How do Annuity Target funds and Lifestyle funds change as I near retirement?

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Annuity Target funds are designed for savers who don’t make active fund choices, and  know they want to buy an annuity when they retire. They’re also sometimes called Lifestyle funds.

 

These funds are a type of Retirement Target fund.

Annuity Target funds are designed for savers who don’t make active fund choices, and  know they want to buy an annuity when they retire. They’re also sometimes called Lifestyle funds.

These funds are a type of Retirement Target fund. Find out more.

How do they work?

In the final years before you’ve told us you want to retire, we automatically start to prepare your savings for when you buy an annuity in retirement.

 

We’ll gradually move your fund out of its growth stage investments, and into long gilts, with the aim of preserving the size of annuity you’ll be able to buy.

 

When you’re nearly at retirement, we’ll also move 25% into cash to cater for your tax-free cash entitlement.

Why do we use long gilts?

If the value of long gilts goes down, annuity rates tend to go up.

And if the value of long gilts goes up, annuity rates tend to go down.

So even if your fund value goes down just before you retire, you’ll be able to buy roughly the same size of pension – although this relationship isn’t perfect.

These funds are designed for savers who plan to buy an annuity on retirement. If you don’t want to buy an annuity, or don’t know how you’ll take a retirement income, these funds may not meet your needs.

 

You may also want to find out about our Flexible Target funds, designed for those want to keep their options open.

 

The value of investments may go down as well as up, you may get back less than you originally invested. We review these funds regularly and may change them if we believe it’s in the best interests of investors.

Speak to a financial adviser to find out more.

You have lots of choice about how you access your retirement savings. We’re here to help. Our website, Your Retirement Planner, has information and tools to help you understand your options when you get close to retirement.

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