Switching Between Funds
Overview
Switching lets you change where your pension is invested. You can move money from one fund to another, change how future contributions are allocated, or both. It's a way to adjust your investment approach as your circumstances or views change.
How Switching Works
When you switch funds, units in your current fund are sold at the current unit price. The proceeds are then used to buy units in your new fund at its current price. The whole process typically takes a few working days.
Your pension value stays broadly the same through a switch - you're just moving it from one investment to another. However, because markets move constantly, there might be small differences between the value when you request the switch and when it completes.
Types of Switch
You can switch your existing holdings, your future contributions, or both. Switching existing holdings moves the money you've already built up. Switching future contributions changes where new money goes but leaves your existing pot where it is.
Most people switch both together to keep things simple, but you can do them separately if you have a reason to.
Reasons to Consider Switching
Common reasons include: your attitude to risk has changed, your retirement timeline has shifted, you want to move away from or into the default strategy, or you've reviewed your investments and decided a different mix suits you better.
Switching because of short-term market movements is generally not recommended. Trying to time the market rarely works out well. It's better to choose an allocation that suits your long-term situation and stick with it.
Things to Consider Before Switching
Think about why you're switching and whether it aligns with your long-term goals. If you're moving to lower-risk funds, you might reduce volatility but also reduce growth potential. If you're moving to higher-risk funds, you might increase growth potential but also increase the chance of short-term losses.
Check whether you're in a lifestyle strategy. If so, your allocation is already being managed automatically. Switching out of a lifestyle strategy means taking over responsibility for managing your investments yourself.
Consider whether you'd benefit from financial advice before making significant changes, especially if you're approaching retirement.
How to Request a Switch
Speak to us to request a fund switch. We'll need to verify your identity and confirm exactly what you want to do - which funds you're moving from and to, and whether it applies to existing holdings, future contributions, or both.
Once instructed, the switch will be processed at the next available dealing point. We'll confirm when it's complete.
Switching Charges
Most workplace pension schemes don't charge for fund switches, and there's usually no limit on how often you can switch. However, frequent switching isn't encouraged as it can disrupt your long-term investment strategy and won't necessarily improve returns.
Different funds have different ongoing charges, so switching could mean your future charges go up or down depending on where you move to.
For Financial Advisers
For IFAs, we can process switches on client instruction following appropriate verification. We confirm current holdings, available fund options, and any scheme restrictions. Switch confirmations and updated valuations are provided once transactions complete. Bulk or regular switching arrangements can be discussed for portfolio management needs.