L&G sent letters to change pension fund/scheme should I?

DRG10

Currently in L&G pmv multi-asset fund 3 L&G (pension pot from my previous company). Received letter they will swap unless I opt out to L&G pmc lifetime advantage fund 2040-45. After some reviewing I understand the new fund would invest more aggressively until c. 10 years before my due retirement date may 2043 (though that's age 65 and hmrc tells me 68), whilst my current one  continues to invest as is unless I change it. I have read all info provided, all docs from my pension online account even tried chat gpt to compare but still don't know what is best. My current FMC charge is 0.13% (though actual total charges if totted up monthly seem 0.38%). New fund states fmc 0.28%, also subject to performance fee. I am lost. The pot is not huge just 50k but my other pension pot is only 50k too. Anyone can advise please? 

Marcon

DRG10 said:

Currently in L&G pmv multi-asset fund 3 L&G (pension pot from my previous company). Received letter they will swap unless I opt out to L&G pmc lifetime advantage fund 2040-45. After some reviewing I understand the new fund would invest more aggressively until c. 10 years before my due retirement date may 2043 (though that's age 65 and hmrc tells me 68), whilst my current one  continues to invest as is unless I change it. I have read all info provided, all docs from my pension online account even tried chat gpt to compare but still don't know what is best. My current FMC charge is 0.13% (though actual total charges if totted up monthly seem 0.38%). New fund states fmc 0.28%, also subject to performance fee. I am lost. The pot is not huge just 50k but my other pension pot is only 50k too. Anyone can advise please? 

What are your objectives, and what's your attitude to risk?

DRS1

Does the letter give a reason for the swap?  Are they going to scrap the fund you currently have?

DRS1

Found this

l-g-sets-lifetime-advantage-funds-as-new-default-strategy-for-contract-based-schemes.pdf

Some things in there that may not be everyone's cup of tea.  Sustainable Focus, Climate Action, Affordable Housing and Renewable Infrastructure should have Torygraph readers foaming at the mouth.

Albermarle

After some reviewing I understand the new fund would invest more aggressively until c. 10 years before my due retirement date may 2043 (though that's age 65 and hmrc tells me 68), 

68 will be the age that you can claim your state pension, it is not a retirement age. There is nothing to stop you retiring at a much earlier or later age.
Similarly the age 65 mentioned by L&G does not mean you have to retire at that age, or take that pension at that age. It is just that they like to have a reference age in their system, especially for the new fund they are proposing which is geared around that age. Normally you can change that age in their system from anything from 55 to 75.

DRG10

Thank you for the responses. I wish I was more risk open but in reality I am not - I like balanced approach.The current fund is not closing, when I called and spoke to them they said I can stay in it - need to tell them I don't with to move otherwise move will be automatic. Reason given very vague in the letter: We regularly review the default investment with an independent investment adviser to make sure it remains suitable for most members. Following a recent review, we found the Lifetime Advantage Fund is a better choice for most members than the current default. Therefore, we have decided to change the default investment for your Scheme to the L&G Lifetime Advantage Fund. The new fund has been chosen because we believe it is more likely to provide investment growth for younger savers in the long term. It is also expected to better protect members’ savings as they approach retiremen

DRG10

I understand closer to retirement one needs to reduce risks to their pension investments - allegedly this new fund/plan will do that 5-10 years in advance. To be honest I am not sure I am apt to do that myself, unless it simply involves changing to one of their lower risk funds later on? How easy is to  reduce risk myself at later time? I have little knowledge but am willing to read up and learn but don't even know where to start. And despite comparing the two plans, I am no closer to being able to decide.

Albermarle

DRG10 said:

I understand closer to retirement one needs to reduce risks to their pension investments - allegedly this new fund/plan will do that 5-10 years in advance. To be honest I am not sure I am apt to do that myself, unless it simply involves changing to one of their lower risk funds later on? How easy is to  reduce risk myself at later time? I have little knowledge but am willing to read up and learn but don't even know where to start. And despite comparing the two plans, I am no closer to being able to decide.

You do not have to reduce the risk level as you get near retirement, although most people do.
The key factor is how you intend to withdraw from the pension.
If you want to buy an annuity when you retire ( = guaranteed income for life) then you do not want to see a sudden drop in your pension value close to that date. So some serious derisking, pretty much down to cash is advised.
If you want to leave the pension invested and drawdown regular amounts from it, then it is better to leave it invested as you may well be drawing down from it for 30 years or more. So in this case any derisking should be more limited, if at all. 
Your current fund is already medium risk at most , and it could be the best strategy is to not derisk it at all if you want to go down the drawdown route.

gm0

It's OK to not know a long way out whether you will do drawdown, annuity or a mixture.  And the rules can change.  Half the things that exist now didn't when I was in your shoes.  So don't sweat that stuff.

Your overall willingness to ride the rollercoaster.  While saving.  And what to do with any pots you already have is the key focus

Some people are open to saving at 100% equities - buy cheap in the dips - keep plugging away,.  Half the value can vanish (hopefully temporarily) in those same dips.  Others are not.  And are willing to take the "possible gains" hit for a more balanced approach.  Smaller swings.  Lower potential gains.  Lower volatility.

You need to do you - viewed across all your pots.

If automatic derisking with no further action on your part appeals  (to a known % target (which needs a view on drawdown or annuity focus) to judge it) then it's available.

If a fixed investment that stays where it is put until you come back and change it - appeals then you have your answer.

I chose fixed fund - no lifestyle back in the day - and was forced to make my uncomfortable derisking decisions later - closer to retirement

LHW99

If you tell them not to change your fund now, you would (I presume) always be able to ask them to move it in a few years time if you then feel that is what you want.

It sounds as if the lifetime advantage fund wouldn't make much change for quite a lot of years, so if you currently like what you're invested in, there is no harm in waiting and maybe do a bit more reading here / elsewhere to improve your confidence