Your basic contributions and pension account are invested automatically in one
(sometimes two) of three investment portfolios. These include:
A growth portfolio – comprised of about 75% equities, 25% bonds.
A balanced portfolio – comprised of about 50% equities, 50% bonds.
A conservative portfolio – comprised of about 25% equities, 75% bonds.
In which portfolio(s) your contributions and pension account are invested will
depend on your personal risk profile. Specifically, it will depend on three
key factors: your age, your income range and your marital status.
The charts below illustrate,
in very general terms, how these three variables are used to
determine where your required contributions are invested. The
first chart is for married members; the second is for unmarried
members.
These charts reflect
the following assumptions
Younger members have a longer time
horizon to invest and more time to make up any short-term
drop in their investments – so they can take on more risk.
Members nearing retirement have fewer
years left to save for retirement and less time to recoup
any losses – so a more conservative investment strategy makes
sense.
Members who earn more save more (because
pension contributions are based on income). As a result,
they are in a better position to withstand a short-term drop
in investments.
The pension assets
of married members need to be invested on a slightly more
conservative basis because two people may have to depend
on that pension in retirement.
This profile approach to investing is designed to help ensure
the balance between your investment returns and investment risks
reflects your financial needs.
If your personal profile changes
If your personal
profile changes, so might your Silver Thatch investment portfolio.
Each time you pass a key “threshold” – whether it be age, income range or marital
status – your basic pension account will be reallocated to the
appropriate portfolio(s). Your future basic contributions will
also be redirected.
A transfer from one portfolio to the next
will typically take place over a two-year period. One-third will
move when you first cross the threshold and one-third will move
on each of the next two anniversaries. This gradual transition
helps to avoid any large and unexpected changes in the market
value of your investments that could occur if all of your assets
were to be transferred during a period of market volatility.
The transfer of assets between portfolios
is designed to ensure that your investments continue to reflect
your individual circumstances. Here are some examples:
When a married member earning $50,000
turns 60, investments will start shifting from the balanced
portfolio to the conservative portfolio.
When a 30-year-old, married member
earning $38,000 gets a raise that pushes his/her income above
$40,000, investments will start shifting from the balanced
portfolio to the growth portfolio.
When a 26-year-old, unmarried member
earning $27,000 gets married, investments will start shifting
from the growth portfolio to the balanced portfolio.
