Case studies

Case study

James

James is planning to access his pension savings later than he originally planned.

James enjoys his job and is in good health. His chosen pension date is 62, although he has no intention of accessing his pension savings before age 70. He is comfortable with higher risk investments and any potential loss on his Phoenix pension plan as he has other pensions and a good amount of savings.

Lifestyle switching would see James’ pension savings gradually moved, over the five years leading up to his chosen pension date of 62, from a higher risk fund to a lower risk fund. From age 62, his pension savings would stay invested in the lower risk fund until he accesses them. Investing in a lower risk fund with lower growth potential may mean the buying power of his pension savings is reduced by inflation, impacting on his future income.

If James were to remain in the lower risk fund to age 70, he could miss out on potential growth if financial markets produce strong returns.

Case study

Antonio

Antonio’s pension savings had already started to be moved into lower risk funds when his finances changed

As lifestyle switching has already kicked in, it will continue unless Antonio asks for it to be turned off.

Antonio was planning to access his pension savings at his chosen pension date of 65 and was 60 when lifestyle switching kicked in. He liked the blended approach of combining some security with potential growth. However two years on, Antonio is nearing the end of an expensive divorce which resulted in his pension savings being split equally between himself and his ex-wife. He has decided to work longer and is rethinking his investment choices. He is now prepared to take more risk to potentially grow his pension savings.

He has concluded that lifestyle switching is no longer appropriate for him and has decided to ask Phoenix to turn it off and to switch his pension savings to a higher risk fund. He will also invest future payments in the higher risk fund. He understands that by investing in a higher risk fund, there is potential for bigger fluctuations in the value of his pension savings.

Case Study

Jenny

Jenny is soon to become a grandma and is planning to cash in her pension early

Jenny is 54 and had always planned to work until her chosen pension date of 60. However, her daughter has just announced she is expecting twins and so Jenny is rethinking her retirement plans and planning to cash in her pension in a year's time so she can help with childcare when her daughter goes back to work.

When her children were young, Jenny worked part time and has several pension pots from different employers. She has decided to cash in her Phoenix pension plan.

She has reviewed her investment choices and decided to switch all her Phoenix pension savings into a lower risk fund to reduce the potential for a drop in value shortly before she cashes in her pension plan. She understands that by investing in a lower risk fund, inflation may reduce the buying power of her pension savings and she may miss out on any potential growth if financial markets produce strong returns.

Case Study

Anna

Anna is planning to select a flexible retirement income on her chosen pension date

Anna has worked for several companies during her career. She has a good company pension from one employer which will provide a reasonable level of income. She is approaching 55 and plans to transfer her Phoenix pension plan to another provider in order to access flexible retirement income.

She is planning to take maximum tax-free cash and then draw down taxable lump sums, as and when she needs, to pay for extras such as a holiday or new kitchen.

She is comfortable investing in medium risk funds and accepts that she could lose money if the value of the fund drops.

Anna had been considering if she should use lifestyle switching but has decided not to. This is because, after taking tax-free cash, the balance of her pension savings are likely to remain invested for many years as she will only access her pension savings from time to time to top up her income. She does not want to miss out on potential growth if financial markets produce strong returns. By investing in a lower risk fund with lower growth potential, she is worried that the buying power of her pension savings may be reduced by inflation, impacting on her future income.

She has reviewed her investment choices and will move part of her pension savings into a lower risk fund a year in advance of whenever she plans to access them.

Case Study

Abdul

Abdul is looking for a guaranteed income for life from his chosen pension date

Abdul is just over five years away from his chosen pension date of age 65. He was late starting to save for a pension and has the majority of his pension savings with Phoenix. He is planning to access his pension savings to buy a guaranteed income for life.

Abdul understands why Phoenix has decided to turn off lifestyle switching given recent changes to how people access their pensions. However, as he is planning to access his benefits at his chosen pension date, he will ask Phoenix to turn lifestyle switching on for him.

This is because he wants the security of knowing that his pension savings won’t fluctuate as much as his chosen pension date approaches. He understands that he might miss out on potential growth if financial markets are strong and that by investing in a lower risk fund, inflation may reduce the buying power of his pension savings.