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Investing in pension drawdown – 3 options to consider

We take a closer look at three options to think about when investing in pension drawdown.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

Drawdown has become one of the more popular retirement options over the years. It’s flexible and you have the chance to grow your income throughout your retirement if your investments do well. But it doesn’t come without risks. Investments and any income they produce can fall as well as rise in value, so you could get back less than you put in.

Choosing where to invest your pension isn’t always easy though. The investments you choose will have an impact on how much income you get in retirement, and how long your pension lasts. If you’re an existing drawdown investor, or you’re planning to move into drawdown soon, we offer three options for investing.

This isn’t personal advice. If you’re not sure if a certain action is right for you, ask for financial advice. Remember, you can’t usually access the money in your pension until you’re 55 (57 from 2028).

Option 1 - choose your own individual investments

This gives you the most control, but it’s a hands-on approach. You can choose from our full range of investments, including funds, shares, bonds and more.

When picking your own investments, it’s important to diversify. By diversification, we mean not holding all your eggs in one basket. Diversification involves choosing a range of different types of investments from around the world, and in a number of different sectors.

More on getting started with investing

Different types of investments perform well at different times, and so do different markets around the world. Holding a mixture could help shelter your investments when some areas don’t perform as well as others.

While you can never completely get rid of risk, keeping your investments well diversified is one of the best ways to help spread your risk.

To stay up to date with the latest on shares and funds, see our share insight and fund research.

How to build an investment portfolio

Option 2 - choose from selected drawdown funds

There are thousands of funds out there, which can seem overwhelming. Our experts have selected a number of funds that they feel offer promising opportunities for drawdown.

Some are individual funds you could include as part of your portfolio. Others are multi-manager funds which invest in a range of other funds to help give you a balanced portfolio. Download our drawdown investment ideas and strategies factsheet to have a closer look at these investment ideas.

They aren’t a personal recommendation, so you still need to review your investments regularly to make sure they’re still suitable for your circumstances and if you’re at all unsure you should seek advice.

Investing in funds isn't right for everyone. Investors should only invest if the fund's objectives are aligned with their own, and there's a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a diversified portfolio.


Option 3 - leave it to an expert

If you’re comfortable with the risks associated with drawdown, but don’t feel you have the time or expertise to choose and review the investments yourself, you could consider financial advice.

To find out if advice is right for you, the first port of call is to speak to our advisory helpdesk. They’ll explain how an adviser can help you meet your goals, what benefits you might see from taking advice, and how much it costs.


What other help is available?

What you do with your pension is an important decision. We strongly recommend you understand your options and check the option you choose is right for your circumstances.

Take advice or guidance if you’re not sure. The government provides a free and impartial service to help you understand your retirement options – more on Pension Wise.

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    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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