Deciding where to invest your pensions funds

Deciding where to invest your pension funds.

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Understanding the various investment choices on offer can be daunting and so we have created this simple guide as a starting point to help you decide how to invest your pension fund.

We recommend you review your investment choices regularly. This is especially important in the run up to accessing your pension savings

If you have a financial adviser, we recommend you speak to them before making a decision.

If you are a UK resident and do not already have a financial adviser, you can find details of the advisers in your area from Unbiased. Financial advisers may charges for providing financial advice.

Factors to consider when deciding where to invest

Everyone’s personal circumstances are different and your investment choices depend on many things including:

Your attitude to risk
Where your pension funds are currently invested
How you plan to take your benefits
When you plan to access your pension savings

: Cautious investors do not like to take risks with their investments and typically invest in lower risk funds such as cash, deposit, fixed interest or bond funds which aim to deliver security rather than growth.
: In between investors (sometimes known as balanced or medium risk investors) are prepared to take some degree of risk with their investments and typically invest in medium risk funds which aim to deliver long term growth by investing in a mix of UK and overseas equities bonds, property and cash.
: Adventurous investors are prepared to take risks with their investments and typically invest in higher risk funds that invest heavily in equities.

: Lower risk funds aim to provide short term security and have limited growth potential. They typically invest in cash, deposit, fixed interest or bond.
: Medium risk funds aim to grow your pension savings over the longer term. They normally provide long term growth by investing in a mix of UK and overseas shares (equities), bonds, property and cash. You could lose money if the value of your investment falls.
: Higher risk Managed funds aim to provide long term growth by investing mainly in UK and overseas equities. You could lose money and you can expect to see greater fluctuations in the value of your investments than in a low or medium risk fund. Other higher risk funds may invest in a single market, such as the Far East.

: You can take the whole of your pension savings in one go. A quarter of your pension savings can usually be taken tax-free; the rest will be taxed as income. You will need to plan how you will provide an income for the rest of your retirement.
: You can leave your pension savings invested and take one off lump sums or regular income. You decide how much of your pension savings is to be used and a quarter of that amount can usually be taken tax-free. Any regular income is taxable. There is no requirement for you to take a regular income.

The amount left in your pension savings remains invested, which gives your pension savings a chance to grow although it could go down in value too.

You may need to move into a new pension plan to access this option.
: A lifelong, regular income, known as an annuity, provides you with a guarantee that the income will last as long as you live. A quarter of your pension savings can usually be taken tax-free and any other payments will be taxed as income.
: You can leave your pension savings invested and take lump sums as and when you need them. A quarter of each lump sum taken is usually tax-free; the rest will be taxed as income. You can keep taking lump sums until your pension savings run out or you choose another option. You decide when and how much to take out.

The amount left in your pension savings remains invested, which gives your pension savings a chance to grow although they could go down in value too.

You may need to move into a new pension plan to access this option.

: Regardless of when you think you will access your pension savings it is recommended that you regularly review your investment choices.

You should consider if the funds you currently invest in are targeting short, medium or long term returns and that these are in line with when you might access your pension savings.

You can usually switch existing investments and change where future payments are invested for free.
: Regardless of when you think you will access your pension savings it is recommended that you regularly review your investment choices.

You should consider if the funds you currently invest in are targeting short, medium or long term returns and that these are in line with when you might access your pension savings.

You can usually switch existing investments and change where future payments are invested for free.
: Regardless of when you think you will access your pension savings it is recommended that you regularly review your investment choices.

You should consider if the funds you currently invest in are targeting short, medium or long term returns and that these are in line with when you might access your pension savings.

You can usually switch existing investments and change where future payments are invested for free.
: Regardless of when you think you will access your pension savings it is recommended that you regularly review your investment choices.

You should consider if the funds you currently invest in are targeting short, medium or long term returns and that these are in line with when you might access your pension savings.

You can usually switch existing investments and change where future payments are invested for free.

Example investment choices for your pension

We have created some examples to illustrate how investment choices can change depending on when and how you plan to access your pension savings.

These examples are not based on actual customers and should not be taken as advice or the most appropriate course of action in similar situations.

Investment choices for taking pension savings all in one go

If you are intending to take all of your pension savings as a lump sum (of which, 25% is tax-free) and your chosen pension date is approaching, you may want to consider lower risk funds that invest in cash or deposits. The funds available to you will depend on the product you bought. This information can be found on our fund factsheets.

The actual funds available to you will depend on the product you bought.

Medium Risk	Managed Fund
Lower risk	Cash

Investment choices for guaranteed income for life

If you are planning to exchange your pension savings for a guaranteed income for life, you may want to consider lower risk funds that don’t fluctuate as much. This becomes more important as you get closer to the date you intend to access your pension savings.

Example - moving from a medium risk to a lower risk fund

The actual funds available to you will depend on the product you bought.

Medium Risk	Managed Fund
Lower risk	Cash or Fixed Interest

Investment choices for flexible retirement income

If you are planning to access flexible retirement income in the near future, you should consider your investment choices taking into account your personal circumstances and how long any balance of your pension savings will remain invested.

Example – investing in medium and low risk funds

The actual funds available to you will depend on the product you bought.

Medium Risk	Managed Fund
Cash for lump sums or any income you plan to access soon	High and medium risk Managed Fund for balance of pension savings

Investment choices for a number of lump sums

If you are planning to take your pension savings as a number of lump sums (of which, 25% is tax-free) you may want to consider a mixture of investments that takes into account your personal circumstances and the period of time over which you plan to take the lump sums.

Example – investing in a mixture of high, medium and low risk funds

The actual funds available to you will depend on the product you bought.

Medium Risk	Managed Fund
Cash for lump sums you plan to access soon	High and medium risk Managed Fund for balance of pension savings

Next Steps

Phoenix pension plans offer a range of funds from low to higher risk, if you are interested in talking to a member of our team about your pension please get in touch.

Before making any investment decisions, we recommend that you take independent financial advice. If you are age 50 or over, you can contact MoneyHelper – a free and impartial service set up by the Government - to help you understand your pension options.

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Deciding where to invest your pensions funds

id

Factors to consider when deciding where to invest

Your attitude to risk

Where your pension funds are currently invested

How you plan to take your benefits

When you plan to access your pension savings

Attitude to risk

Cautious

In between cautious and adventurous

Adventurous

Where are your pension savings currently invested?

Lower risk funds

Medium risk funds

Higher risk funds

How do you plan to take your pension savings? (You can choose more than one option and mix them)

Take all pension savings in one go

Get a flexible retirement income

Get a guaranteed income for life

Take pension savings as a number of lump sums

When do you think you might access your pension savings? (You can choose more than one option and mix them)

In the next year

In 1 to 5 years

In 6 to 10 years

In 10 years or more

Example investment choices for your pension

Investment choices for taking pension savings all in one go

Investment choices for guaranteed income for life

Investment choices for flexible retirement income

Investment choices for a number of lump sums

Next Steps

Investment choices

Retirement choices

Contact us

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Deciding where to invest your pensions funds

id

Factors to consider when deciding where to invest

Your attitude to risk

Where your pension funds are currently invested

How you plan to take your benefits

When you plan to access your pension savings

Attitude to risk

Cautious

In between cautious and adventurous

Adventurous

Where are your pension savings currently invested?

Lower risk funds

Medium risk funds

Higher risk funds

How do you plan to take your pension savings? (You can choose more than one option and mix them)

Take all pension savings in one go

Get a flexible retirement income

Get a guaranteed income for life

Take pension savings as a number of lump sums

When do you think you might access your pension savings? (You can choose more than one option and mix them)

In the next year

In 1 to 5 years

In 6 to 10 years

In 10 years or more

Example investment choices for your pension

Investment choices for taking pension savings all in one go

Investment choices for guaranteed income for life

Investment choices for flexible retirement income

Investment choices for a number of lump sums

Next Steps

Investment choices

Retirement choices

Contact us