Risk & Reward

‘Nothing ventured, nothing gained’ or ‘you can never be too careful’ – which are you?

In making investment decisions, there is always a trade-off between risk and reward. Understanding your attitude to risk is a crucial step in making your investment decision.

The more risk you are prepared to take with your money, the greater the chance it will bring you substantial rewards but it is also possible to lose your money. The more cautious you are with your money, the lower your returns are likely to be.

The Default strategy, put in place by the Trustees, works on the basis that most people's tolerance for risk decreases as their career progresses. In the early years, higher-risk funds are used with the level of risk being lowered before being reduced very significantly in the final three years – a process that is known as ‘lifestyling’.

If you Pick & Mix your own funds, you make the decision about the right level of risk for you. However, the Trustees have given a risk rating for each of the funds, based on the professional investment advice they have received and you can use this as a guide when making your decision.

Please note that, whether you opt for Default or Pick & Mix, responsibility for the investment decision is yours. If you are not sure what action to take, it is recommended that you take professional financial advice.

You can find more information about investment risk from the Money Advice Service and the Pensions Regulator's guide to Making pension fund choices.