Legal & General Pension Funds

WYSPECIAL

Good morning,

started a part time job job a couple of years ago and joined the pension scheme. 

It must have had some default settings, or maybe I even set it up that way, but it has a retirement age of 65 and target to be taken as a lump sum.

Due to my age the funds now seem to be diverting from the original fund (PACE Growth Mixed Fund) with a proportion going into L&G Cash 3.

Obviously this is to de-risk in the run up to the retirement age but I thought this was only relevant if you were planning to buy an annuity?

I don’t have any specific plans for this money and I had already reached “my number” via DB with previous employers and state pension before I took this job. Given the circumstances would it better to keep it invested in equities etc rather than de-risk it into cash or is there something I am missing?

sheslookinhot

If you don’t need the money, it would be better, from a growth perspective to be in equities.

Brie

most schemes will allow you to change the de risk settings so you could start doing this at 65 if you don't anticipate wanting the money until you are 70.

Albermarle

Brie said:

most schemes will allow you to change the de risk settings so you could start doing this at 65 if you don't anticipate wanting the money until you are 70.

You do not change the 'de risk' settings as such, but just change the proposed retirement date until a later one ( max 75) .

Obviously this is to de-risk in the run up to the retirement age but I thought this was only relevant if you were planning to buy an annuity?
If someone was high in equities, then some derisking is normal approaching retirement, even if planning to go into drawdown.
However too much derisking would not be advisable, unless an annuity was planned.

Probably you would be best just to transfer to another investment fund within the pension that suited your requirements. You do not have to stay with this one.

Brie

Albermarle said:

Brie said:

most schemes will allow you to change the de risk settings so you could start doing this at 65 if you don't anticipate wanting the money until you are 70.

You do not change the 'de risk' settings as such, but just change the proposed retirement date until a later one ( max 75) . 

One of my DC pensions allowed me to change the de-risk settings by both date and length of period to de-risk. So a different target date to NRA and anything from 0 to 10 years.

Albermarle

Brie said:

Albermarle said:

Brie said:

most schemes will allow you to change the de risk settings so you could start doing this at 65 if you don't anticipate wanting the money until you are 70.

You do not change the 'de risk' settings as such, but just change the proposed retirement date until a later one ( max 75) . 

One of my DC pensions allowed me to change the de-risk settings by both date and length of period to de-risk. So a different target date to NRA and anything from 0 to 10 years.

OK, normally you just have the opportunity to change the retirement date, and then the fund recalculates the fund constituents.

gm0

It depends on the scheme and its age and it's current admin and IT.  If "derisking" (also known as lifestyling) is available it can be a simple -10%/year down to zero equities (annuity purchase approach) or something subtler (derisking for tfls and drawdown).  In some schemes it may well be true that all you can do is fiddle with NRA target. 

But in others you can pick a version of lifestyle or just opt out of it entirely and have the funds you choose in the proportions you chose and have them left alone until you want to change that yourself in the years ahead of retirement. No fiddling with NRA required.