Standard Life savers to have their pensions shaken up
Insurer Standard Life is making drastic changes to the investments of more than a million of its pension customers. Affected customers are mainly those who began to save into company plans, personal pension plans and “stakeholder” schemes before 2012, a spokesman said.
The firm took the decision to invest customers’ money differently in response to the “pension freedoms”, which came into effect two years ago.
People who were saving into pension plans set up before the reforms took effect found that their money was invested on the assumption that an annuity would be bought at a predetermined retirement age.
This meant that if someone wanted to keep their pension invested into retirement and “draw down” an income, their pension money would be invested in low-yielding assets, such as government bonds.
Such investments are unlikely to produce the returns needed to support an income in retirement. Since 2015, only 5pc of Standard Life’s customers have bought annuities. If you do nothing you’ll automatically be put into a “multi-asset” fund. The idea is to give exposure to assets with a better chance of preserving or growing the value of pension pots into retirement.
The fund will be roughly half invested in bonds, with a third in the stock market and a small proportion allocated to property and cash.
From this month savers will begin to receive letters outlining their options. If you still want an annuity you can opt to be placed into the “annuity targeting” pension fund. This will “de-risk” your portfolio about five years from your retirement date. Alternatively you can choose another fund. Standard Life said no one would pay more in charges as a result of the switch.
Customers more than five years from retirement will receive the letters from January next year.