Governed RetirementIncome Portfolios

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Pensions | Supporting a sustainable income

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Building up pension savings may take your clients a lifetime. So it’s important they think carefully about what they want to achieve when the time comes.

If they decide they want f lexible access to their pension savings, then our Governed Retirement Income Portfolios (or GRIPs for short) could help them fulfil this.

Our GRIPs have been designed with the aim of helping clients maintain a sustainable level of income throughout retirement, while taking a level of risk consistent with their own attitude to risk.

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What’s inside

06 Introducing GRIPs

07 A closer look at GRIPs

08 Resilient multi asset investment solution

09 GRIPs supporting a sustainable retirement income

10 Gripping reasons to invest

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A closer look at GRIPs

We want to try and get the best returns we can for your clients, in line with how they feel about risk. How much they invest in each asset class depends on how much (or how little) risk they’re comfortable with.

The diagram above shows that as you move from GRIP 1 to GRIP 5 the mix of assets changes from lower risk to higher risk.

There is also the option to replace the default equity fund – RLP Global Managed Fund – with an alternative equity fund or funds from a selection of fund managers available within our range.

There are five portfolios to choose from, each one is made up of a diversified mix of asset classes.

The benchmark asset allocations are shown. You can view the latest asset allocations at adviser.royallondon.com/pensions/investment

10.0% Equity5.0% Property5.0% Commodities2.5% Global High Yield Bonds2.5% UK High Yield Bonds20.0% Corporate Bonds20.0% Gilts20.0% Index Linked Gilts15.0% Absolute Return Strategies (incl cash)

20.0% Equity7.5% Property5.0% Commodities3.75% Global High Yield Bonds3.75% UK High Yield Bonds15.0% Corporate Bonds15.0% Gilts15.0% Index Linked Gilts15.0% Absolute Return Strategies (incl cash)

30.0% Equity7.5% Property5.0% Commodities6.25% Global High Yield Bonds6.25% UK High Yield Bonds10.0% Corporate Bonds10.0% Gilts10.0% Index Linked Gilts15.0% Absolute Return Strategies (incl cash)

40.0% Equity10.0% Property5.0% Commodities7.50% Global High Yield Bonds7.50% UK High Yield Bonds5.0% Corporate Bonds5.0% Gilts5.0% Index Linked Gilts15.0% Absolute Return Strategies (incl cash)

50.0% Equity10.0% Property5.0% Commodities8.75% Global High Yield Bonds8.75% UK High Yield Bonds2.5% Corporate Bonds2.5% Gilts2.5% Index Linked Gilts10.0% Absolute Return Strategies (incl cash)

RISKLower Higher

Governed RetirementIncome Portfolio 1

Governed RetirementIncome Portfolio 2

Governed RetirementIncome Portfolio 3

Governed RetirementIncome Portfolio 4

Governed RetirementIncome Portfolio 5

Introducing GRIPs

The GRIPs are a suite of five risk-targeted, multi-asset portfolios with dynamic asset allocation available for clients seeking a regular income from their pension savings. Each portfolio invests in a mix of equities, high yield bonds, corporate bonds, index linked gilts and property, managed by Royal London Asset Management.

Our GRIPs are designed to help clients achieve a sustainable income from their pension savings even during challenging market conditions. They aim to deliver growth above inflation to support regular income withdrawals, whilst taking a level of risk consistent with your client’s attitude to risk.

GRIPs are also designed to be resilient and cope with market shocks whilst also capturing

market upside. The GRIPs have delivered strong performance against recent challenging market conditions including the 2016 US Election, ongoing geo-political uncertainty, the delay to Brexit, the US/China trade war and the Global Pandemic - Covid-19.

As part of our Governed Range they benefit from regular reviews and automatic rebalancing. This governance is intended to ensure the GRIPs meet their objectives and comes at no extra charge.

GRIPs also benefit from our commitment to being a responsible investor, which means we ask our asset managers to consider environmental, social and governance (ESG) factors when investing your clients’ savings. We believe this can help manage risk, support informed investment decisions, and help to generate better long-term results.

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Our GRIPs have a track record in delivering an opportunity for sustainable income in challenging market conditions.

As at November 2020. These assumptions are representative of a typical income profile of a Royal London customer who has taken advice.

GRIPs supporting a sustainable retirement income

Income sustainability is one of our key performance metrics for GRIPs – it’s a measure of how likely it is that a client’s investments will meet their specific retirement needs. All of our GRIPs are designed to maximise sustainability across a range of income paths with regular monitoring carried out with a focus on a real income of 2.25%.

Risk metrics are monitored with a focus on real income as we believe this is more representative of a

customer’s true income schedule over an extended time frame as inflation increases the cost of day-to-day living.

The tables below show the most recent income sustainability for each portfolio for someone with

savings of £100,000 who is taking income over a 25-year term, such as age 65 to 90, and is paying a total charge of 1% pa. We believe a score of 85% or more indicates a highly sustainable income.

By using our Drawdown Governance Service, you can easily model a wide range of economic scenarios, helping you to paint a picture of how sustainable different income levels could be for your client.

You can find out more about our Drawdown Governance Service by visiting adviser.royallondon.com/dgs

Real Income to 90 (Income Drawdown) - Income Sustainability

GRIP 1 GRIP 2 GRIP 3 GRIP 4 GRIP 5

Actual 92.8% 94.0% 93.5% 92.0% 90.8%

Target Minimum 85% 85% 85% 85% 85%

Real Income to 75 (Annuity Purchase) - Income Sustainability

GRIP 1 GRIP 2 GRIP 3 GRIP 4 GRIP 5

Actual 89.7% 89.4% 89.1% 87.2% 86.5%

Target Minimum 85% 85% 85% 85% 85%

Resilient multi asset investment solution

GRIPs are designed to be resilient and cope with challenging market conditions. The graph below shows how GRIP 3 has performed over eight years of volatility.

Source: Lipper as at 29/08/2020. Past performance is not a guide to the future.

Income to Age

• Real income for 25 years (e.g. 65 to 90) • Nominal income for 25 years (e.g. 65 to 90)

Income for Life

• Real income then real annuity purchase at age 75 • Nominal income then nominal annuity

purchase at age 75

29/08/2012 29/08/2013 29/08/2014 29/08/2015 29/08/2016 29/08/2017 29/08/2018 29/08/2019 29/08/2020

Governed Retirement Income Portfolio 3ABI UK – Mixed Investment (20-60 Shares)

Chinese currency

devaluation

Chinese & US economic tension

Brexit

US Election

Market Correction -

Global sell-off

Ongoing Geo-politcal

uncertainty

US/ChinaTarriffs,

Brexit delay, Boris PM

Geopolitical risks increase

US taper tantrum

Covid-19 Global

Pandemic

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Governance

GRIPs come with ongoing governance, which takes the hassle out of monitoring asset allocation and with the aim that each GRIP will continue to meet it’s objective, at no extra cost.

Resilient

A diversified mix of assets has helped the GRIPs to be resilient even in challenging market conditions such as the 2016 US Election, ongoing geo-political uncertainty, the delay to Brexit, the US/China trade war and Covid-19 Global Pandemic.

Income sustainability

Our GRIPs aim to deliver a sustainable retirement income for your clients.

Performance

All GRIPs have outperformed benchmark since launch and have a proven track record for delivering on risk, returns and governance.

Successful track record

Five multi-asset portfolios with a proven track record for providing an investment solution that offers your clients a sustainable income in retirement.

Gripping reasons to invest

overnance

esilient

ncome sustainability

erformance

uccessful track record

If you’d like to find out more about how Royal London can support your business,

please speak to your consultant or visit adviser.royallondon.com/investment

Royal London 1 Thistle Street, Edinburgh EH2 1DG

royallondon.com

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The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number 117672. It provides life assurance and

pensions. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL. Royal London Marketing Limited is authorised and regulated by the Financial Conduct Authority and introduces Royal London’s customers to other insurance companies. The firm is on the Financial Services Register, registration number 302391. Registered in England and Wales number 4414137. Registered office: 55

Gracechurch Street, London, EC3V 0RL.

December 2020 BR5P10012/4