Investment choices

You have the flexibility to invest in a way that suits you. If your circumstances change, your investments can too.

Decide what's right for you

How to choose

Everybody’s different and your circumstances may well change over time, so there are no hard and fast rules for investing into a pension.

Put simply, the more risk you take the more your pension pot may grow – or fall – in value. You should expect investments to rise in value in the long term but they can also fall in value. 

To help you decide how to invest your pension savings, think about:

Number 1

When you want to retire

Number 2

How you feel about risk

Number 3

How you'd like to take your pension

1. When you want to retire

What does retirement mean for you?

What does retirement mean for you?

Our Retirement Account gives you flexibility to retire and start taking your pension in a way that suits you and your needs.

You normally get access to your pension savings when you're 55 years old (rising to 57 in 2028). But this doesn't mean you have to start taking your money then. You can wait and carry on working, full or part time, and leave some or all of your savings invested.

Things to think about

Things to think about

  • How you'll support yourself as you move out of work and into retirement.
  • What income you'll need.
  • Where it will come from.

We'll ask you for your selected retirement date if you apply.  Don't worry, if something in your life changes, you'll have the flexibility to adjust your Retirement Account to meet your needs.

2. How you feel about risk

An investment solution that suits you

An investment solution that suits you

When you open a Retirement Account online, we've taken away the hassle of choosing individual funds and have designed investment solutions called Governed Investment Strategies (GIS), which we manage for you.

A GIS automatically adjusts how we invest your pension over time, gradually moving into lower risk funds as you get closer to your selected retirement age.  This is known as a lifestyle strategy.

Our GIS solutions take into account:

  • your own personal risk appetite - whether you're a cautious, balanced or adventurous investor
  • how you've told us you expect to take your pension when you retire.

How much risk are you willing to take?

How much risk are you willing to take?

To help you understand your appetite for investment risk, try answering these questions:
  • The value of your plan can go down as well as up, in line with the stock market fluctuations.  Are you comfortable with this?  If not, should you consider other investments alongside your pension to help you achieve your goals in retirement?
  • What would happen if your pension pot dropped dramatically in value?
  • Are you comfortable with taking some risk to potentially increase growth, or would you rather minimise the risk as much as you can?

How much risk do you want to take?

Cautious

Cautious

You can expect your pension pot to have some ups and downs in value. While there’s potential for some growth, there’s also the potential for some losses.

You’re cautious with your investments and don’t feel comfortable taking much risk with your money.

At 15+ years from retirement - PP3

At 10 years from retirement - PP4

At 5 years from retirement - PP4

Balanced

Balanced

You can expect your pension pot to go up and down in value, but these may be sharper and more frequent than in the 'cautious' approach. While there is the potential for higher growth, potential losses are also slightly higher.

You’re a balanced investor and feel comfortable taking some risk with your money for, potentially, more reward.

At 15+ years from retirement - PP2

At 10 years from retirement - PP3

At 5 years from retirement - PP4

Adventurous

Adventurous

You can expect your pension pot to have a lot of sharp ups and downs in value. While there’s potential for high growth, there’s also the potential for significant losses.

You’re an adventurous investor and feel comfortable taking high risk with your money for, potentially, high rewards.

At 15+ years from retirement - PP1

At 10 years from retirement - PP2

At 5 years from retirement - PP3

With pension investments there are no guarantees, and there is a risk that the value of your pot could go down as well as up.  Depending on how the investment fund performs, you may get back less than you paid in.

  • Our Pension Portfolio Funds (PPF)

    These are the funds a GIS (Governed Investment Strategy) invests in. Different GIS use different proportions of these funds depending on their risk profile and how close you are to retirement.

     

    Our Pension Portfolios (PP)
    Fund PP1 PP2 PP3 PP4

    OO Total equities

    95.0% 82.0% 66.0% 35.0%

    OO Total Fixed Interest and Cash

    2.0% 14.5% 31.0% 62.0%

    OO Total Property (REITs)

    3.0% 3.5% 3.0% 3.0%

    Total

    100.0% 100.0% 100.0% 100.0%

    Source: Scottish Widows, as at 30th September 2023

  • How does a lifestyle strategy work?

    A lifestyle strategy is a type of investment that automatically adjusts how your pension is invested over time, gradually moving into lower risk funds as you get closer to your selected retirement age.

    Where your money is invested

    Your money will be typically invested in bondsLoans made to companies which pay an agreed rate of interest until a set date. and shares (known as 'equitiesWhere the growth depends on several factors including how well those companies perform.'). These are shares within the UK, emerging markets and developed markets overseas.

    Shares are considered riskier investments than bonds, so a portfolio investing in a large percentage of shares will carry more risk than one investing in a large percentage of bonds.

     

    Chart: potential returns vs risk of value falling. The higher the potential returns, the higher the risk. Money market is the least risky, followed by gilts and bonds, then property, then shares, which have the highest risk and also the highest potential returns.
  • Your investment near retirement

    The GIS you've chosen adjust your investment depending on how you expect to take your pension when you retire.

    When you’re fifteen years away from retirement, it gradually starts to move your money into lower risk investments, taking into account how you want to take your pension. Although this may lessen the potential for growth, it helps reduce the impact of potential market drops on the value of your pension as you get closer to retirement. Also, it reduces the likelihood of any sudden drops in its value. When you are five years away from retirement, we will start to move your investment into different funds depending on which option for retirement you have chosen.

    Your investment in retirement

    When you’re ready to take income from your plan, you’ll need to think about how best to invest your remaining pension to help achieve your retirement goals.

    That’s why we we’ve created Investment Pathways for our Retirement Account to help simplify the decision.​

    You’ll be able to access one of our Investment Pathways as an option. ​They are designed to help you meet your retirement income needs, based on your broad aims over the next five years in retirement.

3. How you'd like to take your pension

Your options at retirement

When you're ready to start taking your pension savings, you'll have options.  You'll normally also be able to take up to 25% of your pension savings as a tax-free cash lump sum.

You can take the rest of your pension as:

  • a guaranteed regular income for life (an annuity)
  • income withdrawals as and when you like (known as 'drawdown')
  • all or some of it as cash (known as 'encashment').

Find out more about planning your retirement and how you'd like to take your pension - Taking your pension.

Still not sure?

Our default investment option

Our default investment option

There's a default investment option available if you're:

  • not ready to think about how you plan to take your money in retirement
  • unsure how you feel about investment risk.

Our default is the Balanced Targeting Flexible Access GIS. Like our other Governed Investment Strategies, it aims to achieve capital growth over the longer term.

It is not personalised but may suit the aims and needs of a typical customer with a balanced risk profile who is investing for the longer term and is likely to take a flexible income in retirement.

Flexibility to suit you

We know that life changes. When you want to retire, how you want to retire and how much risk you want to take with your pension savings.

We know it might be difficult for you to decide now.  If something changes, your Retirement Account can change with you.  Just call us and let us know.

If you don't feel comfortable making decisions, we can help you find a financial adviser. They usually charge for their advice. 

We can also explain anything you don’t understand, but we can’t offer financial advice. Call us on 0345 601 2585. We’re open Monday to Friday, 9am to 5pm.

Your investment choices

Your investment choices

Get more details about how your pension is invested.

Download guide (PDF, 1.2MB) Asset opens in a new tab.

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START YOUR APPLICATION

If you’re transferring £10,000 or more and know how you want to invest your pension pot, then you’re ready. Have to hand the details of the pensions you want to transfer.

 

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