INVESTING TO – AND
THROUGH – RETIREMENT
None of us has a crystal ball, but several years before your planned retirement date you should be considering how and when you might want to take your pension. That will help you to choose the right type of investment strategy which can make a big difference to your retirement income.
Full Withdrawal
If you are thinking of withdrawing your entire fund at retirement, you might consider moving your pension investments gradually into a cash fund (also known as ‘Sterling Liquidity’ or ‘Money Market’ funds) in the years leading up to your planned retirement date. This may protect your pension fund from market volatility prior to retirement.*
Flexi-access Drawdown
If you plan to keep your pension fund invested after you retire and draw an income from it, there is less of a requirement to protect your fund from market volatility before retirement. You might choose to switch some money into a cash fund for any tax free cash you are planning to take, but leave the remainder in a mix of growth and stability focused assets (including equities) to provide you with the income you are planning to take when you retire.
Annuity Purchase
If you are thinking of buying an annuity at retirement, you might want to shift the balance of your investments towards lower risk assets such as bonds (also known as ‘gilts’ or ‘fixed interest’) and cash prior to retirement. This may protect your pension fund from market volatility prior to retirement and can help preserve its annuity purchasing power.
* Please note that by moving into Cash Funds you will not benefit from any stock market rises.