Pension Assured Fund (PAF)

Assets in the Pension Assured Fund (PAF) are managed by Aviva.  The Fund was closed to new members from April 2003, and in June 2007 contributions to this fund were stopped altogether.

Key features

The £1 per unit guarantee 
The structure of the PAF means that units have a guaranteed value of £1 each on your guarantee date (age 55) or if you die before the guarantee date.

Members up to age 55
Any contributions you made to the PAF before the fund closed bought ‘basic’ units that cost £1 each.  At the end of each month, Aviva determines whether any investment return has been earned by the fund’s assets beyond what is considered to be needed to meet guarantees to members. If there has, this is allocated to you and other members in the PAF as ‘bonus’ units. Once bonus units have been allocated to your BRASS Personal Retirement Account they cannot be removed. Bonus units are also guaranteed to be worth £1 when you reach age 55 (or if you die before then). 

The fund is invested in a relatively low risk manner, with the majority of assets invested in bonds and deposits. Equities only account for a small proportion of the PAF’s total assets. Bonds are usually expected to be less risky than equities, and their long-term return is expected to be lower. This may affect investment returns, which might be expected over the longer-term to be lower than from a fund with a higher proportion in equities. The balance between bonds and other assets is controlled by Aviva.

The investment returns you gain in the PAF depends on how many basic and bonus units have been built up in the past and how many new bonus units have been distributed over the period you have invested. If you were a contributor into the PAF for many years, you are likely to have built up a large number of bonus units as well as your basic units and these units can receive further bonuses. This means that the return on the PAF will be different for each member.

Please remember that past performance is not a guide to future performance.

It is important to note that if you take your Railways Pension Scheme benefits, transfer benefits to another scheme or exit the PAF before age 55, you are not guaranteed to get £1 for each unit. The value of your savings will depend on the value of the underlying PAF assets at the time. If Aviva calculate that the value of assets at the month end is not enough to pay all members £1 for every unit, the value of units is reduced. This reduction is called a Market Depreciation Discount and could happen, for example, after there has been a fall in investment markets. Each month, Aviva determines whether there should be a MDD factor applied and calculates what this should be. The MDD takes into account the number of whole years you have left to reach age 55, and so the further you are from age 55 the higher the MDD. The MDD can be different for basic and bonus units.  Please note, if you choose to move your funds from the PAF this decision cannot be reversed.