"insuring" your pension fund?

SallyG

http://www.moneymarketing.co.uk/channels/retirement-strategy/educational-pages/the-loss-and-risk-factors-of-pensions-advice/1037250.article


"Due to the fact that Catriona’s past experience has contributed to an increasingly cautious outlook, she might feel that “insuring” her pension fund is a sensible choice to make.
So, what does this mean? Well, for a relatively modest sum, Catriona could enter a multi-asset fund and “insure” the value against the possibility of it being worth less at retirement."

I'm confused. Have I missed something vital?

Is he talking about taking out insurance against the fund becoming worth less or is he saying that being in a multi-asset fund is of itself insurance against the fund becoming worth less?
He goes on to say:

"For example, a client in income drawdown could secure a future value using this method while drawing income or it could even be used in a phased drawdown scenario, where the client turns on an income stream at some point in the future."

How is it possible to secure/guarantee a future value?

Lokolo

Sounds like a load of rubbish to me.

Multi Asset is what it says in the tin, but I suppose it does give more diversification than just investing in equities, or just fixed income which I think is the jist of the article.

Catriona is 56 and has a pension fund of £200,000. She has regularly saved into a personal pension to achieve this fund value and was dismayed to find, a few years ago, that her fund predominantly invested in UK equities via a balanced managed fund had fallen in value by 25 per cent.

gadgetmind

I've insured my pension fund against falling satellites by shorting the low earth orbit index.

atush

gadgetmind wrote: »

I've insured my pension fund against falling satellites by shorting the low earth orbit index.

I shall now officially call you Fall Out Boy ;-)

gadgetmind

atush wrote: »

I shall now officially call you Fall Out Boy ;-)

I've been called worse. By my wife. Any my daughter. Often.

jamesd

I'm unsure what that product is. There's writing there about insuring against possibility of loss until retirement but a multi-asset fund doesn't do that and it's not something I'd consider to be any form of actual insurance.

It is possible to use covered warrants, options or structured products to provide a limit on losses, provided there's a willingness to pay the ongoing costs of buying the protection.

lvader

Maybe worth a look when stock markets look a bit toppy, not when they are already down 20-40%.