Investment risk: The value of your pension is directly and inextricably linked to the performance of the S&P500 Index. When the S&P500 Index goes up, your pension value goes up; when S&P500 Index goes down, your pension value goes down. The future value of your pension plan at the end of your chosen duration will depend on the performance of the S&P500 Index over the duration you have selected. To mitigate this risk, a minimum future value is guaranteed to protect against a severe market crash near the end of your chosen duration, as long as you stick to the plan. This takes the form of a full capital guarantee for all pension plan options, as well as a guaranteed minimum return on the 15-year and 20-year options.


Company risk: Whilst unlikely and infrequent, sometimes financial institutions collapse which can put your assets held with that financial institution at risk. By law in the Cayman Islands, customer assets must be kept separate from both company assets and other customers’ assets, by using segregated portfolios. This ensures that your pension plan assets are entirely separate and safe in the event of the holding company (Investors Trust) becoming insolvent or stopping trading for any reason. In the unlikely event of the holding company becoming insolvent, your assets are safe, but you may not be able to continue with your pension plan as originally agreed with the company, and instead have the choice of either transferring your accumulated pension plan assets (your shares in the iShares S&P500 ETF) to another financial institution, or selling them and being paid the full current value by bank transfer to any account in your name. An event of this type would not result in you losing money, but it could affect your financial planning.


Counterparty risk: The capital guarantees which underpin the guaranteed minimum future values are provided by a consortium of several highly-rated international banks, and therefore if all of these banks were to collapse or become insolvent, the futures contracts with these banks may become partially or fully unenforceable, which could affect your future pension value if the value of the S&P Index at the end of your selected duration was lower than the guaranteed minimum future value. This risk is mitigated by using several banks instead of one, and the risk is regularly assessed by both the financial services regulator (CIMA) and a credit ratings agency. The credit rating of Investors Trust, which includes calculating counterparty risk, is A- (Excellent).


Not-sticking-to-the-plan risk: This pension plan is designed to be relied upon by Future You and is structured in a way to make sure you can rely on it for your future financial requirements, and this comes at the expense of some flexibility. For example, if you do not stick to the plan, you negate (lose) the right to a guaranteed minimum future value. It is not designed as an account which you can make random changes to throughout the term of the plan and should not be treated as such. If you use this pension plan for any other purpose than it was intended for, there is a risk that you will not receive the full benefits of it which may affect your financial situation later in life.