As you approach retirement, it is natural to want more certainty from your pension – without worrying that its value could plunge with any market wobble.
That is why many workplace pensions automatically start to move money into lower-risk investments as retirement age approaches.
Mihir Choughule, of financial planning and investment management firm Tideway Wealth, explained: “De-risking several years before retirement protects you from any downturns in equity markets from which you may not have enough time to recover before you start drawing from the pension.”
“This can be particularly acute as your pension pot is often at its largest just before retirement,” Mr Choughule said.
Lifestyling is often the default option for workplace pension schemes, meaning savers do not need to actively move their money between funds. This can be helpful for those who do not regularly review their pension investments.
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