Stan­dard Life savers to have their pen­sions shaken up

The Daily Telegraph - Your Money - - YOUR MONEY - Sam Brod­beck

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.

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