Hi,
I currently invest in low cost index trackers and rebalance the asset allocation annually to hold my age in bonds as a %, e.g. age 40, 40% holding in bonds, 60% equities.
I was in a good DB scheme for 15 years and would like your thoughts on how to consider the value of the pension as part of my allocation. As far as I can see there are 2 options:
1. Consider the value of the pension as a bond investment and adjust my investment asset allocation appropriately to maintain the desired bond/equity split
2. Ignore the pension for the asset allocation, but use the future value of the retirement income stream to reduce the pension target, i.e. the amount I need to save separate to my pension to get by comfortably.
My gut feel says the former is the most logical way to consider it. Thanks in advance for any advice.