During a review meeting with one of our employer clients last week we offered to run a webinar for their employees and why so many of their employees over 50 the impact of Lifestyling on their workplace pension plan.

“What’s lifestyling?” asked the head of HR for this 70 strong company

“Pension lifestyling” I started to explain “is a way a lot of workplace pensions invest. What happens is the default way of investing is by having more in shares (equities) in the early years but as you approach the retirement age of the scheme, more money is shifted into less volatile assets like cash and bonds.”

“That sounds sensible” said the HR head

“Erm, actually it depends” I said “It was sensible when at retirement most people purchased an annuity as you wouldn’t want your investments to be volatile when you were using all of the pot to buy an income for life. However most people don’t buy an income for life now…so it’s often better for the money to continue to be invested in ‘growth assets'”

“The good news is you can do something about it. The pension scheme for your employees has a bunch of alternative investment options, but I believe we need to actively make people aware of these options so they can decide what’s best for them. Alternatively they can get advice based on their own personal needs. The challenge we face is most people don’t know about lifestyling and therefore they simply stay in the fund which is slowly moving into cash and bonds without working out whether it’s right or not.”

“You’re right Chris…let’s put a date in the diary for the webinar so we can help our employees understand this better”

However that got me thinking…How many people simply don’t know about this! So, if you’re over 50 here’s what I recommend…

1) Understand where your pensions are actually invested. Get in touch with your pension providers and ask them about where your money is invested, and in particular whether ‘lifestyling’ applies to any of the schemes.

2) Work out how much is ‘enough’ for you and, if you haven’t started already, build your journey towards financial independence. We’ve got a free PDF which allows you to start thinking about what this means to you. Simply comment PDF below and we’ll get that sent to you…

3) If in doubt, get some help. Speak to an expert.

The ultimate thing here is that if you’re in your 50’s you should be seriously considering where your money is invested. I’ve seen too many people assume that the money they’ve got invested with their employers is doing fine and they don’t realise that the negative impact of their assets slowly moving into cash in their financial plan.

There’s also one additional factor that people ignore when their thinking about either retirement (or what happens next) which I talk about in this video – https://youtu.be/0fOL6I1hJmM