How do I make an Investment Choice?

You carry the risk that the investment returns earned on your retirement saving contributions will be sufficient to provide you with a reasonable income at retirement.

Members have different needs and requirements when it comes to investments and the risks they can accommodate. Each portfolio has its own unique Risk Profile and you choose the portfolio that is more suitable for you and with a Risk Profile (need and expectation) that closely matches yours. 

What are the risks I need to be aware of?

It is crucial that you understand what risks you are taking on and how best you can manage these risks.

In this regard you are exposed to three main risks, namely:



Risk of insufficient contributions

This refers to the risk that the UCTRF contributions that you set aside monthly as your Accumulated Retirement Savings are simply too low in relation to your total remuneration (CoE). Remember that the total contribution is reduced by the Risk Premium and administration fee and only the balance is allocated to your Accumulated Retirement Savings.  Your DPA is between 50% and 100% of your CoE – the choice of what percentage to allocate as your DPA is your own.

Clearly, if you set your DPA at the lowest level of 50% of your CoE, this will have a material impact on your Accumulated Retirement Savings (versus a higher allocation of perhaps 80% or 100%).

The Board cannot do anything to manage this risk other than to warn you of the consequences of saving too little, and to encourage you to increase your DPA to the maximum possible.

As a general rule, the further you are from retirement, the more you are exposed to Inflation Risk.

As a general rule, the closer you are to your retirement age, the more you are exposed to Final Payment Risk.

How can I manage these risks? Find out more in the Investment Guide on the Member Guides page. 

Assessing your risk appetite

A key factor to consider when making your investment choice is your Risk Profile.

You need to understand that if you have a low appetite for risk you will probably need to contribute more for your retirement savings or you may end up with inadequate Retirement Benefits. For example, if your money earns 1% per year less because you have a low "appetite" for risk, your Retirement Benefit (taken over your working lifetime) can be some 20% lower. 



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