Is Your Workplace Pension Invested Properly?

More than £15bn pounds are at risk due to being placed into ‘’outdated’’ investments.

Experts are warning that billions of pounds in funds are in danger of being lost due to obsolete investment methods.

Writing for The Telegraph, Jessica Beard reports that 850,000 workers have had their funds automatically transferred from stocks to bonds as they grow older, which is known as ‘’life styling’’.

Laith Khalaf of AJ Bell comments that the average fund has already been hit by 8% in less than three months, seeing £1.3bn in hard-earned wealth wiped out due to workplace pensions being invested in funds that are “no longer fit for purpose”. That is only set to get worse as interest rates continue to rise.

Why is this the case?

Annuities were compulsory up until ten or so years ago, with savers that had a workplace pension forced to buy an annuity or other income plan by the age of 75. At that stage, 90% of people bought annuities.

Since pension freedom rules were introduced in 2015, many employers are still shifting older investors out of stocks and bonds, with an estimated £30bn set to be switched this year into investments that will return less than inflation.

Don’t sleepwalk towards disaster

Therefore, it is absolutely vital that, as you plan and press ahead towards retirement, you make sure your investments align with your values and ambitions.

If your pension starts to come out of stocks from age 45, as is the norm with workplace pensions, then you will miss out on years of investment growth, says Rob Morgan of Charles Stanley.

It is recommended that you seek the advice of an authorised financial adviser, such as Reeves Independent. We will ensure that you are investing in line with your attitude to risk and provide you with a tailored approach towards your retirement plans.

Reeves Independent can help you

Our in-house investment team, with over 30 years’ worth of experience in London and the North East, continuously monitor the markets to find the best options for growth, as well as to be alert to any potential dangers.

Reeves Investment Services will ensure you are not in the dark, aiding you to make sure you are investing with the best possible returns.

By helping you to get your pensions under control, investing smartly in alignment with your attitude to risk, and drawing up a strong retirement plan, we aim to put you into the driving seat towards achieving your retirement goals.

The articles are for information only and should not be construed as advice or a recommendation. Please seek independent financial advice before taking any action. No action should be taken without independent professional financial advice as any actions on your pension may be irrevocable and have a big impact on your income in retirement.

Note that investments can go down as well as up and you may not get back the full capital invested.

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