Default pension investments
Default funds and strategies are intended to meet the needs of a wide range of pension investors – people of different ages, backgrounds and income levels. There is no guarantee that they will be suitable for your particular retirement goals.
A default investment gives you the reassurance of knowing that it has been selected by pension experts. In addition, it will be carefully monitored and may be changed if it is no longer considered to be right for the investment strategy.
Working towards retirement
Investing in the default means that during the early years of your working life, we invest your money in a way that has the potential for long-term growth. As you get closer to your retirement date, there might not be as much time to recover if equities fall in value. Your fund gradually changes what it holds to more income-focused investments. This is done by moving some of your money out of company shares and into bonds (which are loans to companies, local authorities and governments). As you approach retirement age date, the level of risk is designed for people who are ready to retire. These income-focused investments still carry risk. The level of that risk can be higher in volatile markets, during periods of unpredictable and sometimes sharp price and interest rate movements, which means that the value of your investments can fall in value dramatically during those periods.
Reviewing your pension
Whether you self-select your own funds or stay with your plan’s default investment, it’s a good idea to review your pension savings on a regular basis, to make sure they’re right for your retirement goals. Two important things to check are:
- How much you are saving - you might want to review your contributions and think about whether you’re saving enough. Our retirement savings guidelines help you to understand more about how much you should save each year so that you have enough money in retirement to maintain your lifestyle.
Learn more about how much you should save each year for retirement.
- Your retirement age - you should also check that the retirement age shown on your account fits with your plans. This is especially important with lifestyle strategies because the gradual changes to your investments are all based on how many years are left until your selected retirement age.
Check your retirement age.
Remember tools will only give an indication and cannot be relied upon.
