Pension strategy with 25 years left to retirement - Balanced or Adventurous

[Billbuck]

I have roughly 25 years left to retirement, assuming it stays at 66.
I have a work pension, which has been set to the default "balanced" risk profile for the past 8 years.

As i have 25 years left, I am considering changing the risk profile to Adventurous.
I do not know what funds are currently in the adventurous profile and have requested this from the pension provider and will add it to the thread once they provide it.

Given im not in a position to self manage, but have a bit of time left to retirement, is an Adventurous profile reasonable to consider?

The balanced profile details are shown below:

Fund	Percentage split	YTD
NT World Custom ESG Hedge Eqty Ind Feed Fund ZMKJ7	42%​	21.99%​
NT World Cust ESG Equity Feeder Fnd Unhedged ZMKH5	42%​	13.13%​
NT Emerging Markets ESG Equity Index Fund 3GZH5	9%​	5.37%​
NT Euro Government Inflation Linked Index Fund	2%​	3.79%​
NT High Quality Euro Govt Bond Index Fund NQF19	2%​	-1.32%​
ASI Global Corporate Bond Fund CFLF	2%​	N/A

 

[ClubMan]

With 25 years to retirement and maybe/hopefully the same or more after retirement when the bulk of your pension (after tax free lump sum) could well be still invested (in an ARF) your investment timeframe could be up to half a century so you should definitely not be in "balanced" or cautious assets which will severely limit your long term returns and you should almost certainly be in more adventurous investments such as 100% equities.

 

[Sarenco]

That doesn’t look like a balanced portfolio to me - it’s 94% in equities!

I strongly suspect it’s a lifestyle strategy that gets progressively more conservative as you near retirement.

But it’s certainly worth checking with your provider.

 

[Billbuck]

That doesn’t look like a balanced portfolio to me - it’s 94% in equities!

I strongly suspect it’s a lifestyle strategy that gets progressively more conservative as you near retirement.

But it’s certainly worth checking with your provider.

Youre correct, it will get progressively more conservative as I age.
Perhaps I used the term "profile" incorrectly.

The pension provider offers 2 "profiles": conservative, balanced and adventurous, based on expectations and willingness to accept fluctuations.

 

[Sarenco]

Well, it’s difficult to advise without knowing your overall financial position or the “glide path” your pension provider intends to follow.

But as a default position, “balanced” sounds sensible to me.

 

[Brendan Burgess]

Hi Bill

The industry promotes lifestyling but the tide is turning against it.

I would think you should be in 100% equities as your outlook is long term.

Here is a good discussion of it

The fallacy of "lifestyling"

I was recently made aware of a situation which highlights the total fallacy of "lifestyling". The basic premise behind lifestyling is that one should invest in growth assets up to, say, 10 years before retirement and then ease into bonds/cash or "safer" investments as you approach retirement...

www.askaboutmoney.com

 

[Billbuck]

Thank you for all the advice.
I have read that recommended thread @Brendan Burgess and although informative I do not yet understand all of it.
To give an idea of where I'm starting from, I had to look up the difference between equities & bonds!

My organization is with WIllis for pensions.
All the lifestyling options start moving investments from equities to bonds, all that differs between the options is the amount, and how early before retirement this happens.

To stay fully invested in equities, I have to go self directed (and accept the risks about 10 times before the system allows it).
A friend in the pensions industry heavily advised against this, saying lifestyling is better for the financially illiterate and he has seen too many people mis-manage thier own pensions, but this may just be risk aversion.
Just to reiterate, before today i did not know the difference between bonds and equities, so self directed is not something I believe I am skilled enough to do.
If I chose self directed, my fund options are as listed below.
I probably have to research each of these funds to decide what my best options are.

For the financially illiterate, its an intimidating system, having to click "i accept the risk" at every turn, and I may be better to pay for advice but with mAjor companies still recommending lifestyling, who's to say paid for advice will be any better. Nothing is straight forward!

Fund	Willis Risk Profile
NT Euro Liquidity Fund	Very Low
NT High Quality Euro Government Bond Index Fund	Low to Medium
NT Euro Government Inflation Linked Index fund	Low to Medium
NT World Custom ESG Equity Index Fund hedged	High
NT World Custom ESG Equity Index Fund, unhedged	High
NT Emerging Markets Custom ESG Equity Index Fund	Very High
ASI Gobal Corporate Bond Fund	Low