It’s up to you to decide how your money is invested and you have five options to choose from. You can read about each option on pages 6 - 15 of the guide Your DC pension savings – your choice.
Which investment option you choose is likely to depend on what you want to do with your DC pension pot.
Option 1 – Income Lifecycle follows a pre-set strategy and is designed to manage some of the investment risks for you. It aims to give your DC pension pot the opportunity to grow as much as possible the younger you are and limit the risks as you get closer to the age you want to take your pot.
If you think you’ll use some or all of your DC pension pot to buy an income (called an annuity) this option might suit you.
Option2 – Cash Lifecycle works in a similar way to Income Lifecycle, but your money is gradually moved into a cash fund as you get closer to retirement age. By the time you retire, all of your DC pension pot will be invested in the Cash Fund - active.
If you plan to take your DC pension pot in cash this option my suit you.
If you don’t tell us the option you’d like at My Pension the Trustee will automatically invest your DC pension pot in the Cash Lifecycle option* from 1 July 2015.
*But, if you were paying Additional Voluntary Contributions (AVCs) into the DC fund range on 30 June 2015, all DC contributions starting from 1 July 2015 will go into your existing investment option. If you want to change your investment option you can do this in My Pension.
Option3 – Capital Lifecycle also works in a similar way to Income Lifecycle, but your pot is gradually moved so that by the time you retire, 25% will be invested in the Cash Fund – active and the other 75% in the Diversified Assets Fund – active.
If you still want to invest after you take your DC pension pot and draw down lump sums from it as income, which you can do as a one off or via regular payments, this may suit you. To do this you’ll need to transfer out of the scheme.
Option 4 – Flexicycle is a DIY Lifecycle which lets you decide where to invest your money using a simple framework. Under Flexicycle, you choose which funds to invest in to grow your DC pension pot and which lower risk funds to move your money into as you get closer to when you decide you want to take your savings.
If you want to take some control over which funds you invest in and when you switch money between them this may suit you.
Option 5 - Freechoice gives you flexibility to manage your pot and allows you to choose from 13 funds to invest in and move your money between them as your plans and circumstances change.
You can also see how the different investment funds are performing in the DC fund factsheets
If you want to review or change your investments, go to My Pension and select ‘Review and change investments’