The Aegon Workplace Default fund is our main default fund for Workplace ARC pension schemes. Even if your employer hasn’t chosen it as your scheme default, you’re free to select it if you feel it suits your needs.
It’s a type of lifestyle fund and forms part of our retirement target fund range.
Watch our short video below for more details.
The Aegon Workplace Default fund is designed for pension scheme members who are likely to stay invested at retirement and aims to keep your options open.
It adapts as you get closer to retirement, recognising that your priorities are likely to change.
There are two main stages
At this stage, the Aegon Workplace Default fund invests in a mix of assets designed to grow your pension. It invests mainly in equities (generally at least 65%) with the remainder in bonds (loans to governments or companies) and/or cash.
Equities (also known as company shares) generally have better long-term growth potential than bonds, but are also more likely to fall in value, and by larger amounts, especially over the short term. Holding a mix of assets means the fund isn’t reliant on the success of just one asset type. The fund takes this risk early so there is more time to recover from any market falls.
But remember, the value of an investment can fall as well as rise and isn't guaranteed. The final value of your pension pot when you come to take benefits may be less than has been paid in.
As you approach your retirement date your savings in the fund automatically adapts, recognising that your priorities are likely to change. The changes start on 1 January six years before your target retirement year.
The Aegon Workplace Default fund assumes you'll want to keep your savings invested and maybe take an income from your pension pot - this is called income drawdown.
How does it work?
In the final six years before your target retirement date, we automatically prepare your savings for when you take a retirement income. Stock markets can be unpredictable. If the value of your savings falls when you're near retirement this can have a big impact on your pension pot.
To help manage this risk, as retirement approaches, we gradually move your savings into assets generally considered to be less risky - the aim is to cushion you from the worst of the falls if markets drop just before you're due to retire, but there's no guarantee.
We also make sure your fund holds a mix of different assets so you aren’t reliant on the success, or otherwise, of just one asset type.
At the retirement stage, the aim is to allow your savings to continue to grow to support any income you're taking. If the income you take is higher than its growth, the value of your pension pot will fall and you could run out of money too soon.
If you choose to stay invested in retirement, you'll still be exposed to the ups and downs of the market, so your pension pot may fall in value.
Also, moving into lower risk investments can mean you miss out on growth if markets go up.
How does the fund change?
Here's how the fund changes in the years before you retire:
The risk levels shown are Aegon's and shouldn't be compared to other providers' risk ratings. We review our funds regularly and may change them if we believe it's in the best interests of investors. There‘s no guarantee that the fund objectives will be met.
Our net zero commitment
In 2019, we committed to net zero carbon emissions across all default funds (like the Aegon Workplace Default fund) by 2050 and to halving emissions by 2030.
The Aegon Workplace Default fund has approximately 75% invested in funds with a responsible and sustainable focus in the growth stage, and approximately 53% at the retirement target stage (as at 31 March 2023) and we expect this to increase as we progress towards our net zero goals.
You can find out more about our net zero commitment and how we're investing for a sustainable future at our responsible investing hub.
The choice is yours
The fund is designed to meet the needs of the 'average' workplace scheme member. You may prefer to choose a fund that is tailored more to your individual needs. If so, please review our other investment options.
Your choice of investment fund can have a big effect on your pension benefits. If you're in any doubt about which fund's right for you, you should speak to a financial adviser. If you don't already have one, you can find one at MoneyHelper.