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.
With this type of strategy, all the changes to your investments happen automatically – you don’t need to do anything. 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’s no guarantee that your plan’s default investment will be suitable for your particular retirement goals.
If your plan has this type of investment as its default, the strategy may also be available as a self-select option.
