How our three investment profiles change as retirement approaches
Choosing how to invest pension savings can be challenging. To help simplify the process, we offer three investment profiles that automatically and gradually reduce risk as retirement approaches.
Three profiles that simplify investing
How our profiles reduce risk 15 years from retirement’
Each of our three investment profiles – ‘balanced’, ‘adventurous’ and ‘cautious’ – initially invest in funds predominantly made up of shares when members are far from retirement. Shares – also known as ‘equities’ – are considered higher-risk investments, as they can move up and down rapidly over the short term, but based on past performance, they are the best way to grow savings over the long term.
When members are 15 years from retirement, our investment profiles automatically and gradually start switching to a lower-risk fund that predominately invests in bonds (loans to governments and companies) and money market assets. This move is designed to protect the value of savings as members get closer to taking their money.
All three profiles automatically start switching where savings are invested 15 years before a member’s selected retirement age (SRA). So, for a planned retirement age of 65, investment switching would begin at age 50.
What happens to investments as retirement gets closer
The table below shows how our profiles start switching savings into the lower-risk Pre-Retirement Fund as retirement approaches.
| Years from SRA | Global Investments Fund* | Pre-Retirement |
|---|---|---|
| -15 | 93.75% | 6.25% |
| -14 | 87.50% | 12.50% |
| -13 | 81.25% | 18.75% |
| -12 | 75% | 25% |
| -11 | 68.75% | 31.25% |
| -10 | 62.50% | 37.50% |
| -9 | 56.25% | 43.75% |
| -8 | 50% | 50% |
| -7 | 43.75% | 56.25% |
| -6 | 37.50% | 62.50% |
| -5 | 31.25% | 68.75% |
| -4 | 25% | 75% |
| -3 | 16.67% | 83.33% |
| -2 | 8.34% | 91.66% |
| -1 | 0.00% | 100% |
| 0 | 0.00% | 100% |
* Each profile initially invests in a different Global Investment Fund dependent on its aims and level of risk: ‘balanced’ profile = Global Investments (up to 85% shares) Fund, ‘cautious’ profile = Global Investments (up to 60% shares) Fund, ‘adventurous’ profile = Global Investments (up to 100% shares) Fund.
Choosing another investment option
members can choose their own funds, but they won’t automatically adjust as retirement approaches. This means fund selections and the level of risk considered appropriate should be reviewed regularly, especially as retirement draws closer.
Things to consider
- The ‘balanced’ profile is our core investment strategy – sometimes called the ‘default’. Savings are invested there if members don’t choose for themselves.
- Our investment profiles are designed to produce more predictable returns, but this may also mean that pension savings grow at a slower rate.
- We use a member’s State Pension age as their default retirement age, unless they choose a different one. Members can check their State Pension age at gov.uk. and also check and change their selected retirement date through their online account.
- Following changes to government rules on the minimum pension age, the earliest pension savings can be accessed is:
- From age 55 for anyone who joined the scheme on or before 3 November 2021
- From age 57 for anyone who joined the scheme on or after 4 November 2021
