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Lifecycle pension... too much in bonds?

2 replies

NutsaboutFruit · 18/05/2022 08:09

I'm due to retire in a few years, and for the past year I've been trying to throw as much as I can into my workplace pension. Looking at how it's doing, I see I have actually lost a lot of what I've paid in.

I understand that most pension pots have lost money recently, but what I'm worried about is that so much of mine is in gilts. My company has put me in a Lifecycle fund with 70% in a 15-year gilts tracker. This was meant to be a low-risk way of protecting my money in the run-up to retirement, but in the current environment it seems to be doing more harm than good. Bonds have crashed so hard and with inflation looking like it's here to stay it doesn't seem as if they will be recovering any time soon.

At only 4 years away from retirement, I don't want to keep throwing good money after bad. I'm wondering whether I should request to switch my fund to more equities, which at least might bounce back at some point. Or maybe just substantially reduce my monthly contributions and do something else with the money I'm earning.

The sums I'm talking about are nowhere near enough to make talking to an IFA worth it, so I can't seek help there. I was wondering if anyone here was in a similar situation and if so what you were doing about it. There must be more money-savvy people than me in this situation!

OP posts:
aramox1 · 21/05/2022 04:37

Me too! Lifestyling is what mine calls it. I've gone for more 'risk' ie equities but I'm not at all confident.

123sunshine · 09/06/2022 16:27

Lifestyling is not a great idea in my opinion. It derisks your pension as you near retirment age automatically, without taking into account what is going on in the markets and indeed if you are planning to work past the retirment date of the plan. I would suggest asking for the automoatic lifestying to be removed. As to whether to increase your exposure to equities by switching out of fixed iterest, that answer is not so easy. Fixed interest (which is lower risk) has seen declines due to high inflation and rising interst rates. Equties however are riskier and can be more volatile. Thereis no crystal ball to show what asset class will peform the best.

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