people in each and every area of Legal & General that the IGC works with. It’s evident they understand that what they do is of great importance for scheme members and they demonstrate a real desire to improve outcomes for members wherever they can.

The IGC continues to have a good working relationship with Legal & General, but this does not mean that everything is perfect. Legal & General has some challenges, which is normal for a large institution with millions of customers. This report identifies issues that we have asked Legal & General to address on behalf of members, the progress that’s been made, and what remains to be done.

http://legalandgeneral.com/igc

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Welcoming new people to the teamWe were delighted to welcome Joanne Segars to the IGC. Joanne joined the Committee in January 2019 and brings a wealth of experience to the role. A well-respected and well-regarded figure in the pensions industry, she has the ability to support us in delivering strong and robust oversight for members. As we continue to focus on meeting and exceeding our statutory obligations, Joanne will help us in assessing whether members get the best value from their pensions.

I’m also pleased to welcome two new members of the IGC support team at Legal & General. Adrian Spann joined in July 2018 as Pension Scheme Manager and Tessa Watson joined in September 2018 as Assistant Pension Scheme Manager. The IGC welcomes them both and the additional resource they bring to supporting the IGC with our daily work.

You can read their profiles, along with all the other members of the IGC, on page 34.

Some pension schemes will be moving to ReAssureThroughout this report, you’ll see references to Workplace Pensions and Mature Savings. These are two different Legal & General business units that oversee different products for scheme members.

In December 2017, it was announced that Legal & General would be selling the Mature Savings business and the Group Personal Pension Plan 2000 product of the Workplace Pensions business to ReAssure (a division of Swiss Re). This sale will include policies held by some members whose pension plans are provided by Mature Savings and those in the Group Personal Pension Plan 2000.

All aspects of the transfer will be reviewed by an independent expert, with oversight from regulators. Factors that will be considered include the impact of the transfer on the security of member’s benefits, the quality of claims and services, and any proposed amendments to product features or contractual rights. The court will only permit the transfer if it’s convinced that members are properly protected.

Our responsibilities during the transferThe IGC is keeping a close eye on the transfer. We’re determined to ensure that the interests of members affected are being looked after and that they are being kept informed by Legal & General when there is news to report.

Alongside the transfer itself, we are committed to providing a smooth handover to ReAssure’s IGC. We’ve been in contact with ReAssure’s IGC and their Chair has been to one of our meetings. We’ll stay in touch about issues of common interest until the transfer is complete.

How this affects Legal & General staffWe were concerned that the transfer could result in Legal & General losing subject matter experts and other valuable members of their team before the transfer is complete – and that this could affect the transfer itself and the service members receive. So we’re pleased to see that Legal & General are communicating openly and honestly about the transfer with their team, and that they’ve put a range of measures in place to encourage people to stay. The evidence so far is that the overall retention strategy and pro-active recruitment activity has been working well.

Data security is a top priorityWe have challenged Legal & General to ensure that data security is a priority. A critical aspect of the transfer is guaranteeing that members’ data is properly protected. We’ve pushed for assurances from the Mature Savings team that affected members’ data has been shared in strict accordance with the Legal & General Group Data Protection and Security Policies – which we’re pleased to confirm they’ve given us. Specifically, we


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know they’ve used a dedicated secure encrypted network connection to share the data, and all Personally Identifiable Information (PII) has been encrypted. The Mature Savings team are continuing to provide us with regular updates to make sure all members’ data is safe and secure.

What we’re focusing on in the year aheadA continued focus on default fundsWe always want to make sure default funds are delivering the best they can for members – including for members who want to remain invested for a period after retirement while they consider their long-term options. In the coming year, we’ll be looking in particular at bespoke default funds. These bespoke default funds are created by employers and their advisers to match the types of people in their own workforce. We want to make sure they have appropriate governance, remain fit for purpose, and represent value for money. We’ll also consider what action we can urge Legal & General to take to help protect these members’ interests, if needed.

Continuing to push for improvements to the transparency of transaction costsThis is a complex and technical area which is still evolving. The IGC will stay on top of developments to make sure Legal & General are providing the best possible information to scheme members and they can clearly see all the costs and charges that have affected their pot.

Seeking out your views and opinionsThroughout 2019, we’ll continue to seek to hear the views of scheme members and employers to gain a better understanding of what matters

to you, and to work with Legal & General to address any concerns raised through this engagement. We also want to raise awareness of the IGC and the work we do to protect members’ pensions.

Working with other IGCs to compare our providersWe work with other IGCs to understand how Legal & General are performing compared with other pension providers. In 2019, we’ll be taking part in our third benchmarking project with four other IGCs across the pensions industry. This time round, the project will include a member survey again. We expect to have the results in September this year, and we’ll let you know what we have done and intend to do as a consequence of this research in our next report.

Protecting members during the sale of Mature Savings and the Group Personal Pension Plan 2000We’ll continue to work with Legal & General to protect the interests of affected scheme members right up to the moment that we hand over the responsibility to the ReAssure IGC. In the lead-up to the transfer, we’ll work closely with them to make sure everything goes smoothly.

Assessing the impact of BrexitWe’ll continue to assess the way in which Legal & General manage the potential impact of Brexit on scheme members’ pensions. We’ll take any action as needed.

Reviewing fund objectives and benchmarksWe intend to undertake a thorough review of the objectives for all the Legal & General funds and the benchmarks that are used. We want to make sure they are comprehensive, easy to understand and let you see if you should be pleased or disappointed with how they’ve performed. If we think improvements can be made, we will make recommendations as needed.

Changing the way we judge value for moneyWe use six different criteria when judging value for money. This year we’ve given an equal weighting to all six criteria. Next year, we want to refine this process by deciding if some criteria are more important than others.

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Looking at options at and after retirementWe’ll undertake a detailed review of the services and products that Legal & General offer to members at retirement and beyond. We’ll make recommendations if we think they can be improved.

Making recommendations on Environmental, Social and Governance (ESG) issuesIn 2018, we carried out a survey on members’ views of ESG issues. During 2019 we’ll be taking these findings into account as we review with Legal & General which funds are made available to employers as defaults as well as the self-select funds they offer to members.

Legal & General’s regulator, the Financial Conduct Authority, along with the Department for Work and Pensions and the European Commission have all brought forward proposals on ESG issues. In particular, we will be looking at the way in which ESG considerations are integrated into all funds offered by Legal & General. We’ll also discuss with them whether the Future World Multi Asset Fund should become the standard default option offered to

new employers (it is already available as an optional default option for employers and a self-select option for members).

You can get all the latest updates, and ask us any questions, on our website.

Dermot Courtier Chair

April 2019

http://www.legalandgeneral.com/igc


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How we assess members’ value for moneyEvery year we assess the value for money offered by Legal & General’s pension schemes. We measure this against six criteria. These range from the costs and charges members pay to the communications they receive.

This year, because of the upcoming transfer of the Mature Savings and the Group Personal Pension Plan 2000 business to ReAssure, we have decided to score Mature Savings separately from the Workplace Pensions business unit. This is because at some stage towards the end of 2019 our responsibility for the Mature Savings and the Group Personal Pension Plan 2000 parts of the business should switch to the ReAssure IGC and because of the different projects underway in each unit.

Each criterion is scored ranging between 0 and 6, with 0 being ‘completely unacceptable’ (which we’d be very disappointed to ever get close to awarding) and 6 being ‘perfect’ (which we’d be unlikely to give as there’s always room for improvement), as follows:

Score Assesment

6 Perfect

5 Very good

4 Good

3 Acceptable

2 Weak

1 Unacceptable

0 Completely unacceptable

We give each criteria an equal weighting. So, to get an overall score, we add them all up and divide by six.

These scores are meant to give you a snapshot of how Legal & General have performed in each criterion in the past year.

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Costs and chargesAny costs you pay for your pension

Default strategiesHow suitable the default strategies are

Investment choice and returnsHow your investments perform and the range of investments available

Accessing your pensionHow flexible it is to access the money in your pension

AdministrationHow speedy, accurate and useful the customer service you get is

Member engagementHow accessible and clear Legal & General’s member communications are

OverallWorkplace Pensions - 4.75 Mature Savings - 3.90

Workplace Pensions

Mature Savings

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Costs and chargesCriteria 1


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Why we gave this score Legal & General used their scale to keep transaction costs for their funds low. And our regular review of their standard default funds – which covers the majority of members – confirmed that these funds are particularly good value for money.

We’re pleased that Legal & General have lowered the charges paid by many members of their Workplace Pension schemes. Only six of the funds available to members under the WorkSave Pension now charge more than 1% a year.

We asked Legal & General to make sure that initial unit charges for Mature Savings members were no more than 1% a year. We were pleased when they did this for active members. But we were disappointed when they decided not to limit these initial unit charges for members who are no longer active.

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Mature Savings – 4.0

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How Legal & General and the IGC have worked together on costs and chargesIn the IGC we check, disclose and publish transaction costs – the costs funds incur when buying and selling investments - once a year. To help us do this, Legal & General share with us the annual transaction costs for their own funds and for the funds being run by external managers.

At least every three years we analyse all aspects of Legal & General’s default investment funds – including the management charges of each – and discuss with Legal & General what could be improved.

What’s happened in 2018All pensionsLegal & General used their scale to keep costs downWe examined Legal & General’s transaction costs for the 12 months ending 30th September 2018, unless otherwise stated.

We’ve seen how dedicated Legal & General are to making good use of their scale to keep transaction costs down.

You can find out more about the transaction costs for each fund, and how they are calculated, in Appendix 2: Fund costs and performance.

Workplace Pensions - A new fund administration system was introduced for membersThere was a major project to move all funds under the WorkSave Pensions and Group Stakeholder Pension Plans to a new fund administration platform. This has many benefits, including making it easier for members to choose their own funds.

Fund management charges were lowered for most membersAs part of this exercise, Legal & General reviewed and refreshed the range of investment funds open to members of its WorkSave Pensions and Group Stakeholder Pension Plans. The changes they made affected around 1.1 million members.

We reviewed the plans and the effect on members and after discussion with Legal & General we were satisfied that almost all members are now paying the same or lower fund management charges.

Only around 360 members would have been exposed to higher costs as a result of this exercise and all were offered the opportunity to switch to a lower cost alternative. However, their charges were no more than 0.08% a year higher, or £0.80 a year for every £1,000 invested.

By renegotiating fund charges and moving many members to lower-priced funds, Legal & General reduced the charges of 148 funds by between 0.01% and 1.74% per annum.

Only six of the self-select Legal & General funds that we scrutinise now charge more than 1%. We’ll continue to monitor fund charges across the range and to encourage Legal & General to provide the lowest cost possible options to members from both their own and third-party funds.

We’ve been asking for the drawdown administration charges applied to the members in the WorkSave Pension Plan to be removed and were pleased that Legal & General agreed to do this.

Mature Savings - Initial unit charges for active members were kept under 1%Mature Savings had already limited ongoing charges to no more than 1% a year for active members of its workplace schemes. Only a few active members faced paying more than 1% because of higher charges on initial units purchased during their early years in the scheme. In 2018, the IGC asked Legal & General to remove the initial units charge – which Legal & General did for active members.

We also asked Legal & General to limit these charges to no more than 1% for members who are no longer active. Legal & General considered this but decided against it on the grounds that it wouldn’t be fair to other members of the with-profits fund. We disagreed with their decision. But as their rationale was not unreasonable, and we recognised that they must consider other factors outside our remit, we decided that we should accept the decision and bring the matter to a close.


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Default strategiesCriteria 2

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Why we gave this score We’re satisfied that Legal & General’s standard default strategies give members a good balance between risk and return. They give members the chance to build up their savings in the long-term, as well as protecting them from the short-term ups and downs of more volatile markets.

We were glad to see the launch of the alternative default funds for Workplace Pensions, which give employers and members more choice over how their money could be invested. We were also pleased that those members who were investing in two older default strategies were moved into new strategies that better manage risk.

Mature Savings don’t provide standard default funds for all members. There is no standard default fund in place for members of the Group Personal Pension Plan No. 1 although some employers did put default funds in place for their employees. The default investment strategy for deferred members of the Group Stakeholder Pension Plan is the L&G Multi-Asset Fund. Because not all members have access to the most modern default funds, the IGC has given Mature Savings a lower score.

Default strategies

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How Legal & General and the IGC have worked together on the default strategiesAll the default investment strategies are regularly reviewed by Legal & General to make sure they’re still suitable for members. Following each review, they report back to us at the IGC with their findings.

Every three years, there’s an in-depth review into the performance and suitability of the Workplace Pensions default strategy, which is where most members are invested. The next in-depth review is due to take place later this year. We’ll meet with Legal & General to discuss the findings and consult on any changes that we think need to be made.

We review the bespoke default strategies that some employers create together with their independent advisers every three years, with the next review scheduled for Autumn 2019. We monitor how these bespoke default strategies are governed, and we oversee the action plan developed by Legal & General to make sure they’re properly reviewed and that any actions necessary are taken.

What happened in 2018Workplace Pensions - The default fund, the L&G Multi-Asset Fund, was reviewed and was found to be appropriateThe review found that the default fund continues to be a good option for members whether they end up wanting to take cash, drawdown, or an annuity on retirement.

The L&G Future World Multi-Asset Fund was made available to employers and members The L&G Multi-Asset Fund is the standard choice, or default fund, for many employers. But, until last year, there wasn’t a default option for employers who wanted to include

a greater Environmental, Social and Governance (ESG) focus. The recent launch of Legal & General’s Future World Multi-Asset Fund is therefore a very welcome addition to the range.

Members investing in some old default strategies were moved to a more suitable oneTwo older default strategies were closed during the year. We had expressed concerns that these strategies moved members into a mix of pre-retirement and cash funds 10 years from retirement, and that this approach no longer addressed member needs at retirement. Members who were investing in these strategies have now been moved to a new multi-asset strategy. This new strategy aims to reduce short-term volatility by investing in a wider range of asset types and is designed to take into account the specific needs of these members, the stakeholder pensions regulations, and the move to the new fund administration system.

The process to manage default fund switches was substantially improvedIt’s becoming more common for employers not only to change their default strategies for new joiners, but for existing members too. In the last few years, Legal & General have set up a process to manage these bulk switches – where all scheme members investing in a default fund move into a new one. This process is now fully integrated into the business, so bulk switches can be carried out reliably and effectively.

Mature Savings - The UK Equity Index Lifestyle Profile was reviewed during the yearFollowing a review by Legal & General, it was decided that the UK Equity Index Lifestyle Profile, which had been closed to new members a number of years ago, would remain an option for existing members. Having considered the different types of members in this fund and recognising that some members would have received advice when they decided to invest in this fund, it was not considered appropriate to bulk switch existing members to an alternative fund.

Members were reminded to review their investments regularlyWe want Legal & General to help members make informed choices for their investments. Legal & General included reminders to members in their annual statements to regularly check how their money is being invested, and to make any changes they need to. Legal & General also wrote to existing members to explain that the UK Equity Index Lifestyle Profile was no longer the default fund for their product. They reminded members about investing in Lifestyle strategies, to encourage members to weigh up whether to stay invested in their current investment strategies or whether there was now a more appropriate investment option.

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Investment choice and returnsCriteria 3


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Why we gave this score Legal & General offer a good range of default funds, as well as a broad range of self-select funds for members who prefer to choose their own.

The longer-term investment performance has been good. This is the primary measure by which we judge performance. While we also review shorter-term performance, we see it as the basis for a conversation about how things have been going - rather than as a major factor in our overall assessment.

We’re pleased that Legal & General have extended the ESG fund choice by introducing the Future World Multi-Asset Fund. This fund is now available to employers as a default strategy and to Workplace Pensions members as a self-select option.

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How Legal & General and the IGC have worked together on investment choice and returnsWe asked Legal & General to improve the way they report to us on fund performance and to do so quarterly, which we’re pleased to say has been done.

An independent investment adviser, appointed by Legal & General, checks that their own funds are appropriate for customers, and that any external funds are properly monitored. Their analysis shows how the funds have performed in comparison with their benchmarks and looks at whether individual funds turned out to have higher or lower levels of risk than expected.

Following this review, we work together with Legal & General to decide whether there are any particular funds that aren’t doing as well as we expect. Legal & General may place these funds on what we call a ‘watch list’. This means that we can keep a close eye on how those funds are performing. Depending on what we find, we’ll talk to Legal & General about whether they should remove these funds from the set of fund options available to members.

What happened in 2018Workplace Pensions - Investment choiceThe fund range for members was improved and all funds were moved to a new fund administration systemWe consulted with Legal & General on their project to improve the investment options and fund administration for members of the WorkSave Pension and Group Stakeholder Pension Plans. One aim was to make it easier for members to choose their own funds. In the process, Legal & General closed some older funds, or funds that weren’t being used by many members. They also replaced some more expensive funds with equivalent, lower-priced ones.

This was a large and complicated project and, overall, we were impressed with the efficiency it was carried out with. Here’s how we felt Legal & General performed in specific areas:

Reducing costsIn considering this project, we asked Legal & General to find opportunities to reduce transition costs. All in all, we were impressed with the results. Assets in excess of £22 billion were transitioned in stages. The first and largest stage involved £9.7 billion of assets, covering 1.1 million members. The assets were transitioned with an average cost for each member of £0.02 for every £1,000 invested.


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However, there were some instances where we felt that the costs could be unfair to members. In particular, we expressed concerns about the transition costs that would be incurred in the transition of the Property Fund. A review of costs in the first stage showed that £132,000 was spent in restructuring the £220 million Property Fund and moving it on to the new fund administration system. The Property Fund transition represents an average cost for each member of £0.60 for every £1,000 invested. These costs were acceptable and efficient when compared to the usual costs associated with buying and selling property funds.

The second stage involved restructuring £88 million of assets, covering 7,500 members. The assets were transferred with costs greater than expected, totalling £442,000. In a good result for members, Legal & General have committed to reimbursing the £442,000 of costs, subject to a de-minimis limit being applied, resulting in affected policies being sheltered from over 98% of the cost incurred.

CommunicationThe project was carried out efficiently for something of this scale. But we were disappointed that Legal & General did not share their proposed member communications with us at an earlier stage, so we could make meaningful comments. Legal & General assured us that this was an oversight and they’ve promised to share proposed communications with us in good time in the future.

TimingsIn managing the transitions, it was necessary for Legal & General to apply trading blackout periods and restrictions on the dates when new contributions could be received. Some employers told us that they had not been given sufficient time to prepare for this blackout and restrictions on sending contribution files during the transfer period and that this meant they had to do some additional work. We discussed this with the client relationship team and suggested improvements that could be made to their processes.

Choice for membersAround 6,000 members were switched from funds that were highlighted as no longer being

appropriate. Three of the funds that were found to be no longer fit for purpose were replaced by funds which were slightly more expensive. Members who were investing in these funds were given the option to switch to another fund if they wanted to.

Slicker processesAs part of the changes to the fund range, Legal & General moved the funds onto their new fund administration system. This move to the new platform will allow Legal & General to use the latest technology to better respond to members’ needs.

SecurityThis change now means that the assets are held in the name of a different company within the Legal & General Group. We considered whether this might have any impact on the security of the assets, and we are satisfied that it is at least as strong as before.

A problem with a small number of member accounts was fixedThe process used to close funds in the past meant there were a small number of members whose money hadn’t been moved to the right funds. We oversaw a project run by Legal & General to fix this. For the 6,500 members who were affected, Legal & General made sure their money was moved to the right funds. They also ensured that no members had lost out as a result of the mistake.

A new fund centre for members was launchedThe new fund centre is much easier to navigate, so members can quickly find the information they’re looking for. It includes an overview of all the funds that are available, as well as details of what they invest in and how they’ve been performing.

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The process for switching to different funds was improvedMembers told us that the system for moving money to different funds was clunky and time-consuming. So Legal & General improved it. The new ‘switch and redirect’ system has much clearer instructions, as well as regular prompts along the journey to help members move their money easily. Members can find the new system within Manage Your Account online.

Workplace Pensions - Investment performanceLegal & General’s default investment strategy continued to perform well over the longer-term periods that are important for pension saversIn 2018 Legal & General’s default strategy, the Multi-Asset Fund, outperformed its benchmark, despite making a loss of 3.4% in 2018. Over the last five years, the strategy has generated an annualised return of 7.2% every year, which outperformed the sector benchmark of 4.6% for similar funds.

Here’s a breakdown of how Legal & General’s Multi-Asset Fund performed to 31st December 2018:

L&G Multi-Asset (PMC)

1 year performance

Fund -3.4%

Benchmark -6.1%

3 year annualised performance

Fund 8.4%

Benchmark 5.3%


Fund 7.2%

Benchmark 4.6%

In addition to the default investment strategy, some employers have created bespoke default investment strategies which are designed specifically for their own employees, taking into account their age, likely retirement age, and contribution levels. Members can view the performance of their own fund choice by logging into Manage Your Account.

To see how Legal & General’s funds have performed turn to Appendix 2: Fund costs and performance on page 38.

Mature Savings - Investment performanceMature Savings manage the older pension range that is no longer available to new clients. These products were launched before the introduction of auto-enrolment and pension freedoms. Because of this, they don’t provide default investment strategies that are auto-enrolment compliant.

There is no standard default fund in place for members of the Group Personal Pension Plan No. 1 although some employers did put default fund in place for their employees.

Before 2013, the default investment strategy for deferred members of the Group Stakeholder Pension Plan was the L&G UK Equity Index Fund. After 2013, this was replaced by the L&G Multi-Asset Fund. The performance of these funds during the year to 31st December 2018 was:

L&G Multi-Asset (PMC)

L&G UK Equity Index Fund

1 year performance

Fund -3.4% -9.1%

Benchmark -6.1% -9.5%


Fund 8.4% 6.2%

Benchmark 5.3% 6.1%


Fund 7.2% 4.2%

Benchmark 4.6% 4.1%

To see how Legal & General’s funds have performed turn to Appendix 2: Fund costs and performance on page 38.

http://www.legalandgeneral.com/mya



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ESGESG stands for Environmental, Social and Governance. In the world of investing, it refers to strategies that take these factors into account when deciding where and how money is invested and how Legal & General engages with these companies on your behalf. Investing in a way that incorporates ESG factors can reduce long-term risks for members, for instance from climate change and so has the potential to improve investment returns.

Workplace Pensions - The range of ESG-focused funds was extendedWe have been keen for members to be able to express their views on ESG through their fund choices and were pleased that Legal & General agreed with us and extended the available choices of ESG-focused funds.

One of the new funds – the Future World Multi-Asset Fund – is now available to employers as an alternative default fund option. It invests in index funds designed by Legal & General, which allocate more money to companies that score highly from an ESG perspective, and away from low-scoring companies.

This fund, together with the Future World Equity fund, is also available to members on a self-select basis.

Legal & General continued to talk to companies on ESG issues across all its fundsIn our conversations with Legal & General, we have stressed our view that ESG is as much about engaging with the companies they invest in as it is about voting. We strongly encourage them to ask and, if necessary, require companies to integrate sustainability into their corporate policies and disclosures.

In 2018, we reviewed Legal & General’s Climate Impact Pledge, which represents their commitment to address climate change by engaging directly with the largest companies in the world, and who are crucial to whether the UK meets the aims of the Paris Agreement. Over the course of the year, they celebrated those companies that are taking positive action to change their behaviour and highlighted those companies that need to improve.

As well as environmental issues, we also reviewed the work Legal & General are doing with company boards on social and governance issues. This included actions to promote greater diversity, improve board governance and reduce income inequality within the companies Legal & General funds invest in.

You can learn more about Legal & General’s approach to Corporate Governance and Responsible Investment here.

http://www.lgim.com/uk/en/capabilities/corporate-governance



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Accessing your pensionCriteria 4


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Why we gave this score We’re pleased that Legal & General have taken steps to further improve members’ experiences when they want to access their pensions. We particularly welcome the fact that where an employer opts to provide this service as part of their pension scheme arrangement, Workplace Pensions members can now benefit from a new telephone service providing independent advice from an adviser, external to Legal & General, on how to take their money.

Mature Savings members in the Group Personal Pension Plan No. 1, whose funds are worth £50,000 or more, have the option to drawdown from their pension fund.

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How Legal & General and the IGC have worked together to improve the ways you can access your pensionThe IGC regularly meet with Legal & General to review the process members go through when they want to start taking their money

What happened in 2018Workplace Pensions - Members can now get advice on their options over the phoneIn last year’s report, we suggested that the experience for members who were ready to start taking their money needed improving. In 2018, Legal & General made efforts to do this, by introducing the option for members to get financial advice over the phone before they decide what to do with their money. This is provided by an external financial adviser, independent of Legal & General.

Where an employer has opted to provide this service for their pension scheme, members can get advice on just their Legal & General pot, which costs £500 and can be paid for out of their pot, if they want to. Or, for a higher fee, they can get advice on all of the money they’ve built up for retirement, whether with Legal & General or not.

A project was started to improve the experience for members who choose drawdownDrawdown is a way of taking an income directly from your pension pot any time after the age of 55, rather than converting the whole pot to an annuity. It gives members greater flexibility as they can still use the rest of their pot however they choose. They can take occasional lump sums or regular payments, or they can decide to stop taking money from their pot and leave what’s left in it to grow.

We felt that the experience for members who take their money using drawdown needed improving. As a result, Legal & General removed the £250 charge for members who started drawdown. It has also kicked off a project to improve the service for members in drawdown, including making it easier for them to withdraw money whenever they need it.

Research was conducted into a new idea to help members make better decisionsWe encouraged Legal & General to help customers plan better for how to use the money they’ve built up over the long-term. This would encourage members to think about their money in four pots:

1. Money they need in the early years after they’ve stopped or reduced work

2. Income or lump sums needed for holidays and rainy days

3. Income needed in later life (including for possible long-term care)

4. Any money they want to leave to loved ones.

The idea, which has been actively supported by the IGC, has been positively received by members in testing. They thought that it would help them to plan more effectively.

Since Legal & General started this work, the Financial Conduct Authority has launched a consultation on introducing default investment options for members taking income drawdown. The FCA’s proposals are based on four ‘consumer outcomes’ which are broadly similar to the four pots described above.

The FCA is proposing an implementation date approximately one year from when the final regulations are published. This could be as soon as July 2020 and

Legal & General are now working on delivering this initiative as part of this forthcoming regulatory requirement.

Mature Savings - The process for members who want to access drawdown has improvedMature Savings members in the Group Personal Pension Plan No. 1, whose funds are worth £50,000 or more, have the option to drawdown from their pension fund. Members of the other Mature Savings products are unable to access drawdown options from within their plans, but have the option to transfer to a drawdown provider if they wish.


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AdministrationCriteria 5

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Why we gave this score We’re pleased that the administration issues we highlighted in last year’s report have been improved.

As part of our role, we’ve continued to push Legal & General to make sure they’re delivering the best service they can for Workplace Pensions members. In response, they’ve been reviewing their processes to see where and how they can improve the member experience.

We’ve given a slightly lower score for Mature Savings due to a number of the agreed service standards not being met regularly enough. Despite this, our opinion is that they have performed well this year, in particular considering the impending transfer to ReAssure.

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How Legal & General and the IGC work together to improve administrationLegal & General update us on their service performance statistics at every meeting. Between these meetings, the IGC’s Pensions Manager also receives monthly data on how – and how well – Legal & General have been helping members. We also review this data to check how long it takes them to answer members’ queries, as well as how well they respond to those queries. Our job is to challenge Legal & General if the statistics suggest their service falls below our expectations, and to make sure there are plans in place to improve it.

What happened in 2018Workplace Pensions - We asked Legal & General to improve the service they give membersLegal & General organised training for their Operational support teams to address any knowledge gaps, reorganised their teams to focus on specific product areas, and introduced automated technology to make some processes more efficient.

Following the transfer of administration services from Kingswood to Cardiff during 2017, Legal & General restructured their senior management team in the Cardiff operational centre to ensure that it had the necessary skills and experience to manage the combined centre. Legal & General briefed the IGC of their plans and provided the IGC with regular updates as the restructure and related recruitment was implemented.

The project that moved all the funds to a new fund administration system had a short-term effect on service levelsWe kept a close eye on this project as we knew that Legal & General

would have to temporarily shut down some parts of the system while they moved members’ investments. As a result, members weren’t able to make any investment changes for a number of days in October and November. The operations team put in extra time to get things back on track. The service level was quickly brought back to normal once the switch had been completed.

The transfer out process was made quicker and easierLegal & General introduced automated technology to help speed up the process, while making sure members’ investments are moved correctly. The vast majority of transfers out are now completed using automation, which is helping to make the process much more efficient. Legal & General are reviewing their other processes to see where else they could use this technology.

Some admin errors were fixedIn last year’s report, we highlighted that there had been some delays in paying death benefits and pension transfers. There was also a problem with 2,100 members whose money hadn’t been moved to the right funds. These issues were all resolved over the course of the year within the agreed timescales and we checked that no members had lost out as a result.

Customer satisfaction was improved during the yearFollowing the transfer of administration from Kingswood to Cardiff during 2017, the IGC was pleased to note that the customer satisfaction levels have improved and were consistently above 91% throughout the year. The IGC seeks feedback from employers and it was good to hear positive messages from employers about the standards of customer service,

and the positive “can do” attitude of the administration team to address issues when things do go wrong.

Mature Savings - Challenges in maintaining performance against service standardsWith the announcement of the sale of the Mature Savings business to ReAssure, there has been pressure on administrative resources throughout 2018 and a need to manage expected higher levels of employee turnover than usual. The IGC has taken particular interest in the way that Legal & General have proactively recruited in a timely way to ensure service standards are not reduced.

Whilst service in some areas is taking longer than our targets, the information that we have requested shows that it isn’t generally taking too much longer. We keep a close eye on these areas to make sure that they move in the right direction.

We’ll continue to take an active interest in Legal & General’s people management throughout this period ahead of the final transition to ReAssure.

Customer satisfaction was maintained at over 90%Throughout 2018, Mature Savings customer satisfaction rate remained well ahead of the 90% target. We felt that this was impressive, given the upcoming transfer of the business to ReAssure and we congratulated the team responsible for maintaining customer service standards; the target for 2019 is to give customers the same reliable service, and to keep satisfaction scores above 90%. We’ll monitor this closely.

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Member engagementCriteria 6


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Why we gave this score In 2018, Legal & General carried on improving their member engagement approach – for both Workplace Pensions and Mature Savings.

We were pleased to see they had listened to the Financial Conduct Authority and made changes to how they treat long-standing members. We also welcome the work they’ve done to help members manage their money and feel more in control, including the improvements to Manage Your Account and the launch of the Financial Wellbeing Hub.

Mature Savings gets a lower score than Workplace Pensions because, whilst members can access their account online, they do not have the same range of self-service options available to Workplace Pensions members. Overall, despite this, we think that Legal & General Mature Savings do a reasonable job of engaging members.

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How Legal & General and the IGC work together to improve member engagementThe IGC meets regularly with communications professionals within the Legal & General team to hear about what they have planned – and what they have in progress – to improve member engagement. This covers everything from day-to-day communications – like responding to member requests and giving timely reminders to review their savings – to broader projects like Financial Wellbeing and video benefit statements.

Working directly with employersA member of the IGC always attends Legal & General’s quarterly DC User Group (a group of employer representatives from across different schemes). In these meetings, we hear what Legal & General have planned for general member engagement and experience across Workplace Pensions, and, importantly, listen to feedback from the group about past projects and invite their views on projects in development.

We also seek feedback from employers directly. During these meetings, we meet with the teams who are responsible for administering their schemes to understand what they think of Legal & General as a provider.

Hearing what members have to sayWe’re also keen to hear directly from members. Each year, we hold a Member Forum where people can come and find out what’s in the Annual Report, listen to expert guest speakers and ask questions. We occasionally run member surveys - both specific to Legal & General or with other IGCs.

On behalf of the IGC, our Pension Scheme Manager attends Legal & General’s “Voice of the Customer” meetings. In these meetings, they explore members’ experiences about their dealings with Legal & General, and they review complaints and customer satisfaction indicators. The group then identify what can be changed to improve service to members and what systems, process or communications are needed to make it happen.


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What happened in 2018The IGC has overseen and supported a significant investment in communications, both in terms of people and development, which Legal & General are making.

Workplace Pensions - We supported the development of an updated “member journey”An updated, four-stage programme, which was rolled out, focuses on what Legal & General refer to as the “life stage” of a member in their path to save for retirement. This reduces the prominence of product and technical content. Instead it focuses on supporting members in achieving their retirement goals.

This approach is being adopted across both online and offline communications giving members the same benefits no matter how they access information.

Video has been much appreciated by members, with video added in each stage. This includes a “welcome to your L&G Pension video” and a personalised annual benefit statement video. This gives members details of their contributions and projected benefits at retirement. It also highlights the impact of making a small increase to contributions. 95% of those who opened the video watched it to the end and 74% clicked through to take further action.

Member online access was upgradedThe IGC has been keen for Legal & General to improve the online service for members.

In 2018, Legal & General improved their online Manage Your Account service, making it easier for members to manage their pension and investments online. The campaign to encourage members to sign up for the improved Manage Your Account service resulted in a 38% increase in the number of members registered and a 28% increase in active members who logged into their account regularly.

The improved service makes things like changing retirement age, contributions, and nominated beneficiary easier by simply completing an e-form. It also features video content to help members understand their account and their investments. Their most watched video shows members what they can do on Manage Your Account and gets an average of over 2200 views each month.

Members gave us their views on how their money should be investedIn 2018, we asked Legal & General to survey members on ESG matters and a survey was conducted across all Legal & General Workplace Pension schemes about their thoughts on where and how their pension is invested. The survey received responses from over 900 members. Legal & General promised to plant a tree for every survey returned.

The feedback highlighted how members (particularly 26 to 34-year olds) thought it was important to consider a business’s social responsibility and culture, and their impact on climate change when looking to invest. It also uncovered that doing this would make members think more positively about investing, about their employer and about Legal & General.

We supported the launch of the Financial Wellbeing HubThere’s a growing acknowledgement of the importance of “financial wellbeing” for employees - especially the impact that financial worries can have on a person’s general wellbeing and health. Research by the Chartered Institute of Personnel and Development (CIPD) suggests that one in four employees have money worries that impact their ability to do their job, and 19% of employees report they’re losing sleep because of it.

We’ve been discussing this with Legal & General and so we were very pleased to see the investment they’ve made in launching the Financial Wellbeing Hub in October 2018. The Hub is available on request for all employers to make available to their employees.


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The website is designed to help members of all Legal & General schemes to feel more in control of their money. Legal & General also produced specific publications to help employers communicate with members about their money worries. We also encouraged a project which led to Legal & General publishing thought leadership pieces to start a broader conversation about the importance of supporting members.

The Legal & General website was redesigned

We have been asking for the online experience for members to be improved for a while. After a full briefing with Legal & General, we were invited to offer our thoughts about the proposed changes and the introduction of a new content management system. The Legal & General website has since been redesigned, with a new look and offering clearer, more useful resources for members, employers and advisers.

Improving in-house capabilityThe IGC has maintained a high focus on the quality of communication and user experience. We have been keen to see more innovation. The Workplace Pensions communications team was restructured during 2018 to bring in additional skills and expertise. We now expect Legal & General to be able to test and learn at pace, getting member input throughout the development of new initiatives and following their introduction.

Mature Savings - Customer outcomesFollowing the announcement of the sale of the Mature Savings business to ReAssure, the IGC has been vigilant in ensuring that standards of service and value are maintained ahead of the transfer taking place. So, we welcomed the appointment of a Head of Customer Outcomes whose role is to focus specifically on those important objectives and challenge the Mature Savings team if the member experience starts to slip.

Customer satisfaction remains strongDespite the pressure on administration staff in the lead up to the transfer of the Mature Savings business to ReAssure, we’re pleased to report that they’ve been very good at managing members’ expectations. Even where service is falling short of expectations, member complaints are extremely low and customer satisfaction remains strong.

A programme of improvements was started to improve the member experienceWe scrutinised Legal & General’s Mature Savings Legacy Review to compare how they were doing things with the FCA’s expectations of how to treat long-standing customers fairly. They recognised a number of improvements they could make across their Mature Savings member experience including improvements to annual statements sent out to members.


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Appendix 1: Who we areMeet your IGCEach member of the IGC has been chosen based on the diversity of our professional experience, skills and background.

IGCs have to have a minimum of five members. The majority, including the Chair must be independent of Legal & General. These requirements have been met during the year.

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Dermot Courtier, ChairDermot became the Independent Chair of the Legal & General Independent Governance Committee in March 2017. He also acts as Independent Chair of the Legal & General WorkSave Mastertrust.

Dermot has a wealth of experience in the pensions sector. As well as his role within the Legal & General IGC, he’s also Head of Group Pensions at Kingfisher plc and Secretary to Kingfisher Pension Trustee Limited. Since 2007, Dermot has had an executive role in the governance of the Kingfisher Pension Scheme (KPS) – including overseeing a high-impact initiative to reduce risk and enhance defined contribution (DC) benefit structures and investment funds. KPS has won numerous awards for this work, and for its pioneering financial education program for DC members.

Dermot’s past experience includes senior pension roles at Hachette Livre Group, Towers Perrin HR Services (now Willis Towers Watson) and Royal Mail Group. He’s also a past member of the Pensions and Lifetime Savings Association DC Council. He has an ongoing interest in local community and infrastructure, which is reflected in his past role as the Vice Chair of Curo Group, a social and affordable housing group in the Bath & Bristol area.

Rachel Brougham, Independent IGC memberRachel is a trustee executive at BESTrustees Limited. Rachel qualified as an actuary and has worked in the pensions industry since 1988.

Rachel’s experience includes advising both defined benefit (DB) and defined contribution (DC) trustee boards, and the governance committees of various contract-based DC arrangements through which she has built up a detailed knowledge of the regulatory environment.

With Rachel’s previous employer, the global consultant Mercer, she led a number of national initiatives including pension fund governance (both DB and DC) and pensions automatic enrolment.

Having joined BESTrustees in 2014, Rachel’s appointments include two master trust trustee boards and membership of two independent governance committees, as well as a number of DB schemes.

Steve Carrodus, Independent IGC memberSteve is a Client Director with PTL Governance Ltd.

He has over 40 years’ experience dealing with employers and trustees in connection with workplace pensions. After 1988 this included advising employers on contract- based pension arrangements.

Through his professional trustee role, Steve has extensive experience of governance responsibility relating to pensions and has recent experience with DC master trusts and one other IGC.


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Daniel Godfrey, Independent IGC memberDaniel studied Economics at The University of Manchester and went on to become Marketing Director of Robert Fleming.

He’s worked in various senior positions including Chairman of pfeg (Personal Finance Education Group), Director General of The Association of Investment Companies and Director of Corporate Communications at Phoenix Group Holdings Plc. He was Chief Executive of the Investment Association between 2012 and 2015, where he was responsible for a team that oversaw significant growth in the voice of the organisation in governance and stewardship.

Daniel is currently a Non-Executive Director of Big Issue Invest Fund Management, a social impact investment firm, and of Digital Moneybox, a FinTech startup. He’s also a Senior Adviser to Hermes Investment Management and a Consultant to the Institute for Economics & Peace and an Ambassador for the Transparency Taskforce.

Daniel brings a wealth of knowledge and professional expertise.

Joanne Segars OBE, Independent IGC memberJoanne was appointed to the IGC in January 2019. From 2006 to June 2017, she was Chief Executive of the Pensions and Lifetime Savings Association (PLSA), having been its first Policy Director from 2005 to 2006. Prior to this, Joanne was Head of Pensions and Savings at the Association of British Insurers and Senior Pensions Officer at the Trades Union Congress.

Joanne currently holds non-executive roles at a number of organisations including LGPS Central Ltd, NOW: Pensions, and the Pensions Policy Institute. Previous board roles include Chair of the Pensions Infrastructure Platform and Pensions Europe, the EU trade association for pensions and the Environment Agency Pension Fund.

Joanne is well-respected and well regarded by the pensions industry and brings a wealth of experience to her role on the IGC.

Ali Toutounchi, IGC memberAli has over 30 years of experience in investments. He was formerly Managing Director of Legal & General Investment Management’s (LGIM) Global Index Funds, overseeing the management of over £275 billion of assets on behalf of pension funds, institutional and retail investors. Before this, as LGIM’s Client Fund Director, he was closely involved with a number of large UK corporate and public pension fund schemes.

Ali joined Legal & General in 1995 from NatWest Securities. He’s held senior roles at UBS Asset Management and Wood Mackenzie Stockbrokers. He has a first class honours degree in economics and statistics from University College, London, and a PhD in actuarial mathematics from Heriot-Watt University, Edinburgh.

Ali’s diverse and extensive experience of investment, trade execution and working with pension fund clients is of great value to the IGC.

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Adrian Spann, Pension Scheme ManagerAdrian was appointed Pension Scheme Manager to the IGC and the Legal & General WorkSave Mastertrust in July 2018. He is the bridge between the IGC, employers and Legal & General. Adrian reports to the independent Chair of the IGC.

Adrian is a Fellow of the Association of Chartered Certified Accountants.

Tessa Watson, Assistant Pension Scheme Manager

Tessa became the Assistant Pension Scheme Manager to Legal & General’s Independent Governance Committee in September 2018. She reports to the independent Chair of the IGC and to Adrian Spann, the Pension Scheme Manager.

Before joining Legal & General, Tessa worked for nine years at Rothschild & Co, most recently as the Assistant Pensions Manager for their workplace pension scheme. Tessa

studied Economics at the University of Sheffield and holds the Diploma in Retirement Provision from the Pensions Management Institute.

Andrew Fairhurst, Secretary to the IGCAndrew worked on the launch of the IGC and has been Secretary to the IGC since it began. He makes sure it operates efficiently and effectively to the highest governance standards, and that it fully embraces its position at the forefront of changing governance practice.

Andrew reports to the independent Chair of the IGC and he also has an independent non-operational reporting line to Legal & General’s Group legal & governance function.

Andrew has held a number of senior company secretarial roles within Legal & General Group, is a Fellow of the Institute of Chartered Secretaries, and a member of the ICSA’s Company Secretaries forum.

Leanne Cornish, Assistant Secretary to the IGCLeanne Cornish has provided company secretarial support to the Independent Governance Committee since 2015. She supports Andrew Fairhurst in making sure the IGC fulfils its role in looking after members’ interests.

Leanne joined Legal & General in 2015 as a Company Secretarial Trainee, having spent four years with Link Group (formerly Capita Asset Services) as an Employee Share Schemes executive. Leanne qualified as a graduate of the Institute of Chartered Secretaries and Administrators (ICSA) under the Chartered Secretaries Qualifying Scheme in January 2018 and was awarded Associate status in June 2018.

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Appendix 2: Fund costs and performance

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Fund costs – and why they matterFund costs are important because they can have a considerable impact on your returns and particularly because this impact of costs compounds over time. For example, two funds can have the same underlying performance of 6% every year. But if the total costs of one are just 1% a year higher than the other, it could easily cost you a quarter of your pension when compounded over a 45-year working career.

But costs should not be looked at in isolation. The underlying performance of funds is also important. Otherwise, people would always choose the cheapest fund without realising they could end up with less money in their pot in the end.

Where do transaction costs come into this?Transaction costs happen when a fund’s portfolio of assets is first created. After that, they happen during the day-to-day management of the fund as assets are sold and bought to achieve the fund’s objectives. Costs are incurred as a result of buying, selling, lending or borrowing investments held by a fund. A real-world example, familiar to many people,

would be the many different costs you pay when buying or selling a house.

We’ve set out performance and costs together in one place and with greater detail about ‘transaction costs’. The standards for the way in which these costs are best calculated and disclosed are still being established. This year we have again used what we think is the best current practice.

All pension schemes will soon have to fully disclose costsIn February 2019 the Financial Conduct Authority published a consultation document setting out its proposed changes to the way pension scheme governance bodies tell their members about costs and charges. The consultation also proposes some amendments to the existing rules for the disclosure of transaction costs and administration charges (COBS 19.8).


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An investor in a fund incurs transaction costs at two stages:1. On an ongoing basis, when a portfolio manager buys or sells assetsThe portfolio manager responsible for the day-to-day management of the fund’s investments may change the assets within the fund’s portfolio over the course of time with the purpose of ensuring that the fund achieves its objectives. This involves selling some existing assets and buying new ones. Transaction costs will be incurred in this process. These costs are not directly collected from individual members but are borne by the fund and act as a drag on returns. The transaction costs shown in this document reflect these costs.

2. When new members join the fund, or existing members leaveWhen members first join a fund, their initial and regular cash investments may have to be used by the fund to buy new assets. Similarly, if members decide at some point in the future to switch or sell their investments, assets may have to be sold. Both of these processes incur transaction costs, depending on the balance of members buying and selling on any given day.

If members who continue to invest in the fund were to bear the transaction costs caused by other members buying and selling, it would mean those ongoing members get less value. To avoid this, these costs are collected directly from the money members are investing, or their proceeds from selling. This is done through the application of ‘anti-dilution offsets’ such as a ‘fund spread’ or other ‘anti-dilution’ mechanisms.

The transaction costs shown in this document reflect the value to ongoing members of applying these anti-dilution offsets.

The fund spread costs are not shown within this document, and the IGC is working with Legal & General to establish the best way of showing the implication of these costs for members.

Transaction costs can explicit or implicit:1. Explicit costsThese are costs that are directly charged to or paid by the fund. They may include taxes and levies (such as stamp duty), broker commissions (fees charged by the executing broker in order to buy and sell investments) and costs of borrowing or lending securities.

In the everyday example of house buying and selling, you may be familiar with stamp duty, Land Registry fees, solicitors’ fees, valuation fees, estate agents’ fees and so on. These costs are billed to the fund and paid in cash, and so can be accounted for precisely. They are called ‘known’ or ‘explicit’ costs.

2. Implicit costsImplicit costs aren’t invoiced and paid for by cash like explicit costs. They can’t be calculated precisely.

Take the real-world example of buying and selling foreign currency. You may pay a commission (an explicit cost) but there’s also likely also to be a gap between the price at which the dealer buys the currency and the price at which they sell it. If you bought a foreign currency from a dealer and sold it back to them immediately, you would make a loss. This gap is known as ‘spread’ and is an implicit transaction cost.

The size of the spread is affected by several things. One is how ‘liquid’ the assets are. Liquidity refers to how easy it is to buy and sell an asset. Cash is completely liquid, gold is pretty liquid, property is relatively illiquid. In the currency example, the

spread between the buying price and the selling price is likely to be wider for Liberian dollars (relatively illiquid) than US dollars (highly liquid).

Another factor is size of the transaction and market conditions at the time of the trade.

In the currency example, if you want to buy $US100, you will probably get the price you see on the screen or the blackboard outside the shop. If you want to buy $US100 million dollars, your order is likely to affect the immediate supply and demand in the whole market and push the price up. This is known as ‘market impact’ and is another implicit transaction cost.

There’s no standard way of calculating implicit costs. The FCA has recommended a method called ‘slippage’. This method defines implicit costs as the difference between the quoted ‘mid-market price’ at the time the order was placed (known as the arrival price) and the actual price paid (known as the execution price). This method, although reasonable if observed over a long period of time, can result in a volatile measure from one year to another. It can even result in a profit, known as ‘negative transaction costs’. This can happen, for example when buying an asset, if the actual price paid ends up being lower than the mid-market price at the time of placing the order. This would usually be because something happened in the market to push down the price (like bad news or a big sell order by someone else).

We’ve shown the explicit and implicit transaction costs in the columns below, along with a total so you can see the full transaction costs within each fund.

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Transaction cost example

£0.999 £1.001 £1.004Selling price for 1,000 shares

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Buy1,000 shares

Price impact £0.003

Buying price for 1,000 shares

Please note that the some of the figures in these examples have been exaggerated to make the transaction costs illustration simpler.

Transaction costs example: Buying 1,000,000 shares of ‘UK PLC’

Purchase consideration of 1,000,000 shares (£1.004 a share) £1,004,000

Total worth of 1,000,000 shares (£1.00 a share) £1,000,000

Expenditure above the worth (mid price) of the shares £4,000

The excess payment is due to Implicit Costs as explained below.

Implicit costsIn this example, shares of the UK PLC are worth £1.00 each and traded in the market in parcels of 1,000 shares. Each parcel of shares can be bought at £1.001 or sold at £0.999, slightly above or below their worth; this difference of £0.001 is called ‘spread’ for buying and selling.

If you needed to buy 1,000,000 shares rather than 1,000 the seller would demand a higher price of £1.004 for providing liquidty for you. In other words, each share will cost you an additional £0.003; this extra cost is called ‘price impact’.

The sum of the ‘spread’ and ‘price impact’ is called ‘implicit costs’.

Spread Cost of buying (1,000,000 shares at £0.001 each) £1,000

Price Impact Cost of buying (1,000,000 shares at £0.003 each) £3,000

Implicit costs £4,000

Explicit costsWhen buying or selling stocks, you also suffer explicit costs such as broker commissions and in some markets, like the UK, Stamp Duty or taxes.

Broker commission on total consideration £1,004,000 (assume 0.1%) £1,004

UK Stamp Duty of 0.5% on £1,004,000 £5,020

Explicit costs £6,024

Total cost (implicit costs + explicit costs) £10,024

Total cost as the percentage of the worth of 1,000,000 UK PLC 1.00%

Please note that the some of the figures in these examples have been exaggerated to make the transaction costs illustration simpler.


42

Other chargesAs well as transaction costs, funds are also charged a fund management of investment management charge. You can find these charges on your fund’s fact sheets, fund literature and in member statements.

The fund performance table below shows net performance after all fund charges and transaction costs have been taken off.

Other informationThere are three different generations of funds. The different generations of funds reflect a different pricing series but invest in the same underlying funds. Members can match the exact fund name against the funds available under their scheme.

All performance data is as at 30th September 2018 unless otherwise stated.

The benchmark performance is shown gross, before the deduction of charges and fees.

Implicit transaction costs have been calculated as the difference between the price at which a deal was struck and the price of the instrument at previous market close. This is consistent with the implicit cost calculation methods allowed under PRIIPS. Indirect transaction costs have been calculated assuming a static fund structure as at 30 September 2018.

Important: Past performance is not a guide to future returns. The value of an investment and any income taken from it is not guaranteed and may go up and down. Investors could get back less than they invest.

Annual Report 2019

43

Generation 3 Funds for WorkSave Pensions PlanThe fund performance is calculated after all fund charges but other product charges such as the annual management charges are not included.

Fund name

Active (A)

Passive (P)

1 Year Performance

3 Year Annualised Performance


Maximum Scheme Annual

Management Charge

Annual Fund

Charge

Transaction Costs

Return Benchmark / Sector



Implicit Costs

Explicit Costs

Total Costs

Legal & General Default Funds

L&G Cash 3 P 0.5% 0.0% 0.4% -0.1% 0.4% -0.1% 0.37% 0.10% -0.04% 0.00% -0.04%

L&G Multi-Asset (PMC) 3 A 4.3% 5.1% 11.2% 9.9% 8.5% 7.0% 0.37% 0.13% -0.01% 0.01% 0.00%

L&G Over 15 Year Gilts Index (PMC) 3

P 0.9% 1.4% 5.2% 5.3% 8.1% 8.2% 0.37% 0.08% -0.03% 0.00% -0.03%

Legal & General Self Select Funds

AAA-AA Fixed Int O15 Yr Targeted Duration (PMC) 3

P 1.6% 0.5% 5.0% 5.3% 8.1% 7.2% 0.37% 0.12% -0.09% 0.00% -0.09%

AAA-AA Fxd Int All Stks Targeted Duration (PMC) 3

P 1.1% 0.2% 3.5% 4.0% 4.9% 4.8% 0.37% 0.12% -0.04% 0.00% -0.03%

AAA-AA-A Corp Bond All Stocks Index (PMC) 3

P 0.1% 0.2% 4.2% 4.0% 4.9% 4.8% 0.37% 0.12% -0.05% 0.00% -0.05%

AAA-AA-A Corp Bond Over 15 Yr Index (PMC) 3

P -0.7% 0.5% 6.2% 5.3% 7.3% 7.2% 0.37% 0.12% -0.02% 0.00% -0.02%

All Stocks Gilts Index (PMC) 3

P 0.3% 0.2% 2.9% 2.4% 4.4% 3.9% 0.37% 0.08% -0.02% 0.00% -0.01%

All Stocks Index Linked Gilts Index (PMC) 3

P 1.2% 1.3% 6.5% 6.6% 7.7% 7.8% 0.37% 0.08% 0.01% 0.00% 0.01%

Asia Pacific (ExJap) Dev Equity Index (PMC) 3

P 5.6% 5.3% 19.6% 18.7% 8.9% 9.9% 0.37% 0.14% -0.05% 0.04% -0.01%

Asia Pacific Ex Jap Equity Index (PMC) 3

P 7.9% 8.4% 20.2% 20.4% 9.8% 9.7% 0.37% 0.14% -0.05% 0.04% -0.01%

Asian Income Fund 3 A 1.0% 8.4% 15.6% 20.4% 6.2% 9.7% 0.37% 0.83% -0.14% 0.11% -0.02%

Consensus Index (PMC) 3 P 6.8% n/a 12.5% n/a 8.7% n/a 0.37% 0.10% -0.02% 0.01% -0.01%

Diversified (PMC) 3 A 4.0% 5.1% 11.1% 9.9% 8.4% 7.0% 0.37% 0.27% -0.10% 0.03% -0.06%

Dynamic Diversified Fund (PMC) 3

A 3.8% n/a 9.3% n/a n/a n/a 0.37% 0.52% -0.10% 0.06% -0.04%

Ethical Global Equity Index (PMC) 3

P 14.0% 10.4% 19.0% 16.9% 14.1% 11.2% 0.37% 0.30% -0.01% 0.02% 0.00%

Ethical UK Equity Index (PMC) 3

P 6.1% 4.9% 10.6% 9.5% 7.3% 7.0% 0.37% 0.20% 0.00% 0.01% 0.01%

Europe (Ex-UK) Equity Index (PMC) 3

P 2.5% 2.3% 15.0% 14.8% 9.9% 9.7% 0.37% 0.12% -0.01% 0.02% 0.01%

Global Eqty Fixed Weights 50:50 Indx (PMC) 3

P 9.2% 10.4% 15.4% 16.9% 10.5% 11.2% 0.37% 0.10% -0.02% 0.02% 0.00%

Global Eqty Fixed Weights 60:40 Indx (PMC) 3

P 8.4% 10.4% 14.9% 16.9% 10.1% 11.2% 0.37% 0.10% -0.02% 0.02% -0.01%


44

Fund name

Active (A)

Passive (P)

1 Year Performance




Management Charge

Annual Fund

Charge

Transaction Costs




Implicit Costs

Explicit Costs

Total Costs

Global Equity 70:30 Index (PMC) 3

P 8.2% 10.4% 14.2% 16.9% 9.3% 11.2% 0.37% 0.10% -0.02% 0.02% -0.01%

Global Equity Market Weights 30:70 Index (PMC) 3

P 9.8% 10.4% 14.2% 16.9% 10.6% 11.2% 0.37% 0.14% 0.02% 0.02% 0.03%

Global FW 50:50 Idx GBP Currncy Hedgd (PMC) 3

P 7.4% 10.4% 12.0% 16.9% 9.0% 11.2% 0.37% 0.15% 0.01% 0.02% 0.03%

Japan Equity Index (PMC) 3

P 13.1% 13.9% 18.4% 18.5% 12.3% 12.4% 0.37% 0.12% -0.02% 0.01% -0.01%

L&G (PMC) 2015 - 2020 Pathway Fund 3

A 2.0% 2.5% n/a n/a n/a n/a 0.37% 0.19% -0.06% 0.02% -0.04%


A 2.9% 3.9% n/a n/a n/a n/a 0.37% 0.19% -0.04% 0.02% -0.03%


A 3.9% 5.2% n/a n/a n/a n/a 0.37% 0.19% -0.02% 0.01% -0.01%


A 4.0% 5.3% n/a n/a n/a n/a 0.37% 0.19% -0.01% 0.01% 0.00%


A 4.0% 5.3% n/a n/a n/a n/a 0.37% 0.19% -0.01% 0.01% 0.00%


A 4.0% 5.3% n/a n/a n/a n/a 0.37% 0.19% -0.01% 0.01% 0.00%


A 4.0% 5.3% n/a n/a n/a n/a 0.37% 0.19% -0.01% 0.01% 0.00%


A 4.6% 5.8% n/a n/a n/a n/a 0.37% 0.19% 0.00% 0.01% 0.01%


A 5.6% 6.6% n/a n/a n/a n/a 0.37% 0.19% 0.00% 0.02% 0.02%


A 5.6% 6.6% n/a n/a n/a n/a 0.37% 0.19% 0.00% 0.02% 0.02%

L&G (PMC) Future World Fund 3

P 11.7% 12.6% n/a n/a n/a n/a 0.37% 0.24% 0.00% 0.04% 0.05%

L&G (PMC) Workplace Pathway Fund - 2065 - 2070 3

A n/a n/a n/a n/a n/a n/a 0.37% 0.19% 0.00% 0.02% 0.01%

L&G Distribution 3 A 3.0% 2.0% 8.5% 6.4% 7.1% 4.9% 0.37% 0.38% 0.05% 0.07% 0.11%

L&G Equity 3 A 5.7% 4.9% 10.7% 9.5% 8.1% 7.0% 0.37% 0.23% -0.04% 0.08% 0.04%

L&G European 3 A 3.2% 2.0% 14.5% 14.9% 10.5% 9.7% 0.37% 0.31% 0.18% 0.09% 0.27%

L&G Far Eastern 3 A 7.4% 7.4% 18.0% 18.5% 10.3% 10.1% 0.37% 0.32% -0.05% 0.03% -0.02%

L&G Fixed Interest 3 A 0.3% 0.2% 2.9% 2.4% 4.4% 3.9% 0.37% 0.10% -0.03% 0.00% -0.02%

L&G Growth 3 A 10.8% 5.9% 14.0% 11.5% 11.6% 7.5% 0.37% 0.78% 0.13% 0.40% 0.53%

L&G High Income 3 A -0.3% 1.1% 7.3% 5.6% 5.8% 4.0% 0.37% 0.36% 0.14% 0.00% 0.15%

L&G Index-Linked Gilt 3 P 1.3% 1.0% 6.8% 6.1% 8.3% 7.4% 0.37% 0.10% -0.06% 0.00% -0.06%

L&G International 3 A 10.3% 10.4% 15.8% 16.9% 11.7% 11.2% 0.37% 0.35% 0.19% 0.04% 0.23%

Annual Report 2019

45

Fund name

Active (A)

Passive (P)

1 Year Performance




Management Charge

Annual Fund

Charge

Transaction Costs




Implicit Costs

Explicit Costs

Total Costs

L&G Managed 3 A 6.1% 5.1% 10.9% 9.9% 8.4% 7.0% 0.37% 0.18% 0.03% 0.04% 0.07%

L&G North American 3 A 16.2% 19.1% 21.7% 21.1% 17.0% 16.0% 0.37% 0.32% 0.17% 0.04% 0.21%

L&G Property 3 A 8.6% 7.0% 7.3% 4.7% 10.0% 7.7% 0.37% 1.09% -0.04% 0.08% 0.04%

L&G UK Alpha 3 A -7.8% 5.9% 6.5% 11.5% 5.1% 7.5% 0.37% 0.76% -0.32% 0.07% -0.25%

L&G UK Recovery 3 A -1.7% 4.9% 10.4% 9.5% 8.9% 7.0% 0.37% 0.26% 0.03% 0.21% 0.24%

L&G UK Smaller Companies 3

A 2.9% 0.6% 6.8% 9.4% 8.9% 8.6% 0.37% 0.25% -0.16% 0.04% -0.12%

Legal & General (PMC) HSBC Islamic Global Equity Index Fund 3

P N/A N/A N/A N/A N/A N/A 0.37% 0.35% 0.00% 0.01% 0.01%

Legal & General (PMC) Real Income Builder 3

A 5.9% 6.5% n/a n/a n/a n/a 0.37% 0.55% 0.12% 0.10% 0.22%

Legal & General Artemis Income Fund 3

A 5.3% 5.9% 9.4% 11.5% 7.6% 7.5% 0.37% 0.80% - - 0.10%

Legal & General F&C Responsible Global Equity Fund 3

A 18.1% 15.1% 20.9% 20.0% 14.9% 14.8% 0.37% 0.92% - - 0.06%

Legal & General F&C Responsible UK Equity Income Fund 3

A 3.8% 5.9% 7.3% 11.5% 7.5% 7.5% 0.37% 0.90% - - 0.10%

Legal & General Janus Henderson Preference & Bond Fund 3

A -0.8% -0.7% 4.7% 3.4% 5.5% 3.5% 0.37% 0.72% 0.20%(2)

Legal & General Kames Ethical Equity Fund 3

A 3.7% 5.9% 6.8% 11.5% 7.8% 7.5% 0.37% 0.62% - - 0.25%

Legal & General Newton Global Income Fund 3

A 10.7% 14.2% 17.6% 20.0% 12.7% 14.3% 0.37% 0.84% - - 0.11%

Legal & General Newton Real Return Fund 3

A 1.8% 4.6% 2.9% 4.5% 2.6% 4.5% 0.37% 0.92% - - 0.19%

Legal & General Standard Life Global Absolute Return Strategies Fund 3

A -2.1% 0.7% -0.9% 0.6% 1.5% 0.7% 0.37% 0.86% - - 0.21%

Legal & General Stewart Investors Asia Pacific Leaders Fund 3

A 13.7% 4.9% 15.1% 19.1% 12.0% 10.3% 0.37% 0.91% - - 0.00%

Legal & General Threadneedle Global Select Fund 3

A 16.3% 12.9% 21.3% 19.1% 15.2% 14.1% 0.37% 0.89% 0.25%(3)

Legal & General Threadneedle Managed Equity Fund 3

A 6.8% 6.0% 12.6% 11.2% 9.5% 7.7% 0.37% 0.97% 0.29%(3)

North America Equity Index (PMC) 3

P 20.1% 20.3% 22.7% 22.8% 18.1% 18.1% 0.37% 0.12% -0.02% 0.01% -0.01%

Over 5 Year Index Linked Gilts Index (PMC) 3

P 1.3% 1.4% 7.1% 7.2% 8.5% 8.7% 0.37% 0.08% 0.01% 0.00% 0.01%

Overseas Bond Index (PMC) 3

P AB -5.8% 6.9% 4.7% 4.8% 3.3% 0.37% 0.15% -0.03% 0.00% -0.03%


46

Fund name

Active (A)

Passive (P)

1 Year Performance




Management Charge

Annual Fund

Charge

Transaction Costs




Implicit Costs

Explicit Costs

Total Costs

Overseas Equity Consensus Index (PMC) 3

P 13.8% 14.7% 19.5% 20.6% 13.4% 14.9% 0.37% 0.14% -0.02% 0.01% 0.00%

Pre-Retirement (PMC) 3 P 0.5% 0.5% 5.3% 5.3% 6.4% 7.2% 0.37% 0.12% -0.01% 0.00% -0.01%

Pre-Retirement Inflation Linked Fund (PMC) 3

P 0.8% 0.5% 6.1% 5.3% 7.4% 7.2% 0.37% 0.13% 0.00% 0.00% 0.00%

Pre-Retirement Inflation Sensitive (PMC) 3

P 0.2% 0.5% 5.3% 5.3% n/a n/a 0.37% 0.12% -0.01% 0.00% -0.01%

Retirement Income Multi-Asset (PMC) 3

A 3.0% n/a 8.4% n/a n/a n/a 0.37% 0.31% -0.06% 0.05% -0.01%

Sterling Liquidity (PMC) 3 A 0.4% 0.4% 0.2% 0.3% n/a n/a 0.37% 0.11% -0.02% 0.00% -0.02%

UK Equity 5% Capped Passive (PMC) 3

P 5.3% 4.9% 11.4% 9.5% 7.6% 7.0% 0.37% 0.10% 0.00% 0.01% 0.01%

UK Equity Index (PMC) 3 P 5.8% 5.9% 11.8% 11.5% 7.7% 7.5% 0.37% 0.10% -0.03% 0.02% -0.02%

World (Ex-UK) Equity Index (PMC) 3

P 14.6% 14.7% 20.6% 20.6% 14.7% 14.8% 0.37% 0.12% -0.02% 0.01% -0.01%

World Emerging Markets Equity Index (PMC) 3

P 1.6% 1.7% 17.0% 17.2% 8.0% 8.4% 0.37% 0.25% -0.02% 0.06% 0.03%

(1) Costs provided as at 30 June 2018(2) Costs provided as at 31 December 2018(3) Costs provided as at 31 March 2018(4) data not received, or not received in required format n/a performance data is not available because the share class had not been in existence for the required amount of time

Generation 25 Funds for WorkSave Pension PlanThe fund performance is calculated after all fund charges but other product charges such as the annual management charges are not included.

Fund name

Active (A)

Passive (P)

1 Year Performance




Management Charge

Annual Fund

Charge

Transaction Costs




Implicit Costs

Explicit Costs

Total Costs


L&G Cash Fund P 0.4% 0.0% 0.3% -0.1% 0.3% -0.1% 0.27% 0.20% -0.04% 0.00% -0.04%

L&G Multi-Asset (PMC) A 3.9% 5.1% 11.0% 9.9% 8.3% 7.0% 0.27% 0.23% -0.01% 0.01% 0.00%

L&G Over 15 Year Gilts Index Fund (PMC)

P 1.1% 1.4% 5.1% 5.3% 8.0% 8.2% 0.27% 0.20% -0.03% 0.00% -0.03%


AAA-AA Fxd Int All Stks Trgted Duration Fund (PMC)

P 1.0% 0.2% 3.4% 4.0% 4.8% 4.8% 0.27% 0.20% -0.04% 0.00% -0.03%

AAA-AA Fxd Int O15 Yr Targeted Duration Fund (PMC)

P 1.5% 0.5% 4.9% 5.3% 8.0% 7.2% 0.27% 0.20% -0.09% 0.00% -0.09%

Annual Report 2019

47

Fund name

Active (A)

Passive (P)

1 Year Performance




Management Charge

Annual Fund

Charge

Transaction Costs




Implicit Costs

Explicit Costs

Total Costs

AAA-AA-A Corp Bond All Stocks Index Fund (PMC)

P 0.1% 0.2% 4.1% 4.0% 4.8% 4.8% 0.27% 0.20% -0.05% 0.00% -0.05%

AAA-AA-A Corp Bond Over 15 Year Index Fund (PMC)

P -0.8% 0.5% 6.2% 5.3% 7.2% 7.2% 0.27% 0.20% -0.02% 0.00% -0.02%

All Stocks Gilts Index Fund (PMC)

P 0.4% 0.2% 2.8% 2.4% 4.3% 3.9% 0.27% 0.20% -0.02% 0.00% -0.01%

All Stocks Index Linked Gilts Index Fund (PMC)

P 1.1% 1.3% 6.4% 6.6% 7.5% 7.8% 0.27% 0.20% 0.01% 0.00% 0.01%

Asia Pacific (ExJap) Dev Equity Index Fund (PMC)

P 7.8% 5.3% 20.0% 18.7% 9.7% 9.9% 0.27% 0.25% -0.05% 0.04% -0.01%

Asia Pacific Ex Jap Equity Index Fund (PMC)

P 7.8% 8.4% 20.0% 20.4% 9.7% 9.7% 0.27% 0.25% -0.05% 0.04% -0.01%

Asian Income Fund A 0.9% 8.4% 15.5% 20.4% 6.1% 9.7% 0.27% 0.85% -0.14% 0.11% -0.02%

Consensus Index Fund (PMC)

P 6.4% n/a 12.3% n/a 8.5% n/a 0.27% 0.20% -0.02% 0.01% -0.01%

Distribution Fund A 3.0% 2.0% 8.5% 6.4% 7.1% 4.9% 0.27% 0.25% 0.05% 0.07% 0.11%

Diversified Fund (PMC) A 3.8% 5.1% 11.0% 9.9% 8.3% 7.0% 0.27% 0.37% -0.10% 0.03% -0.06%

Dynamic Diversified Fund (PMC)

A 3.6% n/a 9.2% n/a n/a n/a 0.27% 0.64% -0.10% 0.06% -0.04%

Equity Fund A 5.7% 4.9% 10.7% 9.5% 8.0% 7.0% 0.27% 0.25% -0.04% 0.08% 0.04%

Ethical Global Equity Index Fund (PMC)

P 13.7% 10.4% 18.9% 16.9% 14.1% 11.2% 0.27% 0.25% -0.01% 0.02% 0.00%

Ethical UK Equity Index Fund (PMC)

P 6.0% 4.9% 10.6% 9.5% 7.2% 7.0% 0.27% 0.25% 0.00% 0.01% 0.01%

Europe (Ex-UK) Equity Index Fund (PMC)

P 2.2% 2.3% 14.8% 14.8% 9.7% 9.7% 0.27% 0.20% -0.01% 0.02% 0.01%

European Fund A 3.2% 2.0% 14.5% 14.9% 10.5% 9.7% 0.27% 0.30% 0.18% 0.09% 0.27%

Far Eastern Fund A 7.3% 7.4% 18.0% 18.5% 10.3% 10.1% 0.27% 0.30% -0.05% 0.03% -0.02%

Fixed Interest Fund A 0.2% 0.2% 2.8% 2.4% 4.3% 3.9% 0.27% 0.20% -0.03% 0.00% -0.02%

Global Emerging Markets Index Fund (PMC)

P 1.8% -1.6% 18.7% 16.9% 8.8% 7.2% 0.27% 0.25% -0.06% 0.08% 0.02%

Global Equity 70:30 Index Fund (PMC)

P 8.0% 10.4% 14.1% 16.9% 9.2% 11.2% 0.27% 0.20% -0.02% 0.02% -0.01%

Global Equity Fixed Weights 50:50 Index Fund (PMC)

P 8.6% 10.4% 15.1% 16.9% 10.3% 11.2% 0.27% 0.20% -0.02% 0.02% 0.00%

Global Equity Fixed Weights 60:40 Index Fund (PMC)

P 7.8% 10.4% 14.6% 16.9% 9.9% 11.2% 0.27% 0.20% -0.02% 0.02% -0.01%

Global Equity Market Weights 30:70 Index (PMC)

P 9.7% 10.4% 14.1% 16.9% 10.5% 11.2% 0.27% 0.20% 0.02% 0.02% 0.03%

Global FW 50:50 Idx Fund GBP Currency Hedged (PMC)

P 7.3% 10.4% 11.9% 16.9% 8.9% 11.2% 0.27% 0.25% 0.01% 0.02% 0.03%


48

Fund name

Active (A)

Passive (P)

1 Year Performance




Management Charge

Annual Fund

Charge

Transaction Costs




Implicit Costs

Explicit Costs

Total Costs

Growth Fund A 10.5% 5.9% 13.7% 11.5% 11.3% 7.5% 0.27% 0.95% 0.13% 0.40% 0.53%

High Income Fund A -0.2% 1.1% 7.4% 5.6% 5.9% 4.0% 0.27% 0.20% 0.14% 0.00% 0.15%

Index-Linked Gilt Fund P 1.2% 1.0% 6.7% 6.1% 8.2% 7.4% 0.27% 0.20% -0.06% 0.00% -0.06%

International Fund A 10.2% 10.4% 15.8% 16.9% 11.7% 11.2% 0.27% 0.30% 0.19% 0.04% 0.23%

Japan Equity Index Fund (PMC)

P 13.6% 13.9% 18.5% 18.5% 12.3% 12.4% 0.27% 0.20% -0.02% 0.01% -0.01%

L&G (PMC) 2015 - 2020 Pathway Fund

A 1.8% 2.5% n/a n/a n/a n/a 0.27% 0.29% -0.06% 0.02% -0.04%


A 2.8% 3.9% n/a n/a n/a n/a 0.27% 0.29% -0.04% 0.02% -0.02%


A 3.8% 5.2% n/a n/a n/a n/a 0.27% 0.29% -0.02% 0.01% -0.01%


A 3.8% 5.3% n/a n/a n/a n/a 0.27% 0.29% -0.02% 0.01% 0.00%


A 3.9% 5.3% n/a n/a n/a n/a 0.27% 0.29% -0.01% 0.01% 0.00%


A 3.8% 5.3% n/a n/a n/a n/a 0.27% 0.29% -0.01% 0.01% 0.00%


A 3.9% 5.3% n/a n/a n/a n/a 0.27% 0.29% -0.02% 0.01% 0.00%


A 4.5% 5.8% n/a n/a n/a n/a 0.27% 0.29% 0.00% 0.01% 0.01%


A 5.5% 6.6% n/a n/a n/a n/a 0.27% 0.29% 0.00% 0.02% 0.02%


A 5.5% 6.6% n/a n/a n/a n/a 0.27% 0.29% 0.00% 0.02% 0.02%

L&G (PMC) Future World Fund

P 11.4% 12.6% n/a n/a n/a n/a 0.27% 0.34% 0.02% 0.04% 0.06%

L&G (PMC) Workplace Pathway Fund - 2065 - 2070

A n/a n/a n/a n/a n/a n/a 0.27% 0.29% 0.00% 0.02% 0.01%

Legal & General (PMC) HSBC Islamic Global Equity Index Fund

P N/A N/A N/A N/A N/A N/A 0.27% 0.45% 0.00% 0.01% 0.01%

Legal & General Artemis Income Fund

A 5.0% 5.9% 9.1% 11.5% 7.3% 7.5% 0.27% 1.10% - - 0.10%

Legal & General F&C Responsible Global Equity Fund

A 17.5% 10.4% 20.3% 16.9% 14.3% 11.2% 0.27% 1.44% - - 0.06%

Legal & General F&C Responsible UK Equity Income Fund

A 3.4% 5.9% 6.9% 11.5% 7.1% 7.5% 0.27% 1.34% - - 0.10%

Legal & General Janus Henderson Preference & Bond Fund

A -1.3% -0.7% 4.3% 3.4% 5.0% 3.5% 0.27% 1.13% 0.20% (2)

Annual Report 2019

49

Fund name

Active (A)

Passive (P)

1 Year Performance




Management Charge

Annual Fund

Charge

Transaction Costs




Implicit Costs

Explicit Costs

Total Costs

Legal & General Kames Ethical Corporate Bond Fund

A -0.2% 0.0% 3.3% 5.0% 4.4% 5.4% 0.27% 0.77% - - 0.07%

Legal & General Kames Ethical Equity Fund

A 3.1% 5.9% 6.1% 11.5% 7.1% 7.5% 0.27% 1.23% - - 0.25%

Legal & General Kames High Yield Bond Fund

A 1.2% -0.6% 5.3% 6.7% 4.3% 5.2% 0.27% 1.05% - - 0.36%

Legal & General Kames Strategic Bond Fund

A 1.0% -0.7% 3.5% 1.5% 3.0% 2.8% 0.27% 0.97% - - 0.70%

Legal & General Lazard Emerging Markets Fund

A -5.3% 2.0% 15.8% 18.1% 4.9% 8.2% 0.27% 1.22% 0.08%

Legal & General Newton Global Income Fund

A 10.3% 14.2% 17.2% 20.0% 12.3% 14.3% 0.27% 1.14% - - 0.11%

Legal & General Newton Real Return Fund

A 1.3% 4.6% 2.4% 4.5% 2.1% 4.5% 0.27% 1.39% - - 0.19%

Legal & General Standard Life Global Absolute Return Strategies Fund

A -2.5% 0.7% -1.2% 0.6% 1.1% 0.7% 0.27% 1.23% - - 0.21%

Legal & General Stewart Investors Asia Pacific Leaders Fund

A 13.4% 4.9% 14.9% 19.1% 11.7% 10.3% 0.27% 1.15% - - 0.00%

Legal & General Threadneedle Global Select Fund

A 15.9% 12.9% 20.8% 19.1% 14.7% 14.1% 0.27% 1.32% 0.25%(3)

Legal & General Threadneedle Managed Equity Fund

A 6.3% 6.0% 12.0% 11.2% 8.9% 7.7% 0.27% 1.45% 0.29%(3)

Managed Fund A 5.9% 5.1% 10.8% 9.9% 8.2% 7.0% 0.27% 0.25% 0.03% 0.04% 0.07%

North America Equity Index Fund (PMC)

P 20.2% 20.3% 22.7% 22.8% 18.0% 18.1% 0.27% 0.20% -0.02% 0.01% -0.01%

North American Fund A 16.2% 19.1% 21.7% 21.1% 17.0% 16.0% 0.27% 0.30% 0.17% 0.04% 0.21%

Over 5 Year Index Linked Gilts Index Fund (PMC)

P 1.1% 1.4% 7.0% 7.2% 8.4% 8.7% 0.27% 0.20% 0.01% 0.00% 0.01%

Overseas Bond Index Fund (PMC)

P 1.0% -5.8% 6.8% 4.7% 4.7% 3.3% 0.27% 0.20% -0.03% 0.00% -0.03%

Overseas Equity Consensus Index Fund (PMC)

P 13.7% 14.7% 19.4% 20.6% 13.3% 14.8% 0.27% 0.20% -0.02% 0.01% 0.00%

Pre-Retirement Fund (PMC)

P 0.5% 0.5% 5.2% 5.3% 6.4% 7.2% 0.27% 0.20% -0.01% 0.00% -0.01%

Pre-Retirement Inflation Linked Fund (PMC)

P 0.8% 0.5% 6.0% 5.3% 7.3% 7.2% 0.27% 0.23% 0.00% 0.00% 0.00%

Pre-Retirement Inflation Sensitive (PMC)

P 0.1% 0.5% 5.3% 5.3% n/a n/a 0.27% 0.20% -0.01% 0.00% -0.01%

Property Fund A 8.6% 7.0% 7.3% 4.7% 10.1% 7.7% 0.27% 0.25% -0.04% 0.08% 0.04%

Retirement Income Multi-Asset (PMC)

A 2.9% n/a 8.3% n/a n/a n/a 0.27% 0.38% -0.06% 0.05% -0.01%


50

Fund name

Active (A)

Passive (P)

1 Year Performance




Management Charge

Annual Fund

Charge

Transaction Costs




Implicit Costs

Explicit Costs

Total Costs

Sterling Liquidity (PMC) A 0.3% 0.4% 0.1% 0.3% n/a n/a 0.27% 0.20% -0.02% 0.00% -0.02%

UK Alpha Fund A -8.1% 5.9% 6.2% 11.5% 4.9% 7.5% 0.27% 0.95% -0.32% 0.07% -0.25%

UK Equity 5% Capped Passive Fund (PMC)

P 5.2% 4.9% 11.3% 9.5% 7.5% 7.0% 0.27% 0.20% 0.00% 0.01% 0.01%

UK Equity Index Fund (PMC)

P 5.7% 5.9% 11.8% 11.5% 7.7% 7.5% 0.27% 0.15% -0.03% 0.02% -0.02%

UK Recovery Fund A -1.7% 4.9% 10.3% 9.5% 8.8% 7.0% 0.27% 0.25% 0.03% 0.21% 0.24%

UK Smaller Companies Fund

A 2.8% 0.6% 6.7% 9.4% 8.9% 8.6% 0.27% 0.25% -0.16% 0.04% -0.12%

World (Ex-UK) Equity Index Fund (PMC)

P 14.5% 14.7% 20.5% 20.6% 14.6% 14.8% 0.27% 0.20% -0.02% 0.01% -0.01%

World Emerging Markets Equity Index Fund (PMC)

P 1.3% 1.7% 16.7% 17.2% 7.9% 8.4% 0.27% 0.55% -0.02% 0.06% 0.03%


Generation 17 Funds for Mature Savings including the Group Personal Pension Plan No. 1, the Group Personal Pension Plan 2000, and the Group Stakeholder Pension SchemeFund performance is calculated gross before the deduction of fund charges and other fees. Please note that not all funds may be available under your plan and fund charges may vary.

Fund name

Active (A)

Passive (P)

1 Year Performance




Management Charge

Annual Fund

Charge

Transaction Costs




Implicit Costs

Explicit Costs

Total Costs


L&G Multi-Asset Fund (PMC)

A 4.2% 5.1% 11.3% 9.9% 8.6% 7.0% 0.50% 0.00% -0.01% 0.01% 0.00%

L&G Cash Fund P 0.6% 0.0% 0.5% -0.1% 0.5% -0.1% 0.50% 0.00% -0.04% 0.00% -0.04%

L&G Fixed Interest Fund A 0.4% 0.2% 3.0% 2.4% 4.5% 3.9% 0.50% 0.00% -0.03% 0.00% -0.02%

L&G Over 15 Year Gilts Index Fund

P 0.6% 1.4% 5.2% 5.3% 8.2% 8.2% 0.50% 0.00% -0.03% 0.00% -0.03%

L&G UK Equity Index Fund

P 5.7% 5.9% 11.2% 11.5% 7.7% 7.5% 0.50% 0.00% -0.01% 0.01% 0.01%


L&G Consensus Fund P 6.2% n/a 12.3% n/a 8.9% n/a 0.50% 0.00% -0.02% 0.01% -0.01%

L&G Distribution Fund A 3.3% 2.0% 8.8% 6.4% 7.4% 4.9% 0.50% 0.00% 0.05% 0.07% 0.12%

L&G Equity Fund A 6.0% 4.9% 11.0% 9.5% 8.3% 7.0% 0.50% 0.00% -0.04% 0.08% 0.04%

L&G Ethical Fund P 4.7% 5.9% 6.3% 11.4% 6.9% 7.4% 0.50% 0.00% 0.01% 0.09% 0.10%

Annual Report 2019

51

Fund name

Active (A)

Passive (P)

1 Year Performance




Management Charge

Annual Fund

Charge

Transaction Costs




Implicit Costs

Explicit Costs

Total Costs

L&G European Equity Index Fund

1.6% 2.0% 14.3% 14.9% 9.5% 9.7% 0.50% 0.00% -0.01% 0.01% 0.01%

L&G European Fund A 3.6% 2.0% 14.8% 14.9% 10.8% 9.7% 0.50% 0.00% 0.18% 0.09% 0.27%

L&G Far Eastern Fund A 7.7% 7.4% 18.4% 18.5% 10.7% 10.1% 0.50% 0.00% -0.05% 0.03% -0.02%

L&G Global Equity 70:30 Index Fund

P 8.0% 10.4% 13.6% 16.9% 9.4% 11.2% 0.50% 0.00% -0.01% 0.01% 0.00%

L&G Global Equity Fixed Weights 50:50 Index Fund

P 8.5% 10.4% 14.8% 16.9% 10.5% 11.2% 0.50% 0.00% -0.01% 0.01% 0.00%

L&G Global Equity Fixed Weights 60:40 Index Fund

P 7.5% 10.4% 14.2% 16.9% 9.7% 11.2% 0.50% 0.00% -0.02% 0.01% -0.01%

L&G Index Linked Gilt Fund

P 1.4% 1.0% 6.9% 6.1% 8.4% 7.4% 0.50% 0.00% -0.06% 0.00% -0.06%

L&G International Fund A 10.6% 10.4% 16.2% 16.9% 12.1% 11.2% 0.50% 0.00% 0.19% 0.04% 0.23%

L&G Japanese Equity Index Fund

P 12.7% 13.9% 17.1% 18.5% 11.8% 12.4% 0.50% 0.00% -0.03% 0.01% -0.02%

L&G Managed Fund A 6.2% 5.1% 11.1% 9.9% 8.5% 7.0% 0.50% 0.00% 0.03% 0.04% 0.07%

L&G North American Fund A 16.6% 19.1% 22.1% 21.1% 17.4% 16.0% 0.50% 0.00% 0.17% 0.04% 0.21%

L&G Property Fund A 8.9% 7.0% 7.7% 4.7% 10.3% 7.7% 0.50% 0.00% -0.04% 0.10% 0.06%

L&G UK Recovery Fund A -1.1% 4.9% 10.7% 9.5% 9.2% 7.0% 0.50% 0.00% 0.03% 0.21% 0.24%

L&G UK Smaller Companies Fund

A 3.2% 0.6% 7.1% 9.4% 9.2% 8.6% 0.50% 0.00% -0.15% 0.04% -0.12%

L&G US Equity Index Fund

P 19.6% 21.2% 23.0% 23.2% 18.3% 18.8% 0.50% 0.00% 0.00% 0.01% 0.01%

L&G With-Profits Fund A -3.4% n/a 8.7% n/a 7.8% n/a 0.00% 0.00% 0.07% 0.06% 0.13%

Legal & General Aberdeen Life Global (ex UK) Equity Fund

A 6.3% 8.6% 17.9% 15.2% 9.9% 10.4% 0.50% 0.15% - - 0.07%

Legal & General Aberdeen Life Multi-Asset Fund

A 8.8% 8.0% 12.9% 12.7% 7.8% 9.3% 0.50% 0.15% - - 0.24%

Legal & General Aberdeen Life UK & Global (50/50) Equity Fund

A 9.6% 11.3% 14.8% 19.0% 8.5% 13.3% 0.50% 0.15% - - 0.17%

Legal & General Aberdeen Life UK Equity Fund

A 6.3% 5.9% 10.8% 11.5% 6.5% 7.5% 0.50% 0.15% - - 0.18%

Legal & General Allianz Strategic Bond Fund

A -0.8% -0.7% 2.5% 1.5% 4.0% 2.8% 0.50% 0.85% - - 0.15%

Legal & General Investec American Fund

A 25.6% 20.6% 27.0% 22.5% 20.4% 18.3% 0.50% 0.85% - - 0.22%

Legal & General Investec Cautious Managed Fund

A -0.8% 5.5% 7.4% 5.1% 4.3% 4.5% 0.50% 0.75% - - 0.08%

Legal & General Investec Global Energy Fund

A 11.8% 17.9% 12.7% 18.1% -1.6% 5.3% 0.50% 0.85% - - 0.31%


52

Fund name

Active (A)

Passive (P)

1 Year Performance




Management Charge

Annual Fund

Charge

Transaction Costs




Implicit Costs

Explicit Costs

Total Costs

Legal & General Investec Global Strategic Equity Fund

A 13.3% 12.9% 19.9% 19.1% 16.2% 14.1% 0.50% 0.95% - - 0.16%

Legal & General Janus Henderson European Growth Fund

A 1.6% 2.4% 16.8% 15.2% 12.9% 9.6% 0.50% 1.00% - - 0.07%

Legal & General Janus Henderson Sterling Bond Fund

A 0.7% 0.1% 5.8% 4.5% 6.0% 4.8% 0.50% 0.75% -0.07% 0.00% -0.07%

Legal & General JPM Life Balanced Fund

A 7.7% 6.8% 11.9% 11.9% 9.9% 8.2% 0.50% 0.15% - - 0.40%

Legal & General JPM Life Diversified Equity Fund

A 11.3% 9.7% 16.7% 16.7% 12.9% 11.7% 0.50% 0.15% - - 0.47%

Legal & General JPM Life UK Specialist Equity Fund

A 4.3% 5.9% 10.4% 11.5% 7.7% 7.5% 0.50% 0.15% - - 0.35%

Legal & General Man GLG Balanced Fund

A 3.8% 5.4% 9.2% 10.1% 8.6% 7.3% 0.50% 0.15% - - 1.11%

Legal & General Man GLG Continental Europe Fund

A 7.0% 2.0% 19.1% 14.9% 18.7% 9.7% 0.50% 0.15% - - 0.34%

Legal & General Man GLG Stockmarket Managed Fund

A 6.8% 6.0% 10.9% 11.2% 9.5% 7.7% 0.50% 0.15% - - 1.04%

Legal & General Newton Global Equity Fund

A 14.9% 14.4% 17.5% 19.4% 13.7% 14.1% 0.50% 0.15% - - 0.18%

Legal & General Newton International Bond Fund

A 1.0% -5.8% 7.2% 4.7% 5.1% 3.3% 0.50% 0.40% - - 0.23%

Legal & General Newton Multi-Asset Balanced Fund

A 6.4% 5.4% 10.1% 10.1% 7.6% 7.3% 0.50% 0.15% - - 0.19%

Legal & General Newton Multi-Asset Growth Fund

A 10.8% 6.0% 13.5% 11.2% 12.4% 7.7% 0.50% 0.40% - - 0.39%

Legal & General Newton UK Equity Fund

A 5.6% 5.9% 8.9% 11.5% 9.7% 7.5% 0.50% 0.15% - - 0.55%

Legal & General Newton UK Income Fund

A 5.1% 5.9% 9.8% 11.5% 9.0% 7.5% 0.50% 0.15% - - 0.24%

Legal & General Schroder Tokyo Fund

A 10.6% 13.0% 18.0% 18.9% 13.3% 12.6% 0.50% 0.90% 0.01% 0.00% 0.01%

Legal & General Schroder UK Alpha Plus Fund

A 6.3% 5.9% 10.0% 11.5% 7.2% 7.5% 0.50% 0.95% 0.01% 0.35% 0.36%

Legal & General Schroder UK Mid 250 Fund

A 3.0% 4.2% 8.4% 8.9% 8.4% 8.9% 0.50% 1.10% 0.01% 0.06% 0.07%

Legal & General Schroder UK Smaller Companies Fund

A 6.1% 0.6% 14.5% 9.4% 13.8% 8.6% 0.50% 1.05% 0.03% -0.04% -0.01%


Annual Report 2019

53

Funds Closed to New Contributions in Q4 2018

Fund name

Active (A)

Passive (P)

1 Year Performance




Management Charge

Annual Fund

Charge

Transaction Costs




Implicit Costs

Explicit Costs

Total Costs

Generation 3 Funds

Legal & General Aberdeen Property Share Fund 3

A 6.6% 7.0% 5.1% 4.7% 10.2% 7.7% 0.37% 0.97% - - 0.08%

Legal & General Aviva Investors Property Feeder Fund 3

A 5.8% 7.0% 3.3% 4.7% 5.7% 7.7% 0.37% 1.63% - - 0.00%

Legal & General Baring Multi Asset Fund 3

A 3.1% 0.3% 7.1% 1.9% n/a n/a 0.37% 0.86% (4)

Legal & General BlackRock Gold & General Fund 3

A -21.8% -20.1% 12.1% 16.9% -0.4% -1.2% 0.37% 1.17% - - 0.13%(1)

Legal & General BlackRock UK Income Fund 3

A 3.8% 5.9% 8.7% 11.5% 8.9% 7.5% 0.37% 0.85% - - 0.62%(1)

Legal & General BlackRock UK Special Situations Fund 3

A 8.8% 5.6% 13.4% 10.4% 8.5% 7.8% 0.37% 1.04% - - 0.26%(1)

Legal & General Fidelity Asia Fund 3

A 6.0% 4.4% 21.5% 19.1% 13.7% 11.4% 0.37% 1.26% - - 0.02%

Legal & General Fidelity Multi Asset Strategic Fund 3

A 2.6% 4.8% 6.4% 8.3% 5.8% 6.3% 0.37% 1.32% - - 0.13%

Legal & General Fidelity Strategic Bond Fund 3

A -1.5% 0.5% 2.4% 3.5% 3.4% 4.8% 0.37% 0.69% - - 0.21%

Legal & General Invesco Perpetual Corporate Bond Fund 3

A 0.5% 0.1% 3.8% 4.5% 4.0% 4.8% 0.37% 0.78% - - 0.09%(2)

Legal & General Invesco Perpetual Distribution Fund 3

A 0.4% 2.7% 4.8% 7.0% 4.5% 5.3% 0.37% 0.94% - - 0.14%(2)

Legal & General Invesco Perpetual Income Fund 3

A -0.4% 5.6% 3.5% 10.4% 5.8% 7.8% 0.37% 0.98% - - 0.08%(2)

Legal & General Invesco Perpetual Monthly Income Plus Fund 3

A -0.2% 0.0% 4.9% 3.6% 4.7% 3.6% 0.37% 0.84% - - 0.15%(2)

Legal & General Investec Cautious Managed Fund 3

A -1.6% 5.5% 6.8% 5.1% 3.6% 4.5% 0.37% 0.70% - - 0.08%

Legal & General Investec Global Energy Fund 3

A 11.4% 17.9% 12.8% 18.1% -2.3% 5.3% 0.37% 0.80% - - 0.31%

Legal & General Investec Global Strategic Equity Fund 3

A 13.5% 12.9% 19.6% 19.1% 15.3% 14.1% 0.37% 0.76% - - 0.16%

Legal & General Investec UK Special Situations Fund 3

A 1.5% 5.9% 8.8% 11.5% 5.2% 7.5% 0.37% 0.83% (4)

Legal & General Janus Henderson Cautious Managed Fund 3

A 1.7% 3.1% 4.9% 8.0% 4.1% 6.4% 0.37% 0.87% (4)


54

Fund name

Active (A)

Passive (P)

1 Year Performance




Management Charge

Annual Fund

Charge

Transaction Costs




Implicit Costs

Explicit Costs

Total Costs

Legal & General Janus Henderson China Opportunities Fund 3

A 5.0% 1.9% 23.6% 19.3% 15.6% 12.8% 0.37% 1.01% (4)

Legal & General Janus Henderson European Growth Fund 3

A 1.0% 2.4% 15.7% 15.2% 11.7% 9.6% 0.37% 0.86% - - 0.07%

Legal & General Janus Henderson Sterling Bond Fund 3

A 0.1% 0.1% 4.7% 4.5% 4.7% 4.8% 0.37% 0.78% -0.07% 0.00% -0.07%

Legal & General Jupiter Financial Opportunities Fund 3

A 16.2% 4.8% 16.5% 17.2% 12.1% 12.2% 0.37% 1.13% - - 0.69%

Legal & General Jupiter Merlin Balanced Portfolio Fund 3

A 8.0% 5.4% 11.7% 10.1% 8.9% 7.3% 0.37% 1.74% - - 0.06%(2)

Legal & General Jupiter Merlin Growth Portfolio Fund 3

A 10.2% 6.0% 12.8% 11.2% 9.8% 7.7% 0.37% 1.86% - - 0.05%(2)

Legal & General Jupiter Merlin Income Portfolio Fund 3

A 4.3% 2.7% 6.5% 7.0% 5.0% 5.3% 0.37% 1.59% - - 0.06%(2)

Legal & General M&G Feeder of Property Portfolio Fund 3

A 6.3% 7.0% 1.9% 4.7% 5.6% 7.7% 0.37% 1.71% - - -0.19%(2)

Legal & General M&G Gilt & Fixed Interest Income Fund 3

A 0.2% 0.2% 2.7% 2.4% 3.9% 3.9% 0.37% 0.65% - - 0.11%(2)

Legal & General M&G Global Dividend Fund 3

A 14.5% 14.2% 21.3% 20.0% 11.2% 14.3% 0.37% 1.03% - - 0.08%(2)

Legal & General M&G Global High Yield Bond Fund 3

A 0.3% 12.9% 6.0% 19.1% 4.6% 14.1% 0.37% 0.70% - - 0.17%(2)

Legal & General M&G North American Dividend Fund 3

A 20.8% 21.3% 24.9% 23.5% 16.9% 19.0% 0.37% 0.93% - - 0.03%(2)

Legal & General M&G Optimal Income Fund 3

A 0.1% -0.7% 4.7% 3.4% 4.2% 3.5% 0.37% 0.95% - - 0.12%(2)

Legal & General M&G Recovery Fund 3

A 5.8% 5.9% 10.8% 11.5% 4.4% 7.5% 0.37% 0.83% - - -0.01%(2)

Legal & General M&G Strategic Corporate Bond Fund 3

A 0.1% 0.2% 4.2% 4.0% 4.5% 4.8% 0.37% 0.68% - - 0.03%(2)

Legal & General Managed Income Fund 3

A 0.7% 0.1% 5.4% 4.5% 5.8% 4.8% 0.37% 0.30% -0.37% 0.06%

Legal & General Multi Manager Balanced Fund 3

A 7.1% 5.4% 10.7% 10.1% 6.6% 7.3% 0.37% 0.96% 0.14%

Legal & General Multi Manager Growth Fund 3

A 8.6% 6.0% 12.6% 11.2% 7.7% 7.7% 0.37% 0.94% 0.20%

Legal & General Multi Manager Income Fund 3

A 3.4% 2.7% 7.9% 7.0% 5.4% 5.3% 0.37% 0.87% 0.17%

Annual Report 2019

55

Fund name

Active (A)

Passive (P)

1 Year Performance




Management Charge

Annual Fund

Charge

Transaction Costs




Implicit Costs

Explicit Costs

Total Costs

Legal & General Neptune Balanced Fund 3

A 12.3% 5.4% 12.9% 10.1% 8.2% 7.3% 0.37% 0.81% - - 0.20%(1)

Legal & General Neptune Global Equity Fund 3

A 16.4% 15.1% 16.8% 20.0% 11.4% 14.8% 0.37% 0.89% - - 0.19%(1)

Legal & General Newton Multi-Asset Balanced Fund 3

A 5.8% 5.4% 9.1% 10.1% 6.4% 7.3% 0.37% 0.78% - - 0.09%

Legal & General Newton Multi-Asset Growth Fund 3

A 10.5% 6.0% 12.7% 11.2% 11.2% 7.7% 0.37% 0.80% - - 0.20%

Legal & General Royal London Corporate Bond Fund 3

A 1.1% 0.2% 5.4% 4.4% 6.1% 5.1% 0.37% 0.44% - - 0.00%(1)

Legal & General Schroder European Opportunities Fund 3

A -1.1% 2.0% 9.7% 14.9% 8.3% 9.7% 0.37% 0.90% - - 0.36%(2)

Legal & General Schroder Global Cities Real Estate Fund 3

A 6.9% 5.9% 10.5% 13.3% 9.1% 10.9% 0.37% 1.04% - - 0.06%(2)

Legal & General Schroder Income Fund 3

A 11.3% 5.9% 13.8% 11.5% 9.4% 7.5% 0.37% 0.78% - - 0.20%(2)

Legal & General Schroder Tokyo Fund 3

A 10.2% 13.0% 18.0% 18.9% 12.2% 12.6% 0.37% 0.78% - - 0.02%(2)

Legal & General Schroder UK Alpha Plus Fund 3

A 5.5% 5.9% 9.2% 11.5% 6.3% 7.5% 0.37% 0.78% - - 1.35%(2)

Legal & General Schroder UK Mid 250 Fund 3

A 2.3% 4.2% 8.0% 8.9% 7.5% 8.9% 0.37% 0.78% - - 0.04%(2)

Legal & General Schroder UK Smaller Companies Fund 3

A 5.6% 0.6% 13.7% 9.4% 12.9% 8.6% 0.37% 0.78% - - -0.25%(2)

Legal & General Threadneedle Managed Equity & Bond Fund 3

A 2.7% 5.5% 7.7% 5.1% 6.2% 4.5% 0.37% 0.84% 0.18%(3)

Legal & General Threadneedle Managed Equity Focused Fund 3

A 5.2% 5.5% 10.2% 5.1% 8.3% 4.5% 0.37% 0.94% 0.29%(3)

Generation 25 Funds

Legal & General Aberdeen Property Share Fund

A 6.3% 7.0% 4.7% 4.7% 9.8% 7.7% 0.27% 1.26% - - 0.08%

Legal & General Aberdeen UK Property Feeder Fund

A 6.0% 7.0% 1.5% 4.7% 6.2% 7.7% 0.27% 1.65% - - 0.02%

Legal & General Artemis UK Select Fund

A 3.0% 5.9% 7.2% 11.5% 7.7% 7.5% 0.27% 1.29% - - 0.39%

Legal & General Aviva Investors Property Feeder Fund

A 5.8% 7.0% 3.3% 4.7% 5.7% 7.7% 0.27% 1.64% - - 0.00%

Legal & General Baring Multi Asset Fund

A 2.5% 0.3% 6.6% 1.9% n/a n/a 0.27% 1.40% (4)


56

Fund name

Active (A)

Passive (P)

1 Year Performance




Management Charge

Annual Fund

Charge

Transaction Costs




Implicit Costs

Explicit Costs

Total Costs

Legal & General BlackRock Gold & General Fund

A -21.9% -20.1% 11.9% 16.9% -0.6% -1.2% 0.27% 1.34% - - 0.13%(1)

Legal & General BlackRock UK Income Fund

A 3.5% 5.9% 8.4% 11.5% 8.6% 7.5% 0.27% 1.11% - - 0.62%(1)

Legal & General BlackRock UK Special Situations Fund

A 8.7% 5.6% 13.2% 10.4% 8.3% 7.8% 0.27% 1.18% - - 0.26%(1)

Legal & General Fidelity Asia Fund

A 5.5% 4.4% 20.9% 19.1% 13.1% 11.4% 0.27% 1.79% - - 0.02%

Legal & General Fidelity Multi Asset Strategic Fund

A 2.1% 4.8% 5.9% 8.3% 5.3% 6.3% 0.27% 1.79% - - 0.13%

Legal & General Fidelity Strategic Bond Fund

A -2.0% 0.5% 1.9% 3.5% 3.0% 4.8% 0.27% 1.19% - - 0.21%

Legal & General First State Global Listed Infrastructure Fund

A -2.6% 0.0% 14.4% 13.5% 11.4% 10.8% 0.27% 1.22% - - 0.00%

Legal & General Invesco Perpetual Corporate Bond Fund

A 0.3% 0.1% 3.6% 4.5% 3.8% 4.8% 0.27% 0.91% - - 0.09%(2)

Legal & General Invesco Perpetual Distribution Fund

A 0.2% 2.7% 4.6% 7.0% 4.2% 5.3% 0.27% 1.16% - - 0.14%(2)

Legal & General Invesco Perpetual Income Fund

A -0.6% 5.6% 3.3% 10.4% 5.6% 7.8% 0.27% 1.18% - - 0.08%(2)

Legal & General Invesco Perpetual Monthly Income Plus Fund

A -0.4% 0.0% 4.7% 3.6% 4.6% 3.6% 0.27% 0.99% - - 0.15%(2)

Legal & General Investec Cautious Managed Fund

A -1.8% 5.5% 6.5% 5.1% 3.3% 4.5% 0.27% 0.95% - - 0.08%

Legal & General Investec Global Energy Fund

A 10.8% 17.9% 12.2% 18.1% -2.8% 5.3% 0.27% 1.31% - - 0.31%

Legal & General Investec Global Strategic Equity Fund

A 13.0% 12.9% 19.1% 19.1% 14.8% 14.1% 0.27% 1.18% - - 0.16%

Legal & General Investec UK Special Situations Fund

A 1.0% 5.9% 8.3% 11.5% 4.8% 7.5% 0.27% 1.27% (4)

Legal & General Janus Henderson Cautious Managed Fund

A 1.5% 5.5% 4.6% 5.1% 3.8% 4.5% 0.27% 1.13% (4)

Legal & General Janus Henderson China Opportunities Fund

A 4.7% 1.9% 23.3% 19.3% 15.4% 12.8% 0.27% 1.28% (4)

Legal & General Janus Henderson European Growth Fund

A 0.6% 2.4% 15.2% 15.2% 11.3% 9.6% 0.27% 1.25% - - 0.07%

Annual Report 2019

57

Fund name

Active (A)

Passive (P)

1 Year Performance




Management Charge

Annual Fund

Charge

Transaction Costs




Implicit Costs

Explicit Costs

Total Costs

Legal & General Janus Henderson Multi Manager Active Fund

A 5.6% 6.0% 11.5% 11.2% 7.8% 7.7% 0.27% 2.26% (4)

Legal & General Janus Henderson Multi Manager Income & Growth Fund

A 3.2% 2.7% 6.4% 7.0% 4.9% 5.3% 0.27% 1.88% (4)

Legal & General Janus Henderson Multi Manager Managed Fund

A 4.1% 5.4% 9.2% 10.1% 6.7% 7.3% 0.27% 2.15% (4)

Legal & General Janus Henderson Sterling Bond Fund

A -0.2% 0.1% 4.4% 4.5% 4.4% 4.8% 0.27% 1.03% -0.07% 0.00% -0.07%

Legal & General Janus Henderson UK Property PAIF Feeder Fund

A 6.4% 6.0% 3.2% 7.0% 5.7% 7.5% 0.27% 1.63% (4)

Legal & General Jupiter Distribution Fund

A -2.8% 5.5% 3.1% 5.1% 4.1% 4.5% 0.27% 1.05% - - 0.13%(2)

Legal & General Jupiter Financial Opportunities Fund

A 15.5% 4.8% 15.8% 17.2% 11.5% 12.2% 0.27% 1.71% - - 0.69%(2)

Legal & General Jupiter Merlin Balanced Portfolio Fund

A 7.6% 5.4% 11.3% 10.1% 8.5% 7.3% 0.27% 2.15% - - 0.06%(2)

Legal & General Jupiter Merlin Growth Portfolio Fund

A 9.9% 6.0% 12.5% 11.2% 9.5% 7.7% 0.27% 2.06% - - 0.05%(2)

Legal & General Jupiter Merlin Income Portfolio Fund

A 3.8% 2.7% 6.0% 7.0% 4.4% 5.3% 0.27% 2.11% - - 0.06%(2)

Legal & General Jupiter Merlin Worldwide Portfolio Fund

A 11.2% 11.9% 14.5% 17.9% 10.1% 12.1% 0.27% 2.21% - - 0.04%(2)

Legal & General Legg Mason IF Royce US Smaller Companies Fund

A 14.2% 18.6% 20.1% 23.1% 11.4% 16.0% 0.27% 1.24% (4)

Legal & General M&G Feeder of Property Portfolio Fund

A 5.8% 7.0% 1.5% 4.7% 5.1% 7.7% 0.27% 2.14% - - -0.19%(2)

Legal & General M&G Gilt & Fixed Interest Income Fund

A -0.1% 0.2% 2.3% 2.4% 3.6% 3.9% 0.27% 0.98% - - 0.11%(2)

Legal & General M&G Global Dividend Fund

A 13.8% 14.2% 20.6% 20.0% 10.6% 14.3% 0.27% 1.50% - - 0.08%(2)

Legal & General M&G Global High Yield Bond Fund

A 0.0% 12.9% 5.7% 19.1% 4.3% 14.1% 0.27% 0.99% - - 0.17%(2)

Legal & General M&G North American Dividend Fund

A 20.5% 21.3% 24.6% 23.5% 16.6% 19.0% 0.27% 1.16% - - 0.03%(2)

Legal & General M&G Optimal Income Fund

A -0.3% -0.7% 4.3% 3.4% 3.8% 3.5% 0.27% 1.34% - - 0.12%(2)


58

Fund name

Active (A)

Passive (P)

1 Year Performance




Management Charge

Annual Fund

Charge

Transaction Costs




Implicit Costs

Explicit Costs

Total Costs

Legal & General M&G Recovery Fund

A 5.6% 5.9% 10.6% 11.5% 4.2% 7.5% 0.27% 1.06% - - -0.01%(2)

Legal & General M&G Strategic Corporate Bond Fund

A -0.2% 0.2% 3.9% 4.0% 4.2% 4.8% 0.27% 0.99% - - 0.03%(2)

Legal & General Managed Income Fund

A 0.6% 0.1% 5.3% 4.5% 5.7% 4.8% 0.27% 0.38% 0.06%

Legal & General Multi Manager Balanced Fund

A 6.7% 5.4% 10.2% 10.1% 6.2% 7.3% 0.27% 1.27% 0.14%

Legal & General Multi Manager Growth Fund

A 8.3% 6.0% 12.1% 11.2% 7.2% 7.7% 0.27% 1.28% 0.20%

Legal & General Multi Manager Income Fund

A 3.0% 2.7% 7.4% 7.0% 5.0% 5.3% 0.27% 1.29% 0.17%

Legal & General Neptune Balanced Fund

A 11.9% 5.4% 12.6% 10.1% 7.9% 7.3% 0.27% 1.08% - - 0.20%(1)

Legal & General Neptune Global Equity Fund

A 15.8% 15.1% 16.2% 20.0% 10.8% 14.8% 0.27% 1.33% - - 0.19%(1)


A 5.6% 5.4% 9.0% 10.1% 6.2% 7.3% 0.27% 0.93% - - 0.09%

Legal & General Newton Multi-Asset Growth Fund

A 10.3% 6.0% 12.4% 11.2% 10.9% 7.7% 0.27% 1.02% - - 0.20%

Legal & General Royal London Corporate Bond Fund

A 1.0% 0.2% 5.3% 4.4% 6.0% 5.1% 0.27% 0.52% - - 0.00%(1)

Legal & General Schroder European Opportunities Fund

A -1.2% 2.0% 9.5% 14.9% 8.1% 9.7% 0.27% 1.08% - - 0.36%(2)

Legal & General Schroder Global Cities Real Estate Fund

A 6.5% 5.9% 10.1% 13.3% 8.7% 10.9% 0.27% 1.39% - - 0.06%(2)

Legal & General Schroder Income Fund

A 11.0% 5.9% 13.5% 11.5% 9.1% 7.5% 0.27% 1.08% - - 0.20%(2)

Legal & General Schroder Income Maximiser Fund

A 8.0% 5.9% 11.2% 11.5% 6.8% 7.5% 0.27% 1.32% - - 0.12%(2)

Legal & General Schroder Tokyo Fund

A 9.8% 13.0% 17.6% 18.9% 11.8% 12.6% 0.27% 1.14% - - 0.02%(2)

Legal & General Schroder UK Alpha Plus Fund

A 5.1% 5.9% 8.8% 11.5% 5.8% 7.5% 0.27% 1.12% - - 1.35%(2)

Legal & General Schroder UK Mid 250 Fund

A 1.9% 4.2% 7.5% 8.9% 7.0% 8.9% 0.27% 1.24% - - 0.04%(2)

Legal & General Schroder UK Smaller Companies Fund

A 5.1% 0.6% 13.1% 9.4% 12.4% 8.6% 0.27% 1.29% - - -0.25%(2)

Legal & General Standard Life UK Real Estate Income Feeder Fund

A 5.8% 6.0% 2.1% 7.0% 5.1% 7.5% 0.27% 1.59% - - 0.38%

Annual Report 2019

59

Fund name

Active (A)

Passive (P)

1 Year Performance




Management Charge

Annual Fund

Charge

Transaction Costs




Implicit Costs

Explicit Costs

Total Costs

Legal & General Threadneedle European Fund

A 2.4% 2.0% 11.0% 14.9% 8.7% 9.7% 0.27% 1.62% 0.29%(3)

Legal & General Threadneedle Managed Equity & Bond Fund

A 2.2% 5.5% 7.3% 5.1% 5.8% 4.5% 0.27% 1.21% 0.18%(3)

Legal & General Threadneedle Managed Equity Focused Fund

A 4.6% 5.5% 9.6% 5.1% 7.6% 4.5% 0.27% 1.48% 0.29%(3)

Generation 17 Funds

Legal & General JPM Life UK Specialist Equity Fund

A 4.3% 5.9% 10.4% 11.5% 7.7% 7.5% 0.50% 0.15% 0.00% 0.35% 0.35%

Legal & General Man GLG Balanced Fund

A 3.8% 5.4% 9.2% 10.1% 8.6% 7.3% 0.50% 0.15% 0.00% 1.11% 1.11%


A 6.4% 5.4% 10.1% 10.1% 7.6% 7.3% 0.50% 0.15% 0.00% 0.19% 0.19%



60

Important notesThe total transaction cost figure includes explicit costs of transaction taxes and broker commissions, and the implicit costs of market spread and market impact after any anti-dilution offsets for the year ending 30th September 2018, unless otherwise stated.

The fund performance for Generations 3 and 25 is provided after all fund charges have been taken, but doesn’t include any other product charges, such as the annual management charge. Please see the product literature for more information on charges.

The fund performance for Generation 17 for Group Stakeholder Pension Plan and Group Personal Pension Plan 2000 funds is provided gross. Your charge and therefore your fund performance may be different from this.

The benchmark/sector performance is gross (with no fees/charges deducted).

The benchmarks/sectors have been provided by L&G in conjunction with independent investment advisers Dean Wetton Advisory. Performance data source: Lipper.

Please bear in mind that past performance is not a guide to future returns. The value of an investment and any income taken from it is not guaranteed and may go up and down. Investors could get back less than they invest.

Implicit transaction costs have been calculated as the difference between the price at which a deal was struck and the price of the instrument at previous market close. This is consistent with the implicit cost calculation methods allowable prior to 2018 under PRIIPS guidance, which allows firms to assume there is no intra-day data available. Indirect transaction costs have been calculated assuming a static fund structure as at 30th September 2018.

Independent Governa

nce

Co

mm

ittee

the legal & general independent governance committee (igc) · welcome to your annual update...

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