Statement of Investment Principles

The Trustee's Statement of Investment Principles provides more information on the Trustee's investment responsibilities, including environmental, social and governance considerations.

About this Statement of Investment Principles

This is the Statement of Investment Principles (“SIP”) for the Defined Benefit (DB) section and Defined Contribution (DC) section of the Barclays Bank UK Retirement Fund (the “Fund”). The purpose of the SIP is to detail the policies that control how the Fund invests. It contains the investment principles that govern the strategic investment decisions in relation to the DB and DC arrangements of the Fund. The investment principles are set by the Trustee, and reflect the Trustee’s approach to investment objectives, governance, and risk, including responsible investment. This document covers the:

  • Trustee investment responsibilities.
  • Investment objectives of the Fund.
  • Investment strategy of the Fund, including the expected return on investments.
  • Investment risks involved and the Trustee's methods for managing these.
  • The Trustee's policy in relation to how it takes environmental, social and governance (ESG) factors into consideration and the stewardship of investments.
  • Other relevant investment policies including the Trustee's policy on the use of derivatives and employer related investments.

Please see Sections of the Fund for a table listing all the sections of the Fund. Members should check that they are a member of one of these sections before reading this SIP. Additional Voluntary Contributions (AVCs) and Special Company Contributions (SCCs) are regarded as DC retirement savings.

For members with DC savings, this document should be read in conjunction with other documents regarding the investment process of the DC sections; these can be found on the .

Where we have used defined terms, these are explained in the Glossary section.

Preparation of the SIP

This SIP has been agreed by the Directors of the Trustee of the Fund and is written in accordance with relevant UK legislation1.

The Trustee prepared this SIP after consultation with Barclays Bank PLC and having considered appropriate written advice as required by UK legislation2. The Trustee will also consult Barclays Bank PLC and again consider appropriate written advice before this Statement is revised. This SIP will be reviewed following any material changes to the investment strategy of the Fund and no less frequently than every three years. The investment managers responsible for managing the Fund's investments have been provided with a copy of this Statement.

From 1 October 2020 the Trustee will publish an implementation statement setting out how the investment policies set out in this SIP have been implemented and reasons for any changes to these policies.

Trustee Responsibilities

  • The Trustee's duty is to act in the members' best interests.
  • In accordance with relevant UK legislation3, the Trustee will set general investment policy for both the DB and DC sections of the Fund (and has discretion over the design of the DC investment options offered to members), but will delegate the responsibility for selection of specific investments to appointed investment managers, which may include an insurance company or companies. The Trustee has discretion to appoint or remove any individual investment manager from the Fund.
  • In particular, the detailed implementation, management and monitoring of investment policy is carried out by Oak Pension Asset Management Ltd (OPAM), which operates under a formal delegation from the Trustee, within parameters approved by the Trustee.
  • OPAM is responsible for ensuring that any investments made are satisfactory as required by relevant UK legislation4.

Responsible investment

Responsible investment is an approach that integrates long-term investment, environmental, social and governance (ESG) factors and effective stewardship into the investment processes and decision making, to better manage risk and generate sustainable returns.

The Trustee believes that there is compelling evidence that sustainable business practices lead to better risk-adjusted returns and outcomes in the long-term, and the Trustee therefore aims to fully incorporate assessment of these practices within its investment processes. The Trustee aims to be a leader amongst UK pension funds in responsible investment and maintain an awareness of global best practice.

The Trustee has adopted the following guiding principles for the implementation of its Responsible Investment policy:

  • The Trustee will integrate responsible investment and ESG factors, including climate change, throughout its investment processes, as doing so should lead to better investment decisions and ultimately lead to better risk-adjusted returns.
  • Effective stewardship is important to protect and enhance the value of investments and therefore the Trustee will proactively engage (and vote where applicable) with the entities and markets in which it invests.
  • Through its stewardship, the Trustee will promote appropriate disclosure on responsible investment issues, including climate change.
  • The Trustee will promote recognition of the benefits of responsible investment and its implementation within the investment industry and benchmark itself against global best practice.
  • Collaborative initiatives can be powerful in effecting positive change, therefore the Fund will be an active participant in select initiatives.
  • The Trustee will make appropriate disclosures on how it implements this policy to both members and wider stakeholders.

The UKRF has a stand-alone Responsible Investment policy which describes the Trustee's approach to ESG factors and related matters. The policy is framed within the Trustee's regulatory and fiduciary obligations, as well as its commitments as a signatory to the Principles for Responsible Investment (PRI) and UK Stewardship Code. The Trustee considers non-financial matters, including views and matters that are proactively raised by members as part of its overall decision making and setting of investment strategy.

The Responsible Investment policy applies to all investments, although the expectations are tailored according to the different asset classes and the investment style of the investment manager in question.

The Trustee provides an environmentally responsible investment option that members can choose as part of the self-select fund range, and has integrated ESG factors into the default investment strategies of the Fund’s DC section: the UKRF Lifestyle Fund(s). The Trustee will continue to monitor and review its approach in this area, for example, through the provision of other suitable DC self-select options and investments in climate solutions.

Ownership – Engagement and Voting policy

The Trustee will proactively engage (and vote where applicable) with the entities and markets in which it invests and is willing to act collectively where appropriate. The Trustee has appointed Hermes Equity Ownership Services Limited (EOS at Federated Hermes) as a dedicated specialist engagement provider to maximise Trustee influence as an active owner. With the help of EOS at Federated Hermes, the Trustee will engage (and vote, where applicable) with the investee entities, regulators and markets in a more proactive basis.

As part of its ongoing process, EOS at Federated Hermes will vote at company general meetings in accordance with the voting policy adopted by the Trustee and as set out in EOS' published corporate governance principles.

The Trustee believes that proxy voting activity should not be conducted in isolation but rather as part of a wider engagement strategy. Rather than prescribing specific actions, EOS at Federated Hermes and the UKRF's external managers are afforded a measure of discretion and flexibility.

EOS at Federated Hermes will be identifying companies in which the UKRF is invested and will be conducting a programme of engagement where EOS at Federated Hermes considers it both desirable and feasible to influence change, working with other stakeholders as appropriate. Areas that may prompt EOS at Federated Hermes to identify engagement opportunities on behalf of the trustee include corporate governance and management of environment, social and strategy issues, including the companies' capital structure, with a view to improving long-term outcomes. EOS at Federated Hermes will be providing the Trustee with the opportunity to endorse or sign on to responses to consultations where practical.

The Trustee will regularly monitor the effectiveness of the EOS at Federated Hermes activities and, where appropriate, will consider how engagement could inform investment decisions. The Trustee monitors material stewardship activity, including where agents take different voting actions at the same company.

EOS at Federated Hermes have a stewardship conflicts of interest policy. As part of the suppliers review process, the Trustee will review the policy and consider whether it includes: an explanation of how they act in the best interests of clients; how conflicts of interest are identified; and the process followed when a conflict of interest is seen to exist.

Specifically in relation to Fund investments, the Trustee has a general policy of no direct self-investment in shares or bonds issued by Barclays Bank plc or associated companies.

The Trustee believes that collaborative initiatives can be powerful in effecting positive change and will be a direct participant in select initiatives.

The Trustee recognises that stewardship and active ownership principles apply across all the Fund's investments. In selecting investment managers, the managers' policy on and approach to stewardship is an important factor in the process, with expectations tailored according to the different asset classes and the investment style of the manager in question.

The Trustee expects its investment managers to adhere to the principles within the UK Stewardship Code. The Trustee encourages its investment managers to apply the principles of the Code to both UK and overseas holdings where possible. The primary mechanisms for the application of effective stewardship for these holdings are engagement with investee companies and the exercise of voting rights. The Trustee expects its external equity investment managers to pursue both these mechanisms while being mindful of context. Shares in listed companies are not held directly but through fund managers.

Asset manager policy

The terms of the long-term relationship between the Trustee and OPAM are set out in a separate Investment Advisory and Management Agreement (IAMA). This documents the Trustee's expectations of OPAM, alongside the Investment Guidelines OPAM are required to operate under.

The Investment Guidelines are based on a combination of the policies set out in this document (the SIP), the Trustee's Pension Risk Management Framework (the PRMF) and Responsible Investment policy. The Investment Guidelines are updated following any changes to one of these documents, ensuring OPAM always invest in line with the Trustee's policies.

When relevant, the Trustee requires OPAM to invest with a medium to long-term time horizon, and use any rights associated with the investment to drive better long-term outcomes.

The Trustee requires OPAM to appoint its investment managers with an expectation of a long-term partnership, which encourages active ownership of the Fund's assets. When assessing a manager's performance, the focus is on longer-term outcomes, and the Trustee would not expect to terminate a manager's appointment based purely on short-term performance. However, a manager's appointment could be terminated within a shorter timeframe due to other factors such as a significant change in business structure or the investment team.

Managers are paid an ad valorem fee, in line with normal market practice, for a given scope of services which includes consideration of long-term factors and engagement.

The Trustee's policy towards monitoring non-financial performance is set out in the Responsible Investment policy.

For some asset classes, the Trustee does not expect OPAM to make decisions based on long-term performance. These may include investments that provide risk reduction through diversification or through hedging, consistent with the Trustee's strategic asset allocation.

OPAM maintains oversight of third-party investment managers on behalf of the Trustee through the use of a proprietary monitoring and rating framework. At OPAM's discretion, if a third-party investment manager can no longer be expected to invest in line with the policies of the Trustee, OPAM will find a suitable replacement. Investment performance is assessed over a medium- to longer-term timeframe, subject to a minimum of three years.

The Trustee monitors the performance of OPAM by using relevant comparators and meeting on a regular basis to discuss and review the investment activity carried out on their behalf. It is the responsibility of the Trustee to satisfy itself that OPAM continues to carry out its work competently, provide value to the Trustee, and that it has appropriate knowledge and experience to manage the investments of the Fund.

The Trustee reviews the costs incurred in managing the Fund's assets annually. In addition, OPAM reviews the costs associated with portfolio turnover. In assessing the appropriateness of the portfolio turnover costs at an individual manager level, OPAM will have regard to the actual portfolio turnover and how this compares with the expected turnover range for that mandate.

Other Investment Policies

Use of derivatives

The Trustee may use a variety of derivatives in order to manage the investment portfolio of the Fund efficiently.

Employer Related Investments

The Trustee has a general policy of no direct employer related investments in Barclays Bank PLC or associated companies. However, the Trustee has accepted an indirect exposure to securities in Barclays Bank PLC through holdings in equity or bond index-tracking funds or through derivatives on equity or bond indices. Some indirect investment may also occur via independently managed pooled investment funds.

The Trustee adheres to the statutory limitation of 5% of total assets in such employer related investments. This limit includes assets held in independently managed pooled investment funds.

The Trustee reviews any such assets regularly and takes appropriate action where necessary.

October 2021

  1. Section 35 of the Pensions Act 1995 (as amended)
  2. Pensions Act 1995 (as amended)
  3. Financial Services and Markets Act 2000
  4. Pensions Act 1995 (as amended)
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Defined Benefit (DB) section

Please note that the following information relates to the DB section of the Fund.

Investment Objectives

The Trustee's primary objective is to meet the Fund's obligation to pay pensions as they fall due, with a high degree of certainty and at an economical cost, by building a low-risk, diversified portfolio of assets, derivatives and hedges by 30 September 2025 that will in aggregate provide a close cashflow match to the liabilities and therefore reduce reliance on the Bank to a practical minimum.

To ensure this primary objective of the Fund is met, the Trustee has agreed a more specific set of investment goals, which are used by the Trustee to manage the Fund on an ongoing basis.

Overarching Investment policy

The Trustee's policy is to seek to achieve its primary objective through investing in a diverse range of assets that are expected to deliver a sufficient investment return which, along with the sponsor's deficit repair contributions, should enable the Fund to meet its pension obligations. The range of asset classes that the Fund invests in, either through pooled investment funds or segregated arrangements, broadly includes the following:

  • Equity and other equity instruments
  • Bonds and other debt instruments
  • Private equity and infrastructure
  • Property and land
  • Insurance linked assets
  • Commodities
  • Hedge funds
  • Currencies
  • Cash

The Trustee will vary the Fund's allocation to different assets over time, with a view to reducing risk and volatility of assets relative to liabilities where possible, and with the aim of ensuring the Fund meets its primary objective of being able to pay pension obligations. To achieve this, the Fund will target more contractual sources of return from credit assets, and the Trustee will monitor the funding level of the Fund compared to its long-term funding targets and take appropriate action if this varies by more than a margin set over or under expectations.

Expected returns on investment

The Trustee has considered the investment return (net of fees) and risk that each asset class is expected to provide. The Fund invests in a range of assets which are broadly split between:

  • Those that are expected to deliver a higher level of return but have a higher level of risk relative to the benefits that are expected to be paid (often referred to as return-seeking assets); and
  • Those that are expected to deliver a lower level of return but whose value moves more closely in line with the benefits that are expected to be paid (often referred to as liability-matching assets).

The day-to-day selection of assets is delegated to OPAM, who is tasked with achieving a level of expected return (and risk) that is aligned with the Trustee's objective of achieving full funding on a low-risk basis by 30 September 2025.

Risk Management

In setting investment strategy the Trustee recognises that the Fund is exposed to a number of different risks which vary in their nature and magnitude. These risks include (but are not limited to) interest rate risk, inflation risk, currency risk, longevity risk, counterparty risk, credit risk, market risk, liquidity risk, covenant risk and manager risk. In general, the Trustee aims to manage these risks through the following actions:

  • Diversification of investments across a broad range of asset classes and investment managers;
  • Hedging of certain types of risks (e.g. interest rate risk, inflation risk and longevity risk) through holding hedging assets and the use of derivatives;
  • Appropriate monitoring of the Fund's assets relative to the liabilities that need to be met;
  • Appropriate internal investment controls and processes used by OPAM and the investment managers; and
  • Regular monitoring of the strength of the sponsor covenant provided by Barclays Bank PLC.

The Trustee aims to control the level of investment risk through setting limits for common quantitative risk measures such as Value-at-Risk and Funding Ratio-at-Risk. The other specific risk goals set by the Trustee are:

  • The Trustee aims to achieve a funding level hedge on a suitable low-risk basis of the Fund's interest rate and inflation risks. The Trustee also aims to ensure that at least 85% of the Fund's assets are sterling denominated after allowing for currency hedging.
  • The Trustee will ensure that the Fund invests in a diversified global portfolio of high quality credit and contractual cashflow assets that yield an acceptable premium over gilts.
  • The Trustee considers longevity risk (i.e. members living longer than anticipated) as material and, where appropriate, will make use of longevity hedging options to mitigate this risk. The Trustee will also incorporate an allowance for longevity risk in its regular risk reporting.
  • The Trustee will maintain an appropriate amount of liquidity to cover all projected outflows.
  • Climate change is considered a material financial risk for the Fund which could impact the Fund’s investments. In the interests of members and to ensure alignment with the goals of the Paris Agreement, across the portfolio the Trustee aims to halve levels of greenhouse gas emissions by 2030 and to be net zero carbon by 2050 or sooner. The Trustee will continue to develop climate change risk management goals in support of its ambition, and to integrate and manage the consideration of these issues within the Fund. This work will be supported by the Institutional Investor Group on Climate Change (IIGCC) Net Zero Framework, and will incorporate the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
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Defined Contribution (DC) section

Please note that the following information relates to the DC section of the Fund.

Investment Objectives

The Trustee's primary objective is to make available at a reasonable cost a number of investment options that provide members with access to a range of different asset classes that differ in their level of investment risk and liquidity.

Overarching Investment policy

The Trustee's policy when setting or reviewing DC investment strategy is to consider how suitable the proposed investments are for members of the Fund and the need for the diversification of investments. The Fund provides a number of investment fund options through different investment managers. Pooled investment funds may be used to gain access to different asset classes.

To meet members' needs, the Trustee has decided to make available to members two Lifestyle Funds which are the default investment strategies for the Fund:

  • The UKRF Lifestyle Fund; and
  • The UKRF Lifestyle (Closed) Mature Fund.

The investment objective of the Lifestyle Funds is to generate capital growth over the long term and provide increasing levels of capital and retirement income protection as a member approaches their target retirement date. Investments in the Lifestyle Funds are made primarily through exposure to the Diversified Growth Fund and index-tracking funds. This approach means the Lifestyle Funds have a low turnover of investments, and also means they are widely diversified.

These Lifestyle Funds together with a number of additional investment options offered to members help mitigate the investment risks that members face. A full list of the range of funds offered is included in DC Section UKRF Investment Options, and more detail on the Lifestyle Funds can be found in DC Default Investment Strategy. The Trustee will review the range of options available to members at appropriate intervals.

Members may also have investments in legacy with-profit AVC policies. These are invested outside of the Fund and therefore the Trustee does not set the investment strategy for the funds provided through these AVC policies. Further details on these policies can be found in With-profit AVC policies.

Expected returns on investment

The UKRF Lifestyle Fund is made up of a range of funds including the Diversified Growth Fund. The Diversified Growth Fund manager allocates to a range of asset classes, including derivatives, with the investment objective of outperforming short-term cash (i.e. deposit) rates by 4.5% pa over the long term, albeit realised returns are market-driven and could significantly differ from the objective. The Diversified Growth Fund is used in the growth phase of the Lifestyle Funds and progressively switches into assets with a lower expected return in the 10 years prior to retirement. The self-select options include return-seeking and liability-matching funds, allowing members to target an appropriate expected return for their requirements.

Risk Management

The Trustee recognises that members' DC retirement savings are dependent on the amount of money paid into their individual accounts and the performance (after charges) of the assets they invest in.

Additionally, the Trustee recognises that members face many different types of risks through their investment in the Fund. These risks include (but are not limited to) interest rate risk, inflation risk, currency risk, counterparty risk, credit risk, market risk, liquidity risk, and manager risk. As such, the assets offered within the Lifestyle Fund ranges and any additional investment options should be suitable for managing the risks members face.

The Trustee aims to manage these risks on behalf of members through the following actions:

  • Diversification of investments across asset classes by providing a broadly diversified default investment strategy and a range of other asset class funds for members to invest in;
  • Appropriate monitoring of the investment options offered through the Fund;
  • Structuring of the default investment strategy to reduce risk as a member gets closer to retirement age;
  • Ensuring members are aware of the risks inherent with investing their DC retirement savings;
  • Appropriate internal investment controls and processes used by OPAM and the investment managers;
  • The Trustee invests in funds that are typically daily dealt, investing in assets that are sufficiently liquid to allow them to be realised readily. Responsibility for buying and selling investments has been delegated to the investment managers; and
  • The Trustee will also continue to develop climate change risk management goals in support of its net zero ambition, and to integrate and manage the consideration of these issues within the DC section’s investments.

Member beliefs

The Trustee regularly reviews the Lifestyle Funds (the DC section’s default investment strategies) and in doing so considers the characteristics of the current membership with DC benefits. The characteristics considered include:

  • The value of DC retirement savings across the membership;
  • Whether members have other benefits in the Fund; and
  • How members are accessing their retirement savings.

The most recent review identified that there is a large number of members with small DC pots and that members are using a variety of methods to access their retirement savings. The review also noted that many members have other savings within the UKRF, for example defined benefit or cash balance savings. The design of the Lifestyle Funds has been based on the results of this review and aims to deliver a balanced outcome at retirement.

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DC Section UKRF Investment Options

A summary of the investment options offered to DC section members is shown in this section.

UKRF Fund Underlying fund name Invests in
UKRF UK Equity Index Fund Underlying fund name BlackRock UK Equity Invests in Shares of UK companies.
UKRF Global (ex-UK) Equity Index Fund Underlying fund name BlackRock Overseas Equity Invests in Shares of overseas companies listed in markets around the world.
UKRF Emerging Markets Equity Index Fund Underlying fund name BlackRock EM Equity Invests in Shares of companies based in the emerging economies around the world.
UKRF Sustainable Equity Fund Underlying fund name Jupiter Ecology Invests in Shares of companies around the world which demonstrate a positive commitment to the long term protection of the environment.
UKRF Diversified Growth Fund Underlying fund name UKRF Diversified Growth Invests in The UKRF Diversified Growth Fund can invest in a range of asset classes including equities, bonds and property. The fund has specific risk and return objectives and the fund manager decides how much is invested in each asset class to meet these goals.
UKRF Sterling Corporate Bond Fund Underlying fund name BlackRock Corporate Bonds Invests in Bonds issued in Sterling by large companies and other entities.
UKRF Over 15 Years UK Gilt Index Fund Underlying fund name BlackRock UK Gilts Invests in UK government fixed income bonds (gilts) that have a maturity period of 15 years or longer and which pay interest at a fixed rate.
UKRF Over 5 Years Index-Linked Gilt Index Fund Underlying fund name BlackRock IL Gilts Invests in UK government inflation-linked bonds (index-linked gilts) that have a maturity period of 5 years or longer and pay interest which is linked to a specified measure of inflation.
UKRF Mixed (Gilts, Cash and Growth) Fund
(formerly called the UKRF Anchor Fund)
Invests in A mixture of assets:
  • UKRF Over 15 Years UK Gilt Index Fund (64%)
  • UKRF Cash Fund (21%)
  • UKRF Diversified Growth Fund (15%)
UKRF Cash Fund Underlying fund name BlackRock Cash Invests in Short-term money market instruments and overnight deposits.
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DC Default Investment Strategy

In cases where members did not indicate in which funds they wanted their contributions invested when joining the Fund, the default option was that the contributions were invested in one of the Lifestyle Funds (which comprises the UKRF Lifestyle Fund and the UKRF Lifestyle (Closed) Mature Fund), with a target of accessing their pension savings at age 60 (i.e. the target date or year of maturity of their Lifestyle Fund). Members should review to see where they are currently invested.

The Trustee regularly reviews the default investment strategy and in doing so considers the characteristics of the current membership. The characteristics considered include the likely value of DC retirement savings across the membership, whether members have other benefits in the Fund and how members are accessing their retirement savings. The most recent review identified that there are a large number of members with small DC pots and that members are using a variety of methods to access their retirement savings. The review also noted that many members have other savings within the UKRF, for example DB or cash balance savings. The design of the default option has been based on the results of this review and aims to deliver a balanced outcome at retirement.

What is the objective of the default option?

The investment objective of both the UKRF Lifestyle Funds is to generate capital growth over the long term and provide increasing levels of capital and retirement income protection as a member approaches their target date. Investments in the Lifestyle Funds are made primarily through exposure to the Diversified Growth Fund (more information regarding which is further detailed below), index-tracking funds or derivatives. This approach means the Lifestyle Funds have a low turnover of investments, and also means they are widely diversified.

How does the asset allocation change as a member approaches their target retirement date?

The UKRF Lifestyle Funds use a series of funds during the ten-year period before each member’s target retirement date which are designed to phase investments towards how members are expected to access their DC retirement savings. The Trustee has determined the investment strategies for both the UKRF Lifestyle Fund and the UKRF Lifestyle (Closed) Mature Fund and sets how the amounts invested in each vary over time.

The table below outlines the various stages of the UKRF Lifestyle Funds as a member approaches their target retirement date.

Name of Fund For what period is this Fund used? What assets are in the Fund? What is the aim of the Fund?
UKRF Lifestyle (year of maturity) Fund
e.g. UKRF Lifestyle 2040 Fund
More than 10 years from target date
Within 10 years leading up to target date
For what period is this Fund used? What assets are in the Fund?
More than 10 years from target date UKRF Diversified Growth fund which contains a diversified mixture of assets
Within 10 years leading up to target date Gilts and cash are steadily introduced as members approach their target retirement date
What is the aim of the Fund? Over the long term this fund offers the potential for growth in excess of inflation while preparing members' savings to broadly align with the wide range of retirement options that are available
UKRF Lifestyle (Closed) Mature Fund For what period is this Fund used? After reaching target date What assets are in the Fund? 45% UKRF Diversified Growth fund, 30% UKRF Over 15 Years UK Gilt Index fund, 25% UKRF Cash fund What is the aim of the Fund? To be broadly aligned to the wide range of retirement options available to members

The diagram below shows how the assets of the UKRF Lifestyle Fund changes as a member approaches their target retirement date:

Further details on the investment strategy of the UKRF Lifestyle Funds are included in Your Defined Contribution Investment Guide.

The table below outlines the various stages of the UKRF Lifestyle (Closed) Mature Fund which is a legacy default option still used by a number of members following an investment change introduced in February 2017.

Name of Fund For what period is this Fund used? What assets are in the Fund? What is the aim of the Fund?
UKRF Lifestyle (Closed) (year of maturity) Fund*
e.g. UKRF Lifestyle (Closed) 2020 Fund
For what period is this Fund used? Within 10 years leading up to target date What assets are in the Fund? Gilts and cash are steadily introduced as members approach their target retirement date What is the aim of the Fund? Over the long term this fund offers the potential for growth in excess of inflation while preparing your savings to broadly align with taking a 25% cash lump sum and buying an annuity
UKRF Lifestyle (Closed) Mature Fund For what period is this Fund used? After reaching target date What assets are in the Fund? 75% UKRF Over 15 Years UK Gilt Index fund, 25% UKRF Cash fund What is the aim of the Fund? To broadly align with taking a 25% cash lump sum and buying an annuity

*All target dated funds in the UKRF Lifestyle (Closed) Fund range have moved into the UKRF Lifestyle (Closed) Mature Fund.

The diagram below shows how the assets of the UKRF Lifestyle (Closed) Mature Fund changes as a member approaches their target retirement date:

Further details on the investment strategy of the UKRF Lifestyle (Closed) Mature Fund are included in Your Defined Contribution Investment Guide.

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With-profit AVC policies

Who are these assets invested with?

Some members of the Fund also have investments in three legacy with-profit AVC policies provided by Aviva (manager of 2 AVC policies) and Phoenix Life. These assets are not held within the Fund and therefore are not governed by the principles outlined in this document.

Are these policies still open?

Each AVC policy is now closed to new members and there are no further contributions being paid in respect of Fund members.

How are these assets invested?

Each AVC policy invests 100% in a with-profit fund, managed by each respective provider.

With-profit funds are pooled investment funds, which combine the assets of all investors to provide exposure to a range of asset classes.

Each fund is managed in line with its published Principles and Practices of Financial Management (PPFM) however the provider does have some discretion over how this is achieved.

How do with-profit funds work?

The value of a with-profit fund is not directly linked to the value of the underlying assets. Instead, returns over the period are smoothed by retaining some profits in periods of higher growth and paying out more during periods of lower growth. This is known as smoothing and is achieved through adding a combination of regular bonuses and final bonuses.

Regular bonuses are paid annually and represent the amount that the with-profit fund manager believes appropriate to be passed onto members. There is usually no guarantee that regular bonuses will be paid. Once paid however, they cannot be taken away providing the member keeps their investment in the policy until retirement or death.

Final bonuses (also known as terminal bonuses) may be added when benefits are paid. These are not guaranteed and will depend on a variety of factors including the fund performance over the period of investment, bonuses already paid, expenses etc.

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Glossary

Additional Voluntary Contributions (AVCs)
Additional Voluntary Contributions (AVCs) are contributions which members make to increase their retirement savings.
Annuity
An Annuity is an insurance policy which provides a fixed sum of money paid to someone each year, normally in the form of a pension, usually for the rest of his or her life. It may include annual increases and dependants' benefits on death. An annuity can be purchased from a provider on the open market.
Cash lump sum
The amount of money members take from their DC retirement savings when they retire. Under current tax rules members can take the first 25% tax free with the rest taxed at their marginal rate.
Counterparty risk
Counterparty risk is the likelihood or probability that one of the parties involved in a transaction might default on its contractual obligation.
Covenant risk
Covenant risk is the risk of the financial ability of the employer running a defined benefit Pension Scheme deteriorating now and in the future.
Credit risk
Credit risk is the risk of default on a debt. This risk usually becomes a concern when the borrower fails to make required payments.
Currency risk
Currency risk is the potential risk of loss from fluctuating foreign exchange rates when an investor has exposure to foreign currency or to foreign currency-denominated investments.
Defined Benefit
A defined benefit scheme is a type of pension scheme in which an employer/sponsor promises a specified schedule of pension payments during retirement that is predetermined by a formula based on the employee's earnings history, tenure of service and age, rather than depending directly on individual investment returns.
Defined Contribution
A defined contribution scheme, also known as a money purchase scheme, provides retirement savings from the fund built up from contributions paid and investment returns achieved. Contributions may be made by the employer and/or employee and include any contributions made via Salary Sacrifice.
Derivatives
A derivative is a financial instrument whose value is ‘derived’ from another underlying financial asset. These are typically contracts between two parties to exchange (or have the option to exchange) an underlying asset in future at a set price.
Diversification
Diversification is an investment management technique that reduces risk by mixing a wide variety of investments within a portfolio. The rationale behind this technique is that a portfolio constructed of different kinds of investments could, on average and over the long term, provide better returns and/or pose a lower risk than any one individual investment.
Employer related investment
Employer related investment or self-investment refers to holding assets in the sponsoring employer e.g. company shares or buildings used by the employer.
Fiduciary
The Trustee has appointed Oak Pension Asset Management (OPAM) to act in a fiduciary capacity with regards to investing the assets of the Fund. This means that OPAM has responsibility for managing the assets of the Fund on behalf of the Trustee with a view to achieving the Trustee's investment objectives.
Gilts
Bonds issued by the UK government. These can be ‘fixed interest’ or ‘index linked’ i.e. linked to inflation.
Hedge funds
A hedge fund is an investment fund that pools capital from qualified investors and then invests the capital in a variety of assets, often with complex portfolio-construction and risk management techniques.
Income drawdown
Income drawdown is an account or policy that lets members ‘draw’ their retirement savings as taxed payments over time. There are different types of income drawdown products available.

To access income drawdown members will need to transfer their DC retirement savings to an income drawdown provider as this option is not available within the Fund. Under this option members will also be entitled to draw the first 25% tax free under current tax rules.
Index tracking funds
An index tracking fund is designed to mirror the performance of an index, e.g. the FTSE 100. They aim to provide exposure to assets at a low cost.
Inflation risk
Inflation risk is the risk that the value of an asset will decline due to unfavourable changes in inflation rates.
Insurance linked assets
Insurance linked assets are assets whose value is impacted by insurance loss events.
Interest rate risk
Interest rate risk is the risk that the value of an asset will decline due to unfavourable changes in interest rates.
Lifestyle Fund
The UKRF Lifestyle Fund is the Fund's default option for members who have not actively chosen where to invest their DC retirement savings.

It invests in a UKRF Lifestyle Fund with a target date that is normally the year in which the member turns 60 – as it assumes this is when members intend to access their DC retirement savings. Members can however choose their own target date by selecting the UKRF Lifestyle Fund that aligns with the year they expect to access their savings.
Lifestyle (Closed) Fund
The UKRF Lifestyle (Closed) Fund is the UKRF's legacy default option for members who did not actively choose where to invest their DC retirement savings. These funds are now closed to new investors.

Only active members who are already invested in this fund prior to 18 January 2017 can continue to contribute to the fund, which now only comprises the UKRF Lifestyle (Closed) Mature Fund.
Liquidity risk
Liquidity risk is the risk of being unable to buy or sell a financial asset, security or commodity quickly enough in the market without adversely impacting the market price.
Longevity risk
Longevity risk is the risk for Pension Schemes that members life expectancy increases, resulting in higher liabilities than expected.
Market risk
Market risk is the risk that losses are experienced due to factors that affect the overall performance of the financial markets in which assets are invested.
Manager risk
Manager risk is the risk that investment managers do not invest capital as expected which can lead to adverse performance.
Oak Pension Asset Management Ltd (OPAM)
The Trustee has appointed Oak Pension Asset Management (OPAM) to act in a fiduciary capacity with regards to investing the assets of the Fund. This means that OPAM has responsibility for managing the assets of the UKRF on behalf of the Trustee with a view to achieving the Trustee's investment objectives.
Principles for Responsible Investment
The United Nations supported Principles for Responsible Investment involve 6 principles covering environmental, social and governance (ESG) issues and how these impact the investment decision process. The Trustee is a signatory to those principles.
Pooled investment funds
Funds from individual (UKRF and non-UKRF) members are combined together into pooled investment funds. These larger funds benefit from economies of scale, delivering access to wider range of assets at lower cost than if each individual investor invested separately.
Private equity
Private equity is equity that is not publicly listed or traded.
Segregated arrangements
Segregated arrangements are investments in which the UKRF capital is not pooled alongside other investors' assets. Instead the investment is established specifically for, and is funded solely by, UKRF assets.
Special Company Contributions
This includes any additional contributions that Barclays makes on members' behalf to increase members' retirement savings.
Target retirement date
The date on which a member wishes to access their retirement savings. This does not commit members to accessing their savings at this time. Members may be able to access them earlier or later than the selected target date.
Task Force on Climate-Related Financial Disclosures (TCFD)
The TCFD seeks to develop recommendations for voluntary climate-related financial disclosures that are consistent, comparable, reliable, clear, and efficient, and provide decision-useful information to lenders, insurers and investors.

The TCFD framework is the most widely-adopted way in which organisations are managing and reporting climate risk. For the Trustee, the process of following the TCFD recommendations provides a useful approach to assessing climate-related risks thereby enabling them to set a more resilient investment strategy.
Trustee
The Trustee of the Barclays Bank UK Retirement Fund (the UKRF). This is a trustee company – Barclays Pension Funds Trustees Limited. Its board is made up of Barclays-appointed, independent and member-nominated directors who are responsible for managing the Fund.
UK Stewardship Code
The UK Stewardship Code, to which the Trustee is a signatory, consists of investment principles and guidance for institutional investors.
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