If you don't choose where to invest your pension, you'll automatically be invested in your scheme's default fund, where your pension contributions are managed for you, from the moment you join your scheme right up to retirement, designed for those who prefer a hands-off approach to saving for retirement.
If you decide the default option isn't right for you, perhaps because it takes more or less risk than you're comfortable with, or because it's targeting an outcome that doesn't suit you, there are other fund choices available to you. What you choose depends largely on how confident you are making investment decisions and your attitude to risk.
Please remember, the value of investments isn't guaranteed and may go down as well as up. You may get back less than you invest.
1. Do it for me
If you don't choose where to invest your pension, you'll automatically be invested in your scheme's default option, meaning that your pension contributions are invested and managed for you, from the moment you join your scheme right up to retirement.
2. Guide me
If you feel your default option isn't right for you, your employer may offer a shortlist of alternative funds to choose from.
3. Leave it with me
If you are a confident investor with the time and experience to build your own portfolio, or can take advice from an adviser, you can choose from the full range of funds available to your scheme.
If you don't choose where to invest your pension, you'll automatically be invested in your scheme's default fund.
The advantage of a default fund is that your pension contributions are invested and managed for you, from the moment you join your scheme right up to retirement. A default fund aims to grow your savings during the early stages of your career, automatically changing your investments throughout your working life, before gradually moving into investments that are considered lower risk as you approach retirement.
Default funds are ideal for those who prefer a hands-off approach to saving for retirement. However, they don’t take into account individual circumstances or specific retirement plans, so it’s important to ensure your investment strategy aligns with your financial goals as you may find you want to take your savings in a different way.
Your employer will have chosen a default option that targets one of three outcomes:
- Stay invested and draw an income (known as income drawdown)
- Buy an annuity (for those who want a guaranteed income)
- Cash, which assumes you’ll cash in your savings
Your employer will have set a target retirement age for you. This is the age your plan to access your retirement savings. It's important to check that you are happy with your target retirement age, as it may impact your investment strategy. It's also important to check you are happy with the outcome you are targeting, as you may decide you want to take your retirement savings in a different way.
You can find out more about the default fund for your scheme in your Member or Investment Options booklet, which you can view by logging into your account then selecting View and manage and looking under the Documents tab.
If you decide the default option isn't right for you, perhaps because it takes more or less risk than you're comfortable with, or because it's targeting an outcome that doesn't suit you, your employer may have selected a shortlist of alternative funds to choose from. You can check if your employer’s scheme has a core fund range in your Member or Investment Options booklet, which you can view by logging into your account then selecting View and manage and clicking on Documents.
If you are a confident investor with the time and experience to build your own portfolio, or can take advice from an adviser, you can choose from the full range of funds available to your scheme. You can change your investment choice at any time. Log-in to TargetPlan to see the range of funds available. To choose funds and switch out of your current funds, select View and manage followed by the Switch funds button under your plan value or at the bottom of the page.
Please remember, the value of an investment can fall as well as rise and isn't guaranteed. The value of your pension pot when you come to take benefits may be less than has been paid in. Before deciding to invest in a fund it's important to read the fund factsheet to find out more about where it invests, its objectives, charges and any fund-specific risks.
Responsible investments
At Aegon, we're committed to responsible investment and believe that the way we invest your savings can make a meaningful difference, both to your financial future and the world we live in. Investing in well-governed companies that monitor and manage their environmental and social impacts well, may help contribute to better long-term growth potential for your savings. By using our expertise and influence, we can help encourage positive change, helping to contribute to a fairer, more sustainable society for us all.
We offer a range of funds that consider environmental, social and governance (ESG) factors, so you can choose where your money is invested and invest in line with your beliefs.
Financial advice
If you feel you need help choosing, you may want to talk to a financial adviser, who can help design an investment strategy that is specific to your needs. There may be a charge for this.
If you don’t have an adviser already, you can find one at MoneyHelper.
