Published On: Thu, Oct 3rd, 2019

Martin Lewis pension warning: Do you have this ‘de-risking’ policy plan?

Martin Lewis is the Money Saving Expert who appeared on Good Morning Britain to share his tips. He gave his top deals of the week and also warned people close to retirement to check their pension has the right retirement date to make sure that they don’t risk missing out on £1,000s.

Martin told viewers that if you have a defined contribution workplace pension, your employer may have moved your pension plan from a higher-risk to a lower-risk funds as people approach their expected retirement age. He said: “If you have a defined contribution workplace pension – the most common type, where you and your employer both pay into a pension pot – your savings will often be automatically moved from higher-risk to lower-risk funds as you approach your expected retirement age.

“This affects those whose pension pots are in default investment schemes, where the funds your savings are invested in are selected for you rather than you choosing them yourself.

“The strategy of moving your savings is known as ‘de-risking’, and it’s meant to protect your pension pot from short-term dips in the market.

“This can happen up to 15 years before your expected retirement date, which is often based on a default retirement age set up by employers.

“But with many increasingly likely to work into their 70s, if you aren’t planning to hang up your boots until later than your provider’s standard retirement age then your pot could be sitting in a low-risk fund longer than you intended it to.

“And equally, if you retire early your pension pot might stay in a high-risk fund for longer than it would have been otherwise, leaving it more exposed to a fall in the stock market.”

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