pension - target age

ClareFe73

Hi
I have a workplace pension and it's now worth around £400k. I pay the maximum contribution and AVCs in order to get the tax break thing with the employer contribution so quite a lot is being invested each month. I'm 51 and the default Target Retirement Age is usually 65. But in 2020 I changed the TRA to 55 being rather optimistic about early retirement (wishful thinking!). In late 2023 (a year after the Truss debacle) I changed it to 57. This is because I realised I'd been a bit optimistic and also that the lifestyle fund switches funds into less risky (with less return) investments the closer to retirement you get - ie I realised i was losing out on growth. One year earlier I was cautioned to not make this switch immediately as it might crystallise losses. I tried to talk to the pensions manager about when might be a good time to switch the TRA to 57 but they won't tell you what to do - they just provide information. I just don't really understand pensions so I am panicking a bit wondering if I've done it all wrong now. Especially as now I think I'd like the TRA to be even higher - 59 or 60 ideally. Would I be "crystallising losses" ? Later this year when I turn 52 more of my money will be diverted into the cash fund rather than consolidation fund. This will increase a bit each year. My instinct is to change the TRA before then. Looking at my pension statements my pension does seem to have gone up in the past 2 years ... but considering that around £16,000 a year (of mine and employer's money) is being invested it doesn't seem to have grown that much.
Anyway my question is - is it safe to raise the TRA to 59 or 60. Sorry if all this sounds rambling. I have read and re-read the statements and all the info and just don't understand a lot of it.

Marcon

ClareFe73 said:

Hi
I have a workplace pension and it's now worth around £400k. I pay the maximum contribution and AVCs in order to get the tax break thing with the employer contribution so quite a lot is being invested each month. I'm 51 and the default Target Retirement Age is usually 65. But in 2020 I changed the TRA to 55 being rather optimistic about early retirement (wishful thinking!). In late 2023 (a year after the Truss debacle) I changed it to 57. This is because I realised I'd been a bit optimistic and also that the lifestyle fund switches funds into less risky (with less return) investments the closer to retirement you get - ie I realised i was losing out on growth. One year earlier I was cautioned to not make this switch immediately as it might crystallise losses. I tried to talk to the pensions manager about when might be a good time to switch the TRA to 57 but they won't tell you what to do - they just provide information. I just don't really understand pensions so I am panicking a bit wondering if I've done it all wrong now. Especially as now I think I'd like the TRA to be even higher - 59 or 60 ideally. Would I be "crystallising losses" ? Later this year when I turn 52 more of my money will be diverted into the cash fund rather than consolidation fund. This will increase a bit each year. My instinct is to change the TRA before then. Looking at my pension statements my pension does seem to have gone up in the past 2 years ... but considering that around £16,000 a year (of mine and employer's money) is being invested it doesn't seem to have grown that much.
Anyway my question is - is it safe to raise the TRA to 59 or 60. Sorry if all this sounds rambling. I have read and re-read the statements and all the info and just don't understand a lot of it.

The pensions manager isn't allowed to give advice; they aren't being unhelpful, just staying within the law!

Without knowing what sort of funds your pension is invested in, it's difficult to answer your question. It sounds like a default lifestyle option of some description, but is that targeted at buying an annuity, or are you planning to opt for drawdown?

You have an asset worth £400K, so might now be a good time to take some proper financial advice on how to invest it to increase the chances of the outcome being what/when you hope?