Pension Assured Fund
A quick summary
The Pension Assured Fund (PAF) is under the control of Aviva and was closed to new contributions from April 2003. In June 2007 contributions to this fund were stopped altogether. Any contributions you made to the PAF before the fund closure bought ‘basic’ units that cost £1 each. Once you reach age 55 (or if you die before this), Aviva guarantee that each unit will be worth £1.
The PAF currently invests in a mix of shares in the UK and overseas, fixed interest
investments and deposits. The balance between bonds and other investments is managed by Aviva and the underlying assets of the fund are managed by Legal & General and Aviva. At the end of each month Aviva determine whether any investment return has been earned by the fund’s assets beyond what they consider is needed to meet the guarantees to members, and if there has it 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).
If you direct the Trustee to move investments out of the PAF to another BRASS fund choice before age 55 you may receive less than £1 for each unit, depending on the value of the PAF assets at the time. Please note, if you choose to move your funds from the PAF and later change your mind this action cannot be reversed.
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 your next birthday if you are over 55) or if you die before the guarantee date.
The other BRASS fund choices do not give any guarantee and the value of units in these funds could fall as well as rise.
Bonus declarations by Aviva
Aviva determine whether the investments underlying the fund have made more of a return than is needed to meet guarantees. If so, this excess is distributed as bonus units which are declared as a percentage of basic units and may also include a percentage of existing bonus units held. The allocation of bonus units is affected by market conditions and so this affects your overall BRASS Personal Retirement Account no matter what age you are.
Members under age 55
It is important to understand that if you take your Railways Pension Scheme benefits, transfer benefits or switch funds before age 55, you are not guaranteed to get £1 for each unit and they may be worth less than the guaranteed value of £1 each.
The value of units is reduced if Aviva calculate that the value of the assets would not be enough to pay all members £1 for every unit. This reduction is called a Market Depreciation Discount and could happen, for instance, after there has been a setback in investment markets. See Quick Links - Market Depreciation Discount for more information. Each month Aviva determines whether there should be a Market Depreciation Discount factor applied and they calculate what this should be. However the closer you are to age 55, the lower the Market Depreciation Discount.
The investment returns you gain in the PAF depend on how many basic and bonus units have been built up in respect of you in the past and how many new bonus units have been distributed over the period you are considering. If you have been a contributor into the PAF for many years, you will have built up a large number of bonus units as well as your basic units and all these units can receive further bonuses in proportion. This means that the return on the PAF will be different for each member except in the unlikely event that you have exactly the same birthday and history of investing in PAF as another member.
Members over age 55
When you reach age 55 the value of units in the PAF are guaranteed at £1 each.
Any bonus units you have will be converted to basic units around your birthday each year. You will continue to get any bonus units that are allocated in proportion to these basic units. As bonus units are not allocated if the value of the PAF investments has fallen, the return achieved may be lower than from a deposit-based fund.
Remember that the actual return after each year's membership will reflect the fact that the last contribution has only recently been invested and that only the first contribution in that year will have been invested on your behalf for the full period. Please remember that past performance is not necessarily a guide to future performance.
The assets in PAF
The PAF currently invests in a mixture of types of assets such as shares in the UK and overseas (‘equities’), bonds (fixed interest investments) and deposits. The balance between bonds and other assets is controlled by Aviva. Aviva makes sure that an appropriate proportion of the PAF investments is held in bonds, to make sure that the £1 guarantee can be met.
Bonds are usually expected to be less risky than equities, and their expected long term return is lower. Equities now account for approximately half of the PAF’s total assets, but this can change at any time. This may affect future investment returns, which might be expected over the long term to be lower than from a fund with a higher proportion in equities and equity-like investments like the new Growth fund.
The 
Growth Fund units may fall as well as rise in value (as can any of the other BRASS funds) at any time and could produce returns lower than from the PAF, unlike the PAF units, which are guaranteed at £1 at age 55.
The proportion of the fund invested in each type of asset is not fixed and is altered to take account of the guarantees that the fund provides. If there is a setback in the stock market, the amount of fixed-interest investment is normally increased and no new bonus units will be created that month by Aviva. In certain extreme conditions, such as following a severe set-back, or if all members are close to their guarantee date, the whole of the fund could be in fixed-interest investments and deposits.