Pension investment choices
Understanding investment options and investment risk
Investing simply means that rather than putting it into a bank account, your money buys investments, like stocks and shares.
If you want to decide for yourself how your pension savings are invested, it’s important to know that investment risk and investment return tend to be linked. Usually the higher the potential investment return, the greater the investment risks.
And the greater the risk, the more likely the investment is to go up and down in value over a short space of time – this is called volatility.
If you want to learn more and get involved with how your money is invested, understanding investment risk is a great place to start. Here’s a video from Quietroom all about investment risk…
Investment options with The People’s Pension
Our investment profiles
Members of The People’s Pension have a choice of how we invest their pension savings.
We’ve got 3 simple profiles to pick from:
And members can change their investment profile through their Online Account.
About our investment profiles…
Trying to decide which investment option suits you best?
If you’re a member of The People’s Pension and you’re trying to decide which investment option will suit you best, it’s important to know that Investment risk and investment return tend to be linked.
Usually the higher the potential investment return, the greater the investment risks.
The greater the risk, the more likely the investment is to go up and down in value over a short space of time – this is called volatility.
Remember also, the past performance of investments doesn’t guarantee or act as a guide to future performance. If you don’t make a choice, we’ll automatically invest your money in our ‘balanced’ investment profile (we also call this our default investment profile).
Investment changes approaching retirement
Each of our investment profiles gradually and automatically moves pension savings into lower-risk investments as members get closer to retirement.
We call this a 15-year glidepath, because it normally begins 15 years before a member’s selected retirement age.
How the glidepath works
Our 15-year glidepath is designed to safeguard members’ pension savings as they approach retirement.
Each of our investment profiles gradually and automatically moves members’ money into lower-risk investments as they get closer to retirement. This means their savings are less likely to suffer a large fall in value just when they want to use them.
The glidepath should result in a more predictable return, but could also mean that the fund grows less.
The glidepath normally begins 15 years before a member’s selected retirement age (SRA). So, if someone plans to retire at 65, we’ll start switching their investments when they’re 50.
How we move pension savings on the glidepath
As a member approaches retirement, we move their pension savings from one fund to the other on the following basis:
|Global Investments Fund||Pre-Retirement Fund||Years from SRA||Global Investments Fund||Pre-Retirement Fund|
Your retirement age
Unless your employer has selected a retirement age for you, we’ll assume that you’ll take your pension savings at your State Pension age (SPA).
If your SPA includes a number of months, the retirement age we hold will be your birthday before your SPA. For example, if your SPA is 66 and 3 months, the retirement age we hold for you will be 66.
How to change your selected retirement age
You can review and change your selected retirement age (SRA) through your Online Account…
But it’s impotant you know that changing your SRA could affect where your pension savings are invested, by moving them back or forward on the glidepath and into higher or lower-risk investments
If you’re a member of The People’s Pension and you’re trying to decide which investment option will suit you best, it’s important to know that the glidepath only applies to our 3 investment profiles.
If you choose your investment funds yourself, your money won’t automatically move into lower-risk investments as you approach retirement. That means you’ll need to make sure you regularly review the funds you’ve selected (and your attitude to investment risk) as you near retirement.