The FT is calling out for feedback on how people are getting on with AI in planning their retirement. I know Mary and her advanced bump so am sharing a link to her request which you can access and leave your comment using this sharing link.
If the link has run out, please drop me a line at henry@agewage.com. Here is what Mary is asking for and you can copy across the FT email money@ft.com
There are some great comments on Mary’s request.
Iain Pearce is a smart consultant, Nick Chard a professional trustee and Rob Andrew an actuary who manages pensions at Aberdeen. Together they did a great job for the Stagecoach Pensioners.
I’m pleased he is making sure the story of its transfer to Aberdeen is kept in the front of people’s minds!
You can watch the one hour discussion of the deal A video with fascinating insights is available by retrospectively signing up to the PWC seminar.
The money is rolling in and pots are swelling fast
People’s Pension (run by People’s Partnership) has hit £40bn and is on the same trajectory as Nest.
You may have noticed that between them, Nest and People’s Pension have £100bn of our savings.
There is a great opportunity for these organisations to invest their 20 million pots for growth. Nest has said that it will be introducing within the next 18 months a default for its users that will take them through to 85 (when they’ll find themselves in an annuity – insured by Rothsay).
Five years ago it was boasting that its money was invested around the world and pointing out to those who’d watch (only 147 watches ) that 4.4% of its money managed was invested in the UK. Back then the message was different than today.
Life at People’s Pension’s and the Nest investment team is becoming more important. So is investment in the UK. This year, Mark Fawcett told us (I’m one) 13m Nest savers that our money was being directed more to the UK
I am bored by politicians and commentators arguing about mandation, the fact is that DC pensions are investing more in UK growth and I hope that all pensions will do the same, that includes DB schemes that choose to carry on and CDC schemes which are just starting out.
More than a fifth of that £60m invested by Nest is now invested in UK, that’s five times more as a slice of the cake than five years ago.
It is not just that we feel a little queasy about United States economic policy (hmm), it’s that we want our money to work for the UK. The UK stock market is outperforming America’s and we no longer have a currency that cannot keep up with the mighty dollar. These are incidental but do at least make us feel easier about investing in the growth of Britain.
I don’t want to sound jingoistic , I am not right wing in my political views but I do think that the big funded pensions at LGPS and USS can now be joined by Nest and People’s and not far behind them are other master trusts over £25bn (Lifesight and L&G).
If you look at my blogs promoted below, you’ll see I’ve been calling on Nest to make our money work harder for fourteen years. At last I think I can bring good news.
There is a huge weight of money in GPPs and legacy personal pensions (some still in with profits) that needs to consolidate to pension funds that work as hard as the big master trusts.
Default funds should not and will not (if TPR and FCA get their way) be backwaters where people’s money sit ignored. Consolidation should mean that every pound in pensions is treated as important, particularly money on which members have taken no decision. That is the task of CDC where all money goes into a single fund.
Soon we will see our workplace pensions alongside our state pensions and DB pensions yet to come. CDC schemes will join too (starting with Royal Mail’s)
Over time I expect to see the big master trusts, DB plans and CDC plans looking to savers as variants on one thing – their pension.
To finish I will print an announcement from Royal Mail’s Collective Plan (CDC) which will be fantastic news to the posties who are members of it
I look forward to the day that we all think of our workplace pensions in terms of the benefits we get – like this.
If you look at my blogs promoted below, you’ll see I’ve been calling on Nest to make our money work harder for fourteen years. At last I think I can bring good news.
For many people who think a lot about their personal finances, their pension is a convenient safe to hide money from HMRC. This statement is taken from work done by Claer Barrett of the FT on responses to a “how I use my bonus” survey , involving readers and published here. High tax rates do indeed drive the behaviour of those working in and around the City.
This makes a lot of sense if you aim to maximise the efficiency of your investments using wrapper labelled “pensions” to avoid national insurance , income tax on contributions and taxes on investment gains made.
Pensions are particularly efficient at present because employer contributions to your pot or to buy pensions are not subject to national insurance. And the amount that is saved by companies in paying your pension contributions loses HMT/DWP almost exactly what they get back from us drawing down on our pots and getting pension income.
Damien’s key insight is that the average win for those in pensions is over £785 for each human being living in the UK. But this is of course anything but how tax gets saved. The kind of person who cares about tax relief, national insurance saving and like tax free returns on their investment are not thinking about pensions but about wealth.
As has been proved by the furore over inheritance tax, there are many for whom a pension pot is not to be touched but paid to the next generation on death, as a means of avoiding capital taxes – most importantly IHT which is pernicious to those sufficiently wealthy to need liquid funds to meet HMRC demands.
The idea that saving voluntarily into a pension plan for pension has all but been extinguished by the money purchase AVC which can often be exchanged for tax free cash and very rarely is exchanged for extra pension.
Tax is a driver for almost every voluntary pension payment. But there are many people who opt out of workplace pension and they are not doing so for tax reasons. They are the people who do not want or cannot afford to make pension contributions through payroll.
I am reminded of presentations I did with Harold Davenport in Rotherham miner’s clubs in the mid 1980 when people still thought of themselves as in miner communities. Harold would bring out in front of tables of men a large folder that was full of cut out pictures of ladies from gentlemen’s magazines.
When you retire, do you want some of this?
Harold would ask, pointing to a busty woman.
He would then open up the other side of the folder which would be stuffed with £1 and £5 notes .
If you want out of them , you’ll need plenty of these.
Harold would conclude, pointing out the bank notes. There would then come out applications to pay more into the pension.
There are two ways of selling retirement , white collar and blue collar. We focus on white collar sales because that is where the money is, but the blue collar world is one of need and is generally ignored. I don’t suggest we go back to old-style techniques as perfected by Harold, but I suggest that we need to get to grips for the need of blue collar workers to have pensions paid to them so they can have decent lives and tax and national insurance don’t matter in discussions about pay now- pay then.
Forty years on from the Rotherham miner’s club
A few hours later, before the episode even aired, a friend texted him a screenshot. Someone had created a betting market on Kalshi, the prediction market platform, asking whether Hayes would mention Trump, China, or affordability during his appearance
The interview had already happened. It just hadn’t been broadcast yet.
The market grew to almost $900,000.
This is the rip-off economy — or the grift economy — in its purest form: a world where everything — your attention, your data, your daily activities, even events that have already happened — is a surface to extract value from.
Where the line between investing and gambling has dissolved. Where the business model is built around exploiting customers.
The Economist published a piece last October called “The End of the Rip-Off Economy,” arguing that AI will actually fix all of this scamming and grifting. Their thesis is that technology empowers consumers, removes information asymmetries, and — their words — “the days of the know-nothing consumer are over.”
But I think it misses something fundamental about what actually happened in 2025.
Prediction markets hit nearly $40 billion in volume in 2025, a 400% increase from the previous year. And Kalshi’s CEO has been quite honest about his ultimate vision: “The long-term goal is to financialize everything.”
Everything. And they’re not kidding.
You can now bet on how long the famine in Gaza will last. Whether your favorite influencer will get divorced. Whether the second coming of Jesus is happening this year. (Traders give it a 3% chance before 2027, if you’re curious.) A gaming attorney called it what it is: “gambling, no matter what they call it.”
The line between investing, gambling, and… whatever this is… has completely dissolved.
And if you watched the Super Bowl this month, you saw it in real time. Americans legally wagered an estimated $1.76 billion on the game. But for the first time, prediction market platforms and traditional sportsbooks were in direct competition for that handle — with prediction markets arguing their bets aren’t actually gambling and therefore shouldn’t be subject to gambling regulations. Kalshi is now legal in all 50 states.
And the language is deliberate. 31% of prediction market users report encountering “trading” or “investing” language in platform messaging. You’re not betting. You’re trading contracts on a federally regulated exchange.
And it’s not just prediction markets. Americans now spend more on scratch-off lottery tickets than on pizza, movies, concerts, and sports tickets combined. In Massachusetts, adults average $1,037 per year on scratch tickets alone. Options trading — a form of stock market gambling, IMO — hit record levels in 2025. More than half of S&P 500 options were zero-day-to-expiration trades — bets that expire the same day they’re placed.
Warren Buffett, not exactly a pearl-clutcher, warned in his annual letter: “The casino now resides in many homes and daily tempts the occupants.”
And that’s exactly what’s happening. In a single week in November 2025, the FBI met with the UFC about an allegedly rigged fight, and two Cleveland Guardians pitchers were federally indicted for a pitch-fixing scheme. Earlier in the year, 20 college basketball players were charged in a point-shaving scandal — the largest in NCAA history. An NBA coach and player were arrested on gambling-related charges.
And prediction markets? They have essentially no insider trading protections. None.
So when a worker at Google makes a million dollars betting on Google Search Trends (which they presumably had access to before the information went public), or a government insider makes $400K betting that Venezuelan president Maduro would be ousted hours before it happened, it’s all legal.
The people helping to build the casino are also the people in power. Donald Trump Jr. sits on Polymarket’s advisory board and is a “strategic adviser” to Kalshi. Truth Social is launching its own prediction market. And last week, the CFTC — the federal agency that oversees these platforms — announced it would drop its proposed rules to prohibit political and sports-related contracts. The new CFTC chair said the agency supports “lawful innovation in these markets.”
And as Kyla Scanlon wrote, major media outlets (including Dow Jones, CNN, CNBC) have announced partnerships integrating prediction market odds into their coverage. The news is now read alongside people betting on the news. When markets process political events before democratic institutions like Congress can even deliberate, market outcomes get treated as validation. As Scanlon put it: these bets “get laundered into legitimacy through the language of collective wisdom and truth machines, with a light touch of regulation.”
The Economist said information asymmetries would disappear. Instead, they inverted. Now the platforms know everything about us — our risk tolerance, our behavioral patterns, our dopamine responses — and we know almost nothing about who’s on the other side of the bet.
Also this advertising???
Take surveillance pricing — the practice of using AI to determine a buyer’s “pain point” (the maximum they’ll pay before walking away) and adjusting prices accordingly. Not based on supply and demand. Based on you.
The technology to charge you a personalized price absolutely exists — the FTC confirmed that companies are selling these tools to retailers. Their staff report outlined four key concerns: privacy, discrimination, extraction, and algorithmic collusion.
And a Consumer Reports investigation with the Groundwork Collaborative found that 75% of products on Instacart showed different prices to different users — some paying up to 23% more for the exact same item. Instacart’s internal emails revealed a practice called “smart rounding” — using algorithms to squeeze extra cents out of every transaction. (New York’s Attorney General has since demanded answers.)
However, that doesn’t mean we’re in a surveillance wasteland, yet. The price swings people notice — and attribute to being tracked — are real, but they’re usually dynamic pricing: cheap seats selling out, fares changing based on overall demand. That affects everyone equally, not you specifically.
Both. The capability exists and is being deployed in some contexts (grocery delivery, clearly). And the gap between capability and widespread deployment appears to be closing fast — Delta just announced it’s piloting AI-driven individualized pricing, and given how lucrative perfect price discrimination is, others will follow. Electronic shelf labels are spreading through grocery stores, making it possible to change prices by the hour.
The Economist said AI would empower consumers to compare prices. Instead, it empowered companies to charge each consumer the maximum they’d tolerate — and left the rest of us spending our evenings in incognito mode, trying to outsmart a system that has exponentially more data than we do.
In case you’ve been blissfully offline: slop refers to AI-generated garbage flooding the internet. Content farms churning out hundreds of “articles” per day. YouTube channels posting AI-generated videos that earn millions. Fake reviews, fake news, fake everything.
AI-generated articles now make up over half of English-language web content. A study found that 20% of videos recommended to new YouTube users are AI slop. The top operators earn $4.25 million annually.
Even academic research isn’t safe. Nature reported that low-quality papers are flooding the cancer literature. Over 11,000 academic papers were retracted in 2025 alone — many of them generated by AI and rubber-stamped through peer review. On Amazon, 3% of front-page reviews are now AI-generated — 74% of them were five stars, and 93% had the “verified purchase” label.
Then there’s outright fraud. Deepfake fraud losses hit $1.1 billion in 2025 — triple the previous year. AI voice-cloning scams surged 148%. One in four adults has encountered an AI voice scam. It only takes three seconds of audio to create an 85% voice match. One woman lost $15,000 after scammers cloned her daughter’s voice and called claiming there’d been a car accident.
The internet — the thing we all depend on to navigate modern life — is filling up with garbage. And the garbage is getting better at looking real. The internet used to be a place where you could find information. Now it’s a place where you have to verify everything — and you can never quite be sure you’ve verified enough.
It assumes AI would be used for us. Instead, it’s being used on us — and increasingly, by us.
Because the grift economy isn’t just something that happens to people. It’s something we’ve started to participate in. Hustle culture turned “finding an edge” into a virtue. Influencers sell courses about selling courses and we call it entrepreneurship. We celebrate people who game the system — the crypto millionaires, the dropshippers, the kid who figured out how to arbitrage sneakers. “Get yours” stopped being a warning and became a business plan.
I wrote about this last year — the way we’ve culturally normalized grifting as a survival strategy. What’s changed since then is that the tools have gotten exponentially more powerful.
It’s one thing when a guy sells a $500 course about passive income. It’s another when AI can generate the course, the marketing, the fake testimonials, and the fake reviews — all for the cost of a monthly subscription. The same tools that let companies build surveillance pricing and flood the internet with slop are becoming available to everyone. AI-generated fake storefronts. Deepfake influencers. Automated scam campaigns that used to require a team and now require a laptop.
The grift is getting democratized. And when everyone has access to the tools of extraction, the arms race accelerates.
The grift economy isn’t just a series of bad actors making exploitative choices. It’s a byproduct of what happens when trust collapses — in institutions, in companies, in each other. When the game feels rigged, people stop playing by the rules.
What does it actually cost — financially and psychologically — to live in a society where nobody trusts anybody? More than you think. And you’re likely already paying it. That’s where I’m going next week
Peter Roos is chief commercial officer at Lumera and his comments in Professional Pensions this week are pretty simple, you cannot avoid investment in administration software if you want to compete as a consolidator
“As we have seen first-hand through Lumera’s work in Sweden, scale improves outcomes only if these building blocks are developed and prioritised over a land grab on assets, supported by clean, reliable data and systems flexible enough to meet future regulatory and product demands”.
I have been thinking a lot about the administration needed to run a CDC scheme. When I was looking at what would be needed to run a CDC scheme I had a cautious outlook on the likely take up of CDC. I no longer think that way. That is because demand from CDC seems likely to outstrip the capacity of the original administrators we had expected to carry the load.
In my work preparing for submitting our proposal to the Pensions Regulator in August , it has become obvious that the investment in software to administrate a multi-employer CDC will be considerably bigger than we had envisaged.
We know at present that only TPT are going to offer a multi-employer CDC and they are already a consolidator of DC (Master trust) and will be a DB consolidator (if they can become a Superfund). It will be interesting to see how much they will need to develop their DC systems to include CDC in its suite of offerings.
I have had the good fortune to spend time in January and February with the old luminaries of Higham Dunnet Shaw and a leading consultancy in KGC, it is clear that administration has been under invested in for pensions. But what is becoming evident is that DC and CDC will have the responsibility of paying by default retirement incomes till the member’s death and if a partner’s pension is allowed – beyond.
Superfunds, as I know from my time working with Pension Superfund are subject to serious scrutiny from TPR and it is clear from reading the Pensions Bill and the draft of the CDC Code, that consolidation DC, CDC or DB superfunds is going to put a lot of pressure on providers to have the software and administration.
There are a number of new technology based software offerings available in the market. Lumera is one of them, other similar sounding software is from Festina, Aptia is a well funded administrator while services are available to the market through Mantel – part of the Spence empire.
2027 is likely to be a year of delivery not just for DB and superfunds, but DC as it offers default retirement income pathways to members. CDC offers a DB style pension to members with a DC contribution structure to employers.
As with the dashboard, innovation is not just comparable but learned from northern Europe. Sweden and Denmark own two new pension software providers, one has a foot in Netherlands. It is not just in the Winter Olympics that these countries are strong. It is likely that in dashboards and pension administration, we will have to invest with them to catch up.
I don’t spend much time on Twitter but I do follow Torsten Bell. Lately he’s been tweeting a lot about Swansea where he is an MP but occasionally he makes an economic statement that sounds like him and not the Treasury. Here’s one after the good news for the Treasury they’ve had this week.
Ignore the professional gloomsters and doomsters.
– Borrowing ⬇️ (record surplus last month)
– Inflation (and interest rates) ⬇️
– UK fastest growing European G7 economy
– Retail sales up 4.5% over the year
There’s lots more to do but Britain’s economy is on the mend.— Torsten Bell (@TorstenBell) February 20, 2026
It is Torsten Bell’s version of a Chancellor tweet
I hope that this is the spirit that Bell brings to Edinburgh in a couple of weeks and that his message to the Pensions UK Conference is one of confidence in investing into UK this UK growth.
During this week I have seen complaints that the managers and engineers of our coal mines were getting the fruits of growth from a pension scheme 90% invested in equities.
I saw complaints that the Church of England would this April restore pension benefits when CoE scheme got into trouble over property nearly 20 years ago. It too was criticised for being 70% invested in growth assets.
It’s been a week when I have had encouraging meetings with unions, employers, trustees and most of all with friends that I’ve been explaining CDC and how it can return us the pensions which we lost when DB closed and DC saving gave up on retirement income.
Of course I am pleased too to see the master trusts talking about flexing and then fixing people with annuities in later years. That is an alternative and better than pension freedom (pay lots of tax to have your pension pot swapped for a payment to HMRC to have a healthy bank account).
You have to go back a long way to find Torsten talk to the public about pensions. Here he is in the beginning of February. A lot of stuff (including some questionable stuff on housing) but nothing on pensions.
At a time when politics feels divisive, it’s important to hold onto what really matters.
👉 Half a million kids out of poverty
👉 Ground rent capped at £250
👉 Sick pay for low earners
👉 Zero hour contracts bannedReal answers. Real change. pic.twitter.com/UzQY9sALnv
— Torsten Bell (@TorstenBell) February 4, 2026
If I scroll back through our Pensions Minister’s tweets through 2025 there is nothing on social media about pensions.
I hope that this will change in two three weeks time when we are discussing pensions.
Torsten Bell would make a good Chancellor of the Exchequer one of these days, but right now he’s a pensions minister (a junior one at that). He’s got a Pension Schemes Bill becoming an Act soon and he’s got a CDC scheme that needs a Code and authorisation of schemes.
I have had reasons to scold the Pensions Regulator this week for promoting itself in DB and DC but not mentioning CDC. I hope that our Pensions Minister will do a little better and promote the work that is being done and will see its fruit from 2027.
Right now the Pensions Minister sounds like he wants to be an MP and the Chancellor. He is the Pensions Minister – in case you’ve forgotten!
There will be cracks in care funding – that’s how the light gets in. https://t.co/J2oBXhoo6u this was how @TorstenBell was five years ago – we want you back!
— Henry Tapper (@henryhtapper) February 21, 2026
Let me use a weekend to plant a thought in the heads of those who influence their company’s and their company’s pension’s strategy. By company’s strategy I mean schemes that pay pensions not pots that people can drawdown or exchange for an insurance annuity.
These arguments and many more spin around my head. It strikes me that good ideas are really simple and that there is a lot of complicated thinking in my head that I need to simplify as a thought to you , as someone who can influence the Company Pension or the company that sponsors that pension and workplace pensions to boot! Here is my proposal.
DB pensions with strong finances should consider investing in the proprietor of a CDC scheme which they consider likely to provide a good investment and have values congruent with theirs.
I spent a good part of a morning last week in the FT, talking with journalists about pensions but also about the predicament the children of parents have, once they’ve graduated.
It doesn’t surprise me that the paper bemoans the financial plight of British grads today. Not only do they get less of a pay premium for a good degree but they have loans to repay if they find half way lucrative work. There is an incentive to fail and little incentive to succeed.
The atmosphere of Bracken House by St Pauls is far from that of the offices and bars and sandwich and coffee shops around it. It is a place of erudition where people discuss the kind of problems that middle class graduates have as they try to create and bring up families while seeing the value of intellectual investment being down valued. I mean that there is precious little of the intellectual brilliance that I see coming from the FT being reflected in conversations beyond its four walls!
Ironically, the only way that recent graduates can be measured objectively is by their salary premium, how much they earn more for giving up a minimum of work to get a degree
We have more graduates as a share of the workforce than any other country analysed but it pays our graduates less (and that’s before counting in the student loan and the loss of earnings that occurred when young people at college earn little more than pin money.
John Burn-Murdoch’s argument in this morning’s paper asks the question of this blog,
“is university still worth it?”
He concludes this is the wrong question and points to a lack of productivity in Britain as the start middle and ending of the graduate’s woes.
Like so many of contemporary Britain’s problems, the graduate squeeze is downstream of broader economic woes. Efforts to alleviate it would do better to focus on restoring growth than making tweaks to higher education intake and financing.
If Britain can haul its productivity growth and skilled job creation back into line with its peers, graduate earnings will be stronger, enabling student loan terms to be more generous and allowing more young people to pursue their passions confident of landing a good job.
I am not so sure. There is an intellectual curiosity in science and in arts that has led to Britain being the hotbed of the scientific revolution (along with California the London , Cambridge Oxford triangle is driving the West’s progression). Britain is the world leader in music, drama and our culture in general is admired – could any country in the world put on the proms or host Glastonbury or offer Shakespeare and other drama on the South Bank and in Stratford?
My concern is that we have down valued the intellectual brilliance of science and arts in this country to the point where we recognise nothing that cannot be put on a chart and measured in accountancy terms. We cannot just work harder to get richer, we must be smarter and learn to make our superiority in Science and the Arts (these intellectual hotspots) what Britain is about and rewarded for.
This is what I thought as I walked out of the FT last week and it’s a thought that’s still whizzing around my ageing brain. We simply do not value graduates for what they are. John Keats wrote a lifetime’s work in the year that he was 23. Some reckon he died broken by criticism not TB.
It is good to see some proper work being done on Value for Money
Written by Times Senior Money Reporter Megan Harwood-Baynes
Where your pension is invested could mean the difference between retiring as a millionaire or being left with less than a penny, new analysis shows.
The personal finance site Investing Insiders looked at the performance of almost 13,000 pension funds, creating league tables to show the best and worst performing across different risk profiles (high, medium and low).
It found that taking a “select and forget” approach to funds may not just mean a slightly smaller pot — it could leave it empty.
Pensions are usually invested in a wide range of assets, including lots of different funds, plus less risky options such as cash. Investing Insiders looked at two scenarios where hypothetical investors invested all their money in one fund.
Person A saved £50,000 in the best-performing fund (Aviva Ninety One Global Gold Pension) in December 2020 and over the next five years got a 180.28 per cent return on their investment, increasing their pot to £140,140.
Person B saved their £50,000 in the worst-performing fund (Zurich JPM Emerging Europe Equity), which lost 98.59 per cent in five years, leaving £705 in their pot.
If that same trajectory continued over the next two decades, Person A would have a pension pot worth more than £3 million. Person B would be left with a fraction of a penny. These calculations include fund fees, but not investment platform charges.
Both funds are categorised as high risk, so would be offered to people with the same appetite for volatility.
Clare West from Investing Insiders said: “Sustained for 20 years, those kinds of returns are capable of producing either multi-million growth at one end of the spectrum, or near total wipeout at the other end.”
It also shows that you need to monitor where your money is invested in case something has gone badly wrong at one of your funds — as it did at many of the worst performers.
Zurich UK said its Emerging Europe Equity fund is self-selected by savers or through their financial adviser, and is not a default pension fund. It was suspended in February 2022 after sanctions were introduced following Russia’s invasion of Ukraine.
Zurich UK said: “The fund contains only the sanctioned assets and, as a result, shows very little value and low returns.”
Investing Insiders also looked at the returns on funds classed as medium-risk, where it had 20 years’ worth of data to analyse.
A saver who put £50,000 into the Zurich American Select fund in 2005 would have seen growth of 855 per cent, leaving them with a pot of £477,525. But the same amount placed in the Clerical Medical UK Equity fund would be worth £92,835, which returned 85.67 per cent during the same time.
Donato Boccardi, the head of investments at Aviva, said:
“By their very nature, default investment strategies are designed to do the heavy lifting for you, placing investment decisions in the hands of experts. But while defaults are essential, making small active changes to your pension — particularly increasing contribution levels — can have a significant impact.”
While the risk of leaving your money in just one fund is clear, a select and forget approach can also lead to lower returns on a well-diversified workplace scheme.
The Financial Conduct Authority, the City regulator, has raised concerns that millions are being auto-enrolled into workplace pension schemes that don’t match their needs. In January it said it wants pension schemes to publish transparent data on their performance, costs and service quality.
Lily Megson-Harvey from the advice firm My Pension Expert said:
“Not every workplace pension grows at the same rate. While that may be concerning for some savers, it also highlights the importance of staying engaged with your retirement savings.”
Workplace pensions often utilise an automated strategy, called “lifestyling”, which matches risk to your age. In your younger years the scheme is “ambitious”, which allocates most of your money to equities, to generate maximum growth and benefit from the many years of compounding interest ahead, because you have time to weather any short-term volatility in the stock market.
As you approach your target retirement age, the scheme starts to take less risk, shifting your capital away from volatile stocks and into more stable assets, such as bonds, gilts and cash. This is designed to protect the gains made in earlier years and ensure a sudden crash right before you retire doesn’t wipe out a big chunk of your life savings.
But millions of workers may find themselves in a one-size-fits-all default scheme that is too cautious for them, especially if they are young and have decades until retirement. Being too cautious too early can leave a huge dent in their eventual retirement pot.
averages to see how it measures up. It’s also important to track down old workplace pensions and check if consolidating them makes sense, so you aren’t paying multiple sets of fees.
Most workplace pension schemes offer a range of investing options, so if you feel like it is a bad match for your personal risk appetite and retirement goals, you can move to something else.
“But this isn’t a decision to take on a whim,”
said Craig Rickman from the investment platform Interactive Investor.
“Do your research first and foremost, checking if your scheme has indeed stacked up unfavourably against its peers and/or its benchmark over a reasonable period, and making sure comparisons are on a like-for-like basis”
Crucially, just because a fund, region or sector is riding high now does not mean it will continue to do so. Investing is a long-term game, especially if you are trying to build enough wealth to live on in your later years.
“Constantly churning your long-term investments to chase the best-performing funds is not only a chore but can do more harm than good,”
Rickman said.
All graphs have been provided by Investing Insiders
