Lifestyle profiles

BingyBoingy83

Putting this on to warn more than raise any questions. Mother was looking to retire and sort her pension pot which has been in a lifestyle profile. She left it on the default and at 65, my expectation was it was in low risk funds (cash, short term govies). Now we find that over 75% of her pot is invested in >15 year government bond funds. In what world is this low risk? Low credit risk but not risk of getting pummeled as we have seen. She’s lost over 20% in the last 8 weeks. I also can’t buy the link to annuities as the stats on people who are buying annuities now is dramatically different following pension freedoms. I’m gutted I didn’t warn her and appreciate this message is a “after the horse has bolted” but if you’re on a lifestyle profile, please don’t assume there’s no investment risk. Please check fund allocations ASAP. 

Albermarle

This problem crops up regularly on the forum. On the plus side gilts have performed well until the recent drops and annuity rates have gone up, so if she were to buy an annuity, she can probably get something similar to before.

dunstonh

95% of the time, gilts will perform in line with expectations.  We have gone through a 5% event.  Almost  30 years since the last one.

I also can’t buy the link to annuities as the stats on people who are buying annuities now is dramatically different following pension freedoms.

The pension freedoms change the rules on annuities as well drawdown.  Annuities were out of fashion due to low gilt yields.  Gilt yields are now higher and annuities are back in play again as a viable option.