Investment of Basic Contributions

• A growth portfolio – comprised of about 75% equities, 25% bonds
• A balanced portfolio – comprised of about 50% equities, 50% bonds
• A conservative portfolio – comprised of about 25% equities, 75% bonds

• Younger employees have a longer time horizon to invest and more time to make up any short-term drop in their investments – so they can tolerate more risk.
• Employees nearing retirement have fewer years left to save for retirement and less time to recoup any losses – so a more conservative investment strategy makes sense.
• Employees who earn more save more (because pension contributions are based on income). As a result, they are in a better position to withstand a short-term drop in investments.
• The pension assets of married employees need to be invested on a slightly more conservative basis because two people may have to depend on that pension in retirement.

This profile approach to investing is designed to help ensure the balance between investment return and investment risk reflects an employee’s individual financial needs.

Personal profile changes
A change in an employee’s personal profile may lead to an automatic change in his/her Silver Thatch investment portfolio. Each time an employee passes a key “threshold” (i.e., age, income range or marital status), his/her pension account may be reallocated to a different portfolio(s). Future basic contributions may also be redirected.

A transfer from one portfolio to the next will typically take place over a two-year period. One-third will move when the employee first crosses the threshold and one-third will move on each of the next two anniversaries. Moving the funds over a two-year period helps to avoid large and unexpected changes in the value of an employee’s investments.

The transfer of assets between portfolios is designed to ensure that an employee’s investments continue to reflect his/her individual circumstances.

Here are some examples: When a married employee earning US$50,000 turns 60, investments will start shifting from the balanced portfolio to the conservative portfolio. When a 30-year-old, married employee earning US$38,000 gets a raise that pushes his/her income above US$40,000, investments will start shifting from the balanced portfolio to the growth portfolio. When a 26-year-old, unmarried employee earning US$27,000 gets married, investments will start shifting from the growth portfolio to the balanced portfolio.