If you die whilst a member of the RMDCP, the Trustees must decide who should receive the benefits due.
Many asset classes struggled throughout the year to 31 March 2023. Economies around the world have been heavily impacted by rising inflation and the policies implemented by central banks intent on taming it. Inflation has also been impacted throughout the period by the ongoing effect of Covid-19 and Russia’s invasion of Ukraine causing supply shortages and the global energy crises.
Equities - Poor performance in overseas developed equities (everything but Emerging and Frontier markets) was driven in a large part by the poor performance of the technology sector, which makes up a significant portion of the market in the US, on the back of rising interest rates. In contrast, UK equities posted small positive returns as UK markets generally benefited from having a relatively high reliance on sectors such as energy and banks, which typically outperform in high inflationary environments, and having less reliance on sectors such as technology. Emerging market equities have struggled due mainly to China’s zero Covid-19 policy earlier in 2022. Due to this the underlying fund in the RMDCP Diversified Assets fund was changed in April and May 2023. All of the other equities funds have seen differing returns, but the Trustees are happy that they remain fit for purpose.
Bonds - Performance is strongly influenced by interest rates, which rose sharply as central banks increased them in an effort to combat inflation. The RMDCP Diversified Bonds fund has underperformed its benchmark but this was broadly in line with the market over the year, so the Trustees remain comfortable with this fund.
The Trustees and their investment advisers have been monitoring the performance of the Diversified Assets fund, which is one of the building blocks of the investment strategy which most of you are invested in (the ‘Default Lifecyle’). The Trustees decided that there was more opportunity for growth by investing with different managers, so they have selected the Legal and General Investment Management (LGIM) Diversified Fund (which, like the BlackRock fund, is passively managed) and the Ruffer DC Absolute Return Fund (which is actively managed), and transitioned to these managers in two tranches, in April and May. The changes – and the introduction of active management in particular – does increase the charge for the Diversified Assets fund (from 0.51% a year to 0.81% a year), but the Trustees expect this to have a greater chance of improving investment returns for this part of the strategy (even allowing for higher charges). If you would like more information on the LGIM fund, you can find it here.
More information on the Diversified Assets fund, and all other funds that are available to you as a member of the RMDCP, is available at scottishwidows.co.uk/save/royalmaildcplan/.
We compare the performance of the RMDCP’s default fund (Lifecycle) against the default funds of Master Trusts. The latest figures (spanning the five years ended 31 March 2023) indicate that the RMDCP’s performance is in the top third for return for risk taken.
The Trustees ask Investment Managers – especially those with an ‘active’ mandate – to attend Board meetings in person.