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

RangeRat

My wife has just had notification of this, she’s 2 years away from her retirement age set at 65, though she doesn’t need to take it as she has other pensions etc. it’s likely she will move it on by a few years.

What I can’t find is what happens to the fund so close to retirement, it just says starting from 15 years before retirement it starts to reduce the risk, but I can’t find the detail.

I don’t want it to be one of these lifestyle types that moves it all into bonds and cash, people have been burned by those in recent years.

probably better to keep it in the old fund as she likely won’t benefit much from the new fund?

UncleTomCobley

I've seen one of these letters too.

 

 

On the face of it, changing the default pension investment option to one with higher charges (almost double) and that is underpinned by a fund with a higher risk/reward rating which was launched only last year based on "...a recent review with an independent investment adviser, we [L&G] found LAFs are a better choice for most members than the current default investment" does seem a little unsettling.

 

In particular, there is no mention in the letter about the higher risk profile (the underlying "Risk and reward profile classification" is increasing from 4 to 5 - though a reader would have to identify the relevant funds and dig out their fact sheets to spot this). I suspect, it's unlikely that anyone's change to their attitude to risk would naturally coincide with L&G changing its default pension investment option.

 

In a more detailed point, it seems that the bulk of the increase charges is primary relating to the use of "private market" assets. This document suggests 45% of the overall fund charge relates to these https://group.legalandgeneral.com/media/e3qblwjm/l-g-sets-lifetime-advantage-funds-as-new-default-strategy-for-contract-based-schemes.pdf) and this class accounts for less than 20% of the overall fund. Together, this suggests the fees for this class, at c.0.8%, are about 5 times that of the rest (>80%) of the fund : (80% x 0.15% + 20% x 0.8% = 0.28% ).

 

 

Here's the fact sheet of the fund that underlies the new investment approach https://fundcentres.landg.com/srp/documents-id/2fc8b27d-dbce-4141-8c3d-26cdbc8f2df8/Factsheet.pdf and a current one used in the default option https://fundcentres.landg.com/srp/lit/7qvkBd/Fact-Sheet_Multi-Asset-Fund-LG-PMC-Multi-Asset-Fund-3_31-07-2025.pdf.

 

All this on a workplace pension.