This is often typical for members who are expected to have considerable pension savings (over £50,000) and who would normally seek to draw on their pension flexibly at various intervals rather than taking it all at once or using their pension savings to buy a guaranteed retirement income (an annuity). Each Target Date Fund has a target retirement year, which can be easily identified in the name of the fund, and these are provided in 5-year increments.
Using this target date, our experts create an investment strategy that is pre-programmed to target optimal growth over time based on how far from retirement members are. In earlier years, members will automatically be invested in a way that is designed to grow their pension savings. Gradually, these investments will shift via our investment glidepath to more conservative options that aim to preserve the value of their pension, reducing the risk of significant fluctuations in value whilst aiming to keep it ahead of inflation.
Once the target retirement age is reached, members’ pensions will remain invested in a range of different assets, rather than being converted to cash as with other options. This can be helpful for those planning on using features like Flexi-Access Drawdown.