Most of the current crop of workplace pension schemes will put you by default into a ‘life styling’ fund. This has nothing to do with your lifestyle, even assuming your employer, let alone your pension provider, has any idea what that might be; the mind boggles. No, it means that, as you approach whatever random retirement age has been allotted to you, the amount held in shares is reduced, the amount in ‘safer’ investments like government gilts increased, eventually to everything. It’s based on the now-long-outdated assumption that on that magic day, you’ll cash in your chips and buy an annuity; which very few now do or would, despite rising interest rates, be advised to do; and the assumption that gilts won’t plummet in value, which we now know, thanks to Liz and Kwasi, not to be the case. My advice pretty much every time is to switch to a ‘normal’ managed fund and not to cash in those chips. Retirement these days is rarely ‘all or nothing’ so take advice on the best way to fund it. At whatever age you choose.
“Letter of authority: Why now is the right time for change”
This may sound like a non-issue from outside the world-of-financial-advice bubble. It is the bain, however, of the daily working lives of many of us, particularly of those paid by we advisers to do the dirty work of dealing with the many providers with whom we have to work.