Lifestyle and current market conditions
The current market conditions have affected the way the Lifestyle switching process works for members of Defined Contribution schemes (and Defined Benefit schemes with ASCs and/or AVCs) who are within the switching period.
The Lifestyle process
The Lifestyle process changes how your pension savings are invested over your working life. Initially your investment is in equities, which are expected to give the highest return over the long term; however, equities can be volatile and the Lifestyle process is designed to gradually switch out of equities into less volatile assets to reduce risk as you approach your target retirement age. This 'smoothing' process is intended to avoid you switching all of your assets at one particular point in the market (which may be good or bad).
Current market conditions
As you will have seen in the media, equity markets around the world have been extremely volatile in recent months with large movements both down and up. Because the movements have been so extreme, the way the Lifestyle switching process works has been affected. Instead of the usual quarterly switch taking money out of equities the Lifestyle process may mean that equities are being purchased for some members as the value of their holdings may have fallen below the required percentage within the switching matrix.
If you do not wish to switch back into equities then you may wish to consider moving to an alternative Freestyle investment strategy.
More detailed information on the Lifestyle process can be found here.
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Last Updated: 24/06/2009
