• Spending time researching my investments gives me greater confidence that I’ll get back what I need

  • Managing your investments

    Once you've identified whether you're on track to receive the income you want in retirement you might want to adjust your investment choices to suit your personal goals.

     

     

  • Calculator-greyBefore you consider whether to change your investment fund choices it’s important to know where you currently stand. You can find out where you’re invested and how it’s performing using our free online services.


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  • How can you manage your investment risk as you approach your retirement? Take a look at Tina's example

    Tina manages her pension investment with the help of her financial adviser

    • Tina took out her pension plan at 30, with the intention to retire at 65.
    • As someone new to investments, Tina is nervous about seeing her pension go down in value (volatility risk) so she begins by limiting her exposure to high risk funds.
    • At 40, she has a review with her financial adviser and they decide that to make a reasonable living in retirement, and keep up with inflation (inflation risk), she’ll need to increase her pension’s exposure to risk.
    • They decided to invest some of her money in a high risk fund, which her adviser believed had the potential to grow strongly over the long-term, although it was likely to offer more risk compared to other funds.
    • As Tina nears her 60th birthday, she meets with her adviser and they discuss reducing her working hours, and using her pension to compensate lost income. They decide she should move into Income drawdown (taking a regular monthly income from her pension).
    • It’s important to Tina that her pension continues to grow to offset the impact that taking a regular income has on her pension’s value. She places most of her remaining pension into moderate and higher risk funds.
    • A few years later Tina’s health begins to deteriorate and she can no longer work. She has another meeting with her financial adviser and informs them that when she dies she wants to provide her husband with a guaranteed income.
    • They decide to gradually reduce the pension’s exposure to high risk funds with a view of her purchasing an annuity (a guaranteed income for life) from a specialist enhanced annuity provider.
    • Tina is now receiving the state pension, and an annuity will help her live in financial comfort for the rest of her life.

    How Tina did it

    Tina's age
    Investment concern
    High risk fund (% of money invested)
    Moderate risk fund (% of money invested)  Cautious risk fund (% of money invested)
    30 Cautious about seeing losses
    40 
    20
    40
    40
    Not having enough to retire on
    65 
    25 
    10
    60 
    Keep pension growing while taking an income (Income drawdown)
    30
    40
    30
    66 
    Reduce exposure to high risk funds
    20
    40
    40
    67 
    Reduce exposure to high risk funds
    15 
    20 
    65 
    68 
    Secure a guaranteed income for life to replace lost income

    10
    90


    The example above demonstrates the importance of regularly reviewing your pension, with the help of a financial adviser. Everyone’s personal circumstances are likely to be different and they will have an effect on your attitude to risk. This is a fictitious example to illustrate some typical scenarios and decisions that could be made during retirement. It doesn’t constitute advice and shouldn’t be relied on as such.


  • What's your attitude to risk?

    When you take out your pension you may decide that you are prepared to accept a bit more risk for potentially higher returns on your investment.

    However, as you approach your selected retirement date you may decide that you’re not prepared to see much fluctuation in the value of your pension, down or up, so you may wish to switch your investments into funds that pose lower risks to your investment. The opposite could be true if you’re short of where you want to be at retirement, and you might be prepared to increase the risk for potentially higher rewards.

  • What types of risk should I look out for?

    The chance of short-term fluctuations, both up and down, in the value of your pension savings as events in financial markets cause the value of investments to go down as well as up.

    While this can happen at any time, it’s likely to be most important when you are close to retirement (when you have less opportunity to make up any losses) or when planning changes to your funds.

    The risk that the value of an investment does not grow quickly enough to keep up with inflation and so the buying power of your money is eroded.

    This risk is likely to be important to you throughout the time you are invested.

    Your pension savings could be used to provide you with an income when you choose to take your pension benefits. The income you receive will depend on both the value of your pension savings and the cost of turning your savings into an income. This creates the risk that the value of your pension savings does not move in line with the cost of providing you with an income.

    Conversion risk is likely to be important to you when you are approaching retirement.

  • How funds are classified

    Whether you prefer to use risk-rated, ready-made portfolios, or like to select your own funds, you can choose from a wide range of funds with different investment styles and objectives to suit your needs.

    Funds typically fall in, or between the following four categories -

    • High risk (Rated 6-7 in the fund's key investor information document - KIID)
      High risk funds can fluctuate, down or up, significantly in value because the investments are focused on concentrated markets with little diversification. The potential rewards are higher than other funds for this reason.
    • Moderate risk (Rated 4-5) 
      Investment options in this category take risks to provide higher returns, so there is a risk that you may lose money, balanced by the prospect of greater gains. They mainly invest in equities, bonds with a higher risk of default and/or property. 
    • Cautious risk (Rated 2-3) 
      Investment options assessed as cautious risk tend to have a significant proportion of assets in bonds and gilts. These investment options may hold other stock market investments, but their risks are mitigated by spreading the investment between asset classes. The returns are expected to be lower than those of moderate to high risk. 
    • Minimal risk (Rated 1) 
      Investment options classed as minimal risk would not invest in equities or property and would typically be limited to bank and building society type investments.

      We offer a range of well governed funds to help you achieve your investment goals.

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    Getting advice

    It's important to discuss your investment options with a financial adviser. They'll be able to confirm whether it's  the right thing to do for your personal circumstances. If you don't have a financial adviser we've listed reasons why you might benefit from using one and how to find one local to you.

    Getting financial advice
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    How might a strategy change affect me?

    Find out how the risk you're prepared to take can impact on your pension income in retirement.

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    Want to switch investments?

    Switching between funds is usually free and you can call or email us with your new investment instructions.