Work place pension performance poorly managed

Albermarle

Similar thread
Should I stay in a Lifestyle pension — MoneySavingExpert Forum

EthicsGradient

booneruk said:

Will_43 said:

El-Torro You are correct the fund was organized by my employer and the default of that fund is to do this as you approach retirement. 

My workplace use Aviva for my pension too. When I was first signed up I was sent lots of documentation about the default plan I was in, and told that I could change that and choose my own funds - which I did. Easy-peasy.

The default plan I was on was also "Lifestyling" (as it is known) where your investments get moved into bonds the closer you get to retirement. These plans were really designed for the pre-pensions freedoms world where everyone had to buy an annuity on retirement. 

Your point about "lifestyling" being designed for buying an annuity is important (and also made in the Guardian article mentioned in the OP: Pensions: why do those retiring face ‘massive’ losses despite FTSE highs? | Pensions | The Guardian ). If @Will_43 is intending to buy an annuity with their pot, then what's happened over the past couple of years doesn't look so bad; annuity rates are up by 30-45% over their low in Dec 2021. The Guardian shows an Aviva fund is down 24% over the year to March 2023, a Clerical Medical fund down by 39%, and a Scottish Equitable one 29%.

It would be a good idea for company plans to make clear that the "lifestyling" route is designed for taking an annuity, and that decisions need to take that into account. 

Albermarle

It would be a good idea for company plans to make clear that the "lifestyling" route is designed for taking an annuity, and that decisions need to take that into account.

I think the large majority now offer a range of lifestyle products. For taking an annuity; or drawdown over 30 years; or drawdown over a shorter period and taking cash. Probably the clients have been informed at some stage and totally ignored it/ did not understand it.

The ones aimed at taking an annuity used to be the default. So probably many are still in this even though they do not intend to get an annuity and these are the ones who have been hit badly.

My last workplace pension has recently changed the default lifestyle to one with a drawdown strategy. Probably a few years too late and a classic example of shutting the stable door after the horse has bolted,