Vanguard launches VPPP.pdf (PDF - 47KB)

New pension plan underpinned by long-term performance of indexing

Melbourne, 26 November 2007 - Vanguard Investments Australia today announces the launch of the Vanguard® Personal Pension Plan, providing investors with the tax-efficiency and flexibility of an account based pension and the long-term benefits and low costs of an index investment approach.

All of the investment options in the Vanguard® Personal Pension Plan will follow an index investment strategy and are based on funds which have a strong performance history.

The Personal Pension Plan will enable investors to diversify their investments across a broad range of asset classes. The plan offers a choice of six asset sector investment options and four pre-mixed diversified options (For further information please visit the weblink: www.vanguard.com.au/personalpension). Investors can build their own individual portfolio using the sector funds or opt for a diversified option that matches their personal risk profile - be that conservative, balanced, growth or high growth - with the additional benefit that the asset allocation is monitored and rebalanced regularly to ensure it remains within the ranges that have been set.

The diversified options were developed by Vanguard's Chief Investment Officer, Eric Smith, with the aim of delivering long-term performance on a risk/return basis. In a single fund - the growth option for example - with one investment, investors get the diversification benefits of having their money invested across Australian and international shares, Australian and international property, international small companies and emerging markets along with domestic and international fixed interest.

Robin Bowerman, Head of Retail, Vanguard Investments, said: "The Vanguard Personal Pension Plan will provide a significant new capability to Vanguard's value proposition in the superannuation market. It offers people who invest today in the personal super plan the option to stay within the plan once they reach retirement and want to start a pension.

"Investors who want to draw down a pension and take advantage of the new superannuation regime's tax benefits can now do so while continuing to enjoy the longer-term benefits of an index investment approach and our leading track record in this area.

"Superannuation is a long-term investment which makes the indexing approach a great fit as an investment strategy. Most managers struggle to beat the index after fees over the long term so investors are better off focusing on capturing market returns and keeping costs low."

The plan gives investors access to an account based pension which provides a number of benefits, including; a regular income or lump sums until the account balance is paid out; investor choice as to how much is paid out and the frequency of payments; and no limits on how much the investor can receive as a pension each year.

This is all provided for by an investment fee that ranges from 0.29% to 0.37% and a tiered administration fee depending on the investment options chosen. So, for $100,000 invested into the growth option the annual cost to an investor would be 0.99%.

Vanguard's index funds have lower ongoing fees than most active funds investing in similar assets. Index funds also have lower portfolio turnover than traditional active funds, resulting in lower trading costs.

The Vanguard® Personal Pension Plan currently has no establishment fees, no contribution charges, no withdrawal fees, no switching fees (other than the usual buy/sell spreads) and does not pay sales commissions.