Irish Life Empower Personal Lifestyle Strategy

[moneymakeover]

Hello

In my defined contribution company pension I am 100% global equity.
This is because I am only recently beginning to contribute any AVCs and the total fund is very low.

Now with 13 years to retirement the system is flagging a risk that I'm overly exposed to equities.

Irish Life offers a "personal lifestyle strategy" which uses high growth fund until 11 years out.

Then from 11 years out from retirement: 100% empower growth 0% empower stability
6 years out person is 50% empower growth 50% empower stability

From 5 years out the money is switched into target retirement fund (lump sum and arf)

Couple of questions:
Is the Personal Lifestyle Strategy a particularly conservative approach?
Is there risk the market is overpriced and now is a good time to switch proportion to bonds?
(then switch back if there is a correction)

And can person explain the ARF option in Irish Life: is this usual: stay with Irish Life for the duration of retirement also? Or choose another ARF provider.

Is the empower growth performance published over past years?
I can see a funds called "Diversified Growth" : is that same?

 

[LDFerguson]

Is there risk the market is overpriced and now is a good time to switch proportion to bonds?
(then switch back if there is a correction)

What you describe here is market timing. It's notoriously difficult to achieve. Maybe the market is overpriced now. Maybe it has years of further growth to come. If you switch now, you will lose the future years of growth. Or maybe you'll switch just before a crash. Nobody can tell you that. If you do switch out of the market, how will you know when to switch back? When will you know that the correction has ended? As the saying goes, nobody rings a bell at the bottom. The recovery can be sudden and swift. After a major correction in 2008, the recovery started in Spring 2009. It was swift and if you weren't back in the markets by then, you would have missed a huge part of it.

You're better to pick a long-term strategy and stick with it than to try to time the markets.

And can person explain the ARF option in Irish Life: is this usual: stay with Irish Life for the duration of retirement also? Or choose another ARF provider.

When you retire, you should be eligible for a tax-free cash lump sum. With the balance you can go for an annuity (fixed income for life) or an ARF. You can choose any company you want for an annuity or an ARF; not just Irish Life. If you are going to choose an ARF and not an annuity, this can have an impact on your investment decisions before retirement as that part of your fund will be remaining invested after you retire. If you're going for an annuity it's generally advisable to get out of the markets in the run-up to retirement as you want to avoid a market crash just before you purchase your annuity.

Regards,

Liam
http://ferga.com