Since 2015 only 5pc of Standard Life’s customers have bought annuities, compared with two-thirds who opted to keep their money invested and a third who took their entire pension as a cash payment.
How will my Standard Life pension be invested if I do nothing?
As a result, the firm is moving around 1.1 million customers’ pensions to a new “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.
Standard Life’s At Retirement pension 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 be 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 “derisk” your portfolio about five years from your retirement date using assets that closely track the price of an annuity.
Although annuity sales have plummeted, for many pensioners they remain a sensible option, providing guaranteed income for life.
If you do nothing you’ll automatically be put into the multi-asset fund. This is very much a “one-size-fits-all” option and you may feel the proportion of return-seeking assets, such as stocks, is too low for your needs. Standard Life has hundreds of funds to choose from, although your options may have been restricted by your employer.