How do Flexible Target funds work?

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Flexible Target funds are a type of lifestyle fund also known as a retirement target fund.

Flexible Target funds are for those who want to keep their options open about when they retire and how they take their retirement income.

There are two main stages


When savers are still
some way from retirement

Retirement target

When savers are
approaching retirement

Growth stage

In this stage these funds invest in a mix of investments designed to grow your pension pot.

You can choose the fund that best meets your savings needs and attitude to risk. 

Retirement target stage

This stage happens in the final years before you've told us you want to retire. 

We recognise that your priorities are likely to change as retirement approaches, and automatically and progressively move your fund into investments that get you ready to target a retirement income.

How does it work?

In the final six years before you’ve told us you want to retire, your savings are automatically prepared for when you take a retirement income.

Like the weather, markets can be unpredictable. If your fund falls when you’re near retirement this can have a big impact on your pension savings.

We gradually move you into less risky investments as retirement approaches – so you won’t need to weather the full impact if markets get stormy.

We also make sure your fund holds a mix of different types of investment so you’re not reliant on the success, or otherwise, of just one type.

If you choose to cash in your benefits all at once, you can normally take 25% of your pension pot as tax-free cash. You’ll then pay income tax on the remainder. So when you're nearly at retirement, the fund will move 25% into cash.

An example

Here's an example of how the fund changes in the years before you retire:

Please note that this is just an example, some of our lifestyle funds have different starting risk levels and will move into risk reduction investments and cash at slightly different times.

This bar chart tracks the six years before your target retirement year and shows how the investments are changed.  We automatically gradually move you into investments generally considered to be less risky as you near your retirement date. 

The bar chart shows the asset allocation percentage on the y axis and the years to retirement on the x axis.   The legend shows the various strategies for growth, risk reduction and cash.

When you have 6 years until retirement, the fund is 100% invested in the growth strategy.

When you have 5 years until retirement, the fund moves to 80% growth strategy and 20% flexible target.

When you have 4 years until retirement, the fund moves to 60% growth strategy and 40% flexible target.

When you have 3 years until retirement, the fund moves to 40% growth strategy and 60% flexible target.

When you have 2 years until retirement, the fund moves to 25% growth strategy, 75% flexible target.

When you have 1 year until retirement, the fund moves to 15% growth strategy, 75% flexible target and introduces 10% cash.

As you reach retirement, the fund is 75% in flexible target and 25% cash.

The choice is yours

Flexible Target funds are designed for use by workplace pension schemes. If an employer selects one as their scheme's default fund, members who don't make their own fund selection will be automatically invested into it when they join their workplace pension scheme. This means they're invested from day one.

Your employer will have chosen it because they think it best meets the average needs of their workforce. However, it may not be the best fit for you. 

If you want more control over where your money is invested, you can select a fund that's more tailored to your 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 professional financial adviser. You can find a financial adviser at

Important information

The value of investments can fall as well as rise meaning the final value of your pension plan may be less than the amount invested. There's no guarantee that the fund objectives will be met.

All references to taxation are based on our understanding of current taxation law and practice in the UK and Ireland, which may change.

The risk levels shown here are Aegon's and shouldn't be compared to any other providers' risk ratings.

We review these funds regularly and may change them if we believe it’s in the best interests of investors.

You have lots of choice about how to 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.