Closure of the PSPS Property – active Fund
The Trustee, having taken advice from the DC Section investment consultant (Hymans Robertson), has decided to close the PSPS Property — active Fund (‘Property Fund’). We have written (or emailed) all members who are currently invested in the Property Fund to inform them of the closure and explain what will happen to the funds they currently have invested in the Property Fund. We also provided answers to some of the most likely questions these members may have. You can see these questions and their respective answers below.
Why has the Trustee decided to close the Property Fund?
For some time, the M&G Pooled Property Fund (the underlying fund for the Property Fund) has been suspended. This has meant that members could not move money in or out of the Property Fund. In conjunction with this suspension of the Property Fund, Hymans Robertson, the DC Section investment consultant, downgraded their rating for this Fund and recommended that the Trustee close it, selling the units that members have built up in the Fund. Since the Property Fund was suspended, the Trustee has been considering what, if any, action it was appropriate to take in relation to the Fund. Following the advice from Hymans Robertson, the Trustee decided that now is the right time to close this Fund, and transfer members’ investments into an alternative fund — the PSPS Total Return Bond — active Fund.
Why transfer my funds to the PSPS Total Return Bond — active Fund?
The expected returns for the PSPS Total Return Bond — active Fund are similar to the expected returns for the Property Fund, but with less risk. It also has the same annual management charge of 0.35% per annum. You can see the latest Fund factsheet for the PSPS Total Return Bond — active Fund here.
When will this transfer take place?
The redemption is expected to take place around 9 February 2021.
Is now a good time to be exiting property?
Property market conditions have stabilised at the end of 2020 after a year that had seen a full national lockdown and the suspension of all daily-dealt property funds in the UK marketplace. A last-minute Brexit trade deal (at the time of writing) adds further stability and it is the view of our investment advisers that transferring members out of the Property Fund in early 2021 is appropriate. Of course, this situation will be monitored and reviewed in the lead-up to the actual transfer date.
If the Property Fund is currently suspended what is happening to any existing contributions I am paying?
Any contributions you have made that would have been invested in the Property Fund are currently invested in the PSPS Cash — active Fund. These contributions have benefited from the guarantee offered by the Company. This guarantee is that the return on these contributions will be the higher of those they have received by being invested in the PSPS Cash — active Fund and those they would have received had they been invested in the Property Fund. Once the switch is completed any further contributions will be invested in the PSPS Total Return Bond — active Fund.
Can I choose a different Fund to receive the monies from the Property Fund and any future contributions?
Yes, to choose a different Fund you need to complete a PSPS Property Fund — switch Form, which you will find here. You will need to ensure your completed Form is received by the Administration Team no later than midday on 28 January 2021, otherwise the transfer to the PSPS Total Return Bond — active Fund will happen automatically. If possible, please scan or photograph the Form and email it to PSPSDC.SC@prudential.co.uk.
Will there be a cost for transferring my funds from the Property Fund to the PSPS Total Return Bond — active Fund?
Yes, there will be a cost in selling units from the Property Fund and buying units in the PSPS Total Return Bond — active Fund. The actual costs incurred at the time of trading will not be known until after the transaction date. The Administration Team will be looking to effect the transfer on a ‘same day’ basis to ensure that your holdings remain invested during the switch.
Will the Trustee replace the Property Fund?
The Trustee is undertaking a complete review of the investment funds available to DC Section members. This review is likely to be completed later this year. Once this review is complete, we will confirm whether an alternative solution will be available to members who would previously have chosen the Property Fund.