Automatic lifestyling default funds may be doing more harm than good to pension pots in the current environment, by selling equity and property assets at low levels and then locking investors into gilts and cash, says a pensions IFA.

Kelly Wheble, partner at Positive Solutions, owned by Aegon UK, is advising clients that now may be the time to consider taking manual control of their pensions as they approach retirement, rather than allowing funds to be automatically switched into safer assets.

Wheble said that he believed that those people set to retire within the next five years and who are relying on occupational money purchase schemes and personal or stakeholder pensions should check whether their funds are due to be automatically switched, and if this is so, consider whether the option suits their retirement objectives.

"This kind of lifestyling can work very well - it probably saved money of those who retired in 2007 or early 2008 from sharp falls in value of their pension funds," Wheble said. "But these unprecedented market conditions may demand a very different approach.

"Shares and property values have fallen, gilt prices have risen and cash is delivering no return. In these circumstances investors ought to seriously consider talking to their adviser about switching off the autopilot and taking manual control while waiting for financial markets to stabilise."

- Pensions Age April 2009

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