Glidepath questions and answers

I want to buy an annuity when I retire – is Glidepath right for me?

Glidepath is designed for people who want to keep their pension money invested when they retire. Pension regulation changes mean that the option to take Income Drawdown is easier and more people are now looking for flexibility in retirement which is why we have launched the new Glidepath.

However, if you’re planning to buy an annuity, with your pension pot, in the next few years, Glidepath may not be right for you because it’ll have more money invested in shares than our Automatic Fund Selector (AFS). This means greater ups and downs in value. If you want that annuity, it might be best to:

  • Turn off AFS/Glidepath and choose your own investments for your pension savings. This would allow you to invest more of your money in a lower risk, more defensive fund between now and when you plan to buy an annuity.
  • Move your pension to another provider that offers a lifestyle strategy better suited to your retirement goals

If you’re unsure, over 50 and need advice, please speak to Pension Wise (pensionwise.gov.uk).

Otherwise, please speak with an independent financial adviser (you can find one at unbiased.co.uk.

What are my current options if I don’t want to move to Glidepath?

You can:

  • Turn off AFS/Glidepath and choose your own investments until you retire. You could still follow the AFS lifestyle strategy if you wish, but you’ll need to tell us when and how to move your investments – we won’t do that automatically.
  • Move your pension to another provider that offers a lifestyle strategy better suited for someone who’s looking to buy an annuity on a certain date 
  • Take independent financial advice to find out the best option to suit your needs. You can find an advisor at unbiased.co.uk.

What if I move to Glidepath but then change my mind?

No problem, you can switch Glidepath on or off any time.

If you switch Glidepath off, you will remain invested in the same funds, but the amount invested in each won’t be rebalanced/ adjusted by us each year. You’ll then need to tell us if you want to make changes to the way your pension pot is invested. 

What are my options at retirement?

Thanks to changes in pension regulations, you’ve more choice these days about how and when you access your pension. As well as being able to take a 25% tax-free lump sum, you can:

  • Take it in smaller amounts over time (25% of each withdrawal is tax-free)
  • Turn it into a regular income through ‘income drawdown’ or take a cash lump sum
  • Turn it into a regular income by buying an annuity that pays a guaranteed income for life

We’ve designed Glidepath to support pension savers who wish to stay invested through retirement. This means it manages your investments in line with your age and life stage (i.e. what your money needs to be doing for you at each point in the lead up to retirement and beyond), rather than the date you think you might retire. It gives you more flexibility on when and how you retire.  

At the moment, our Glidepath pension enables you to take your savings as a single lump payment. If you're retiring soon, this could mean you need to transfer your pension elsewhere if we don't yet have the retirement choice you want. We're working hard to make other choices available in the future.

You can find out more about your retirement options at unbiased.co.uk

Remember, tax treatment depends on individual circumstances. Tax law and practice can change and may affect your pension.

I know when I want to retire – can I change the Glidepath dates to fit with my fixed retirement date?

No. If you have a fixed retirement date in mind, you may want to consider self-managing your investment funds as you approach it – especially if you intend to cash-in your pension in one go and/or buy an annuity.

Glidepath is designed to work for most people based on their age, rather than a fixed retirement date.

This means it’ll manage your investments up to, into and during your retirement. It takes a gradual approach when adjusting your investment mix, keeping some of your pension invested for further growth during your retirement. 

If you know you want to buy an annuity or cash-in your pension pot at a fixed date, Glidepath may not be right for you – especially if that date’s in the next few years.

Why is the lifestyling feature set to run until I’m 65, rather than the state pension age?

Glidepath is designed around age and life stage, rather than a fixed point in time to access your benefits. It aims to work for most people, and for the range of ages when most people expect to start accessing their pension pot. For many people with private pension arrangements, this date will be different to their state pension age. 

Additionally, Glidepath is designed to keep some of your pension pot invested for growth throughout retirement. It’s for people looking to draw an income from their pension pot (an option we hope to add in the future), rather than buy an annuity on a fixed date. 

Will Glidepath give me a bigger pension pot than AFS?

None of us know what will happen to investments in the future, so there are no guarantees.

However, we’ve designed Glidepath in a way we think will offer better retirement outcomes for people who want to use today’s flexible retirement options.

The funds we use for Glidepath are different to those we use for AFS:  

  • AFS funds are passive tracker funds. They track UK equity and bond indexes.
  • Glidepath funds are globally diverse, multi-asset funds. These invest in a mix of different investments and countries, and are regularly reviewed on your behalf.

We think the combination of the Glidepath’s lifestyling strategy plus the enhanced diversification of the new funds will provide improved retirement outcomes for people who want flexible income during their retirement. 

Does Virgin Money offer flexible retirement options such as income drawdown?

We don’t currently offer flexible options for accessing your pension pot in retirement. But you do have the option to take all of your pension as a cash lump sum with 25% of it tax-free.

If you want to buy an annuity, drawdown income or access part of your pot, you’ll need to move your pension pot to another provider.

However, we’re working towards introducing flexible retirement options for our pension customers. We’ll let you know more in greater detail in 2021.

When does my money move from AFS to Glidepath?

We’ll be moving money from AFS to Glidepath during November.

The switch of your investments will be processed using the relevant fund prices (the market value of the fund units) on the day of your switch – we are processing switches throughout November and we cannot confirm the precise day we will switch your investments in advance.

You’ll be able to see the details of the switch by checking your Online Service during December and also on your May 2021 pension statement. 

Will my pension pot be ‘out of the market’ while it’s moving from AFS to Glidepath – what will that mean for my pension?

To move your pension pot to Glidepath, we’ll sell your current investments and reinvest the cash proceeds into the relevant Glidepath fund(s) – that’s the Virgin Money Pension Growth Fund 3 and, if applicable, the Virgin Money Pension Defensive Fund.

It could take up to a couple of days for the cash within the new fund(s) to be fully reinvested across all of the UK and international markets within the new funds.  We’ve worked hard to minimise the time this will take, but it may mean that you are not fully exposed to any rises (or falls) in markets over a day or two.

What are the new charges?

Fund invested in

Ongoing annual charge

Total annual charge (fund valued at £10,000 all year)

Growth Fund 3

0.85%

£85

AE Growth Fund 3

0.75%

£75

or

or

or

Defensive Fund and
AE Defensive Fund

0.70%

£70

or

or

or

Glidepath charge
(depending on your age and
how your pension is split
between our two new funds)

Between
0.85% and 0.75%

Between
£85 and £75

Why are the charges for the Glidepath funds higher than those in AFS? And why has the charge for the workplace pension increased with the new Glidepath when it was only reduced in January 2019?

Our two new funds have higher charges than the ones used by our existing AFS (0.60%), but there are good reasons. The new funds are more diverse, holding a wider range of investments. Rather than just investing in the UK, they will spread your money across lots of different markets both in the UK and overseas. This means you will have access to markets such as the US, China and Japan – the three largest economies in the world. The Funds will also benefit from regular review of the mix of shares and bonds and geographical allocations, to ensure they remain aligned with our latest research and thinking.

The higher cost reflects the higher cost in managing the investments, but we believe they will help deliver better outcomes after fees than the current funds.

Why are the charges for the Virgin Money Growth Fund 3 higher than those for the Virgin Money Defensive Fund?

The pricing is different because the investment is different: the assets, risk, and potential return of each fund need to be managed differently.

For example, the Defensive Fund invests more money in lower risk assets, with a lower expected return, and lower running costs. It’s priced at a level that gives the fund a better chance of delivering good returns.

Rest assured, each of our funds has been fully assessed to ensure it’s priced competitively and offers good value.

How do I work out my total cost for Glidepath?

Glidepath invests your money in a mix of two funds: the Virgin Money Growth Fund 3 and the Virgin Money Defensive Fund.

Your total cost will depend on how much of your money is invested in each of these funds. This will depend on your age. The table below shows an example of how this cost would be worked out. If you would like to see your fund mix for your age, our Glidepath page has the information you need.

Personal pension example

Age

Amount

 

Percentage in Virgin Money Growth Fund 3

 

Ongoing annual charge

Total amount

60

£10,000

x

65%

x

0.85%

£55.25

Plus

Age

Amount

 

Percentage in Virgin Money Defensive Fund

 

Ongoing annual charge

Total amount

60

£10,000

x

35%

x

0.70%

£24.50

Total charge

£79.75

Workplace pension example

Age

Amount

 

Percentage in Virgin Money AE Growth Fund 3

 

Ongoing annual charge

Total amount

60

£10,000

x

65%

x

0.75%

£48.75

Plus

Age

Amount

 

Percentage in Virgin Money Defensive Fund

 

Ongoing annual charge

Total amount

60

£10,000

x

35%

x

0.70%

£24.50

Total charge

£73.25

Remember, these are just illustrations based on a simplified fixed amount of £10,000. In reality, the value of your pension won’t stay the same; it’ll move each day. And the costs will be calculated and adjusted for within the daily unit price of your funds – you don’t need to pay a separate charge to us.

If you’d like an actual quote based on your pension, please call us on 03456 10 20 30.

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03456 10 20 40

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