The RCF forms part of our ‘pension saving journey’ for Scheme members.
For most of our members’ working lives we invest their pension savings in the Diversified Growth Fund (DGF), to help them grow as much as possible.
Fifteen years before members’ planned retirement age, we gradually switch most of their pension savings to the RCF with the aim of protecting their value, reducing the risk of them falling in value before they’re due to be turned into retirement benefits. This is an investment approach known as lifestyling.
Unless members tell us otherwise, we assume their planned retirement date is their State Pension age.
At planned retirement age, 80% is in the RCF and 20% in the DGF. We call this the ‘Journey Path’.
The advantage of the Journey Path is that it’s an automatic process designed to protect your pension savings from big gains and losses as you approach your planned retirement age. We move your savings gradually to protect against them all being moved when markets are low.
Switching investments may not be appropriate if you want to take your benefits before or after your planned retirement age. This is because we may move your pension savings to low-risk funds when you could continue to let them grow.
Alternatively, your savings could experience short-term losses in the run-up to taking your benefits, because they were left in our Diversified Growth Fund. So, it’s important that you keep us updated if your planned retirement date changes.
We explain this in more detail on pages 7-9 of our Member Booklet. You can download a copy here.