Risk Disclosure

Capital at risk

If your pension pot or retirement account is invested in financial assets, its value can go down as well as up. You may receive back less than the total contributions made, and in some circumstances you could lose a significant portion of the accumulated value. There is no guarantee of a specific retirement income unless you have a defined-benefit (final-salary) pension that promises a set level of benefits. Defined-contribution pots are not guaranteed.

Market risk

Market risk — also known as systematic risk — refers to the risk that the overall value of financial markets declines due to broad economic, political, or social factors. These include changes in interest rates, inflation, currency exchange rates, geopolitical instability, and shifts in investor sentiment. Because retirement pots are often invested over decades, market downturns close to retirement can have an outsized impact on the final value available to provide income.

Longevity risk

Longevity risk is the risk that you outlive your retirement savings. With improvements in healthcare and life expectancy, retirement could last 20, 30, or even 40 years. If your savings and retirement income are not sufficient to cover this extended period, you may face financial difficulty in later years. Annuity products can mitigate this risk by providing a guaranteed income for life, but they typically offer lower flexibility and may not keep pace with inflation.

Inflation risk

Inflation risk is the risk that the purchasing power of your retirement savings and income is eroded over time. Even a moderate rate of inflation can significantly reduce the real value of a fixed retirement income over a period of 20 or 30 years. It is important to consider whether your retirement savings and income sources are likely to keep pace with inflation. Investments that do not grow at least at the rate of inflation result in a real loss of spending power.

Sequence-of-returns risk

Sequence-of-returns risk is particularly relevant in the years immediately before and after retirement. If investment markets perform poorly during this period, the value of your pot can be reduced significantly, and withdrawals made during a downturn can permanently impair the long-term sustainability of your savings. This risk is one of the most important factors to consider when planning the transition from saving to drawing income.

Asset allocation risk

The mix of assets in your retirement pot (shares, bonds, property, cash, or alternative investments) has a significant impact on both the potential for growth and the level of risk. A portfolio weighted heavily toward equities may offer higher long-term growth potential but comes with greater short-term volatility. A portfolio weighted toward bonds or cash may be more stable but may not keep pace with inflation. There is no single correct asset allocation — it depends on your individual circumstances, time horizon, and risk tolerance.

Lifestyling and glide-path risks

Many retirement schemes automatically shift your investments toward lower-risk assets as you approach retirement (often called "lifestyling" or a "glide path"). While this reduces the risk of a sharp fall just before retirement, it may also limit growth potential and could result in a lower overall pot. The default lifestyling approach used by your scheme may not be suitable for your individual plans — for example, if you intend to draw income over a long retirement rather than purchase an annuity at retirement date.

Charges and costs

All retirement saving products and investment funds incur charges, including annual management charges, platform fees, transaction costs, and adviser fees. These charges reduce the amount available for investment and can have a significant compounding effect over decades. Even a 1% difference in annual charges can reduce the final pot by tens of thousands of pounds or dollars over a full working life. You should understand the total costs of any product or fund before investing.

Your responsibility

You acknowledge that you have read this Risk Disclosure in its entirety and understand the nature and extent of the risks involved in retirement saving and investing. You confirm that you have sufficient financial knowledge and experience to evaluate the merits and risks of any retirement planning decision you make, or that you have sought independent regulated advice to assist you.

No guarantees

You understand and accept that: (i) past performance is not a reliable indicator of future results; (ii) projected retirement income figures are illustrative and not guaranteed; (iii) invested pension pots can fall in value; (iv) you should never invest money you cannot afford to lose; (v) retirement systems and tax treatment differ by country and change over time; (vi) it is your responsibility to conduct your own due diligence.

Independent advice

We strongly recommend that you seek independent financial, legal, and tax advice from appropriately qualified and regulated professionals before making any retirement saving or investment decision. If you do not understand any part of this disclosure, seek clarification before proceeding.