Lifestyling vs Pension Drawdown: Is Your Pension on the Wrong Track?

When you set up a personal or workplace pension, your money is usually placed in default investment funds aiming for long-term growth. One of the most common defaults—especially in older schemes—is the lifestyling strategy. This glide-path approach systematically reduces investment risk as you approach your pre-selected retirement date. The logic is to defend your pension pot from a sudden market crash shortly before you cash in and buy an annuity.

But the retirement landscape has shifted dramatically. Since the introduction of pension freedoms in April 2015, record numbers of savers plan to keep their pensions invested through flexible pension drawdown instead of locking into a lifetime annuity. If that’s you, sticking with a traditional lifestyling schedule could cap the growth you need to support a decades-long retirement.

In this in-depth guide we’ll unpack:

• How lifestyling strategies work under the bonnet

• Why they were designed for an annuity-first retirement model

• The hidden opportunity costs if you intend to stay invested in drawdown

• Practical steps to check whether you’re affected

• Questions to ask a regulated financial adviser about aligning your portfolio with your real goals

Key takeaway: Lifestyling isn’t bad per se—it’s just a tool built for a different job. The real risk is owning a strategy that no longer matches the retirement you want.

How Does a Lifestyling Strategy Work?

1. Growth phase (20+ years to retirement)
   Early in your career the strategy is equity-heavy—often 80-100 % in global stock-market trackers. The aim is compound growth greater than inflation.

2. Preparation phase (about 10–15 years out)
   Around age 50–55 the glide path begins. Equity exposure is trimmed each year, replaced by bonds and gilts.

3. Consolidation phase (0–5 years out)
   By your selected retirement age equities might be as low as 20 %. Some schemes even move entirely into short-dated bonds and cash.

4. Crystallisation
   Historically, day one of retirement meant buying an annuity. Lifestyling sought to match annuity prices so that a sudden market dip wouldn’t reduce the income you could secure.

That design made sense when almost everyone bought an annuity. But what if your “crystallisation” is simply moving into drawdown and staying invested?

Why Lifestyling Is a Legacy Approach in the Age of Drawdown

1. Annuitisation Is No Longer the Default

Figures from the FCA show fewer than 10 % of defined-contribution retirees now buy an annuity at outset. Most opt for drawdown or leave funds untouched. A glide path aimed at annuity purchase is therefore mis-aligned for nine out of ten savers.

2. You Could Sacrifice Decades of Growth

Retirement isn’t a single day—it can last 30 + years. Shifting heavily into low-return bonds at 55 could mean your pot misses the equity-market returns needed to combat inflation in later life.

3. Sequence-of-Returns Risk Works Both Ways

Yes, big market drops just before retirement hurt. But so does locking in low returns forever. In drawdown you still need exposure to growth assets to buffer against withdrawals and rising living costs.

4. Glide Paths Are One-Size-Fits-All

Your employer’s default may not consider your total wealth or risk appetite. Owning a lifestyling fund could give a false sense of security that your investments are “managed” when in fact they’re on autopilot.

Signs You Might Be in a Lifestyling Fund

• Your statement shows automatic “portfolio rebalancing” or a “target retirement date fund”.

• Equity exposure falls by a fixed percentage each year.

• Fund name includes words like Lifestyle, Target Retirement, or a specific year.

• Charges look low (around 0.3 %) because these are often passive blends.

If any of the above ring true, flag it for a closer look.

Case Study: Emma, 57 – Planning for Drawdown

Emma has built up £280,000 in her workplace pension. The default scheme uses a 75/25 equity/bond split until 15 years before retirement, then transitions to 20 % equities by age 65. Emma wants to reduce her working hours at 60 and draw 4 % a year while leaving the rest invested.

Under her current glide path, her equity allocation falls below 40 % just as she needs growth. A simulation shows a 32 % probability of fund depletion by age 88. A drawdown-suitable portfolio—60 % global equities, 30 % diversified bonds, 10 % alternatives—improves the success rate to 80 % while keeping volatility within her comfort zone.

Lesson: The default may feel safe, but safety is relative to your objective.

Alternatives to Traditional Lifestyling

How to Review Your Pension Investments

1. Log in to your provider’s portal and download the latest statement.

2. Identify the funds and note the equity/bond allocation.

3. Check your Selected Retirement Age. Moving it later can slow or pause the glide path.

4. Compare your allocation with what’s needed for drawdown success.

5. Seek professional guidance if you’re unsure.

For a quick sense check, try our pension drawdown calculator.

The Role of a Financial Adviser

A good adviser can:

• Stress-test your drawdown plan under thousands of market scenarios.

• Recommend tax-efficient withdrawal orders.

• Monitor portfolio drift and rebalance opportunistically.

• Provide behavioural coaching when markets wobble.

Advice fees are transparent and often outweighed by the benefit of ending up with the right strategy.

Frequently Asked Questions About Lifestyling and Drawdown

Does everyone in a pension scheme get lifestyling?
Not always. Most older workplace schemes still default to a lifestyling glide path, but many modern master trusts now offer drawdown-target or “balanced-lifestyle” funds. Always check the investment choices section of your annual benefit statement.

Can I switch out of a lifestyle fund without advice?
Most online platforms let you change funds at any time, but switching without a clear plan can crystallise losses or increase risk. If the amount is material to your retirement, regulated advice is strongly recommended.

Will moving out of bonds now mean higher risk?
Risk depends on time horizon. A 35-year-old with three decades to invest may reduce long-term risk by adding equities. A 65-year-old relying solely on their pension may need a blend of growth, income, and capital preservation.

Putting It All Together

Lifestyling was built for a world where retirees bought annuities. For today’s flexible drawdown generation, that default setting can be more handbrake than safety belt.

• Too much in bonds early on risks eroding your future purchasing power.

• Staying invested in a diversified growth portfolio may give you a higher sustainable income.

• The right answer depends on your goals, risk tolerance and wider finances—not a one-size-fits-all glide path.

Next Steps

1. Check whether your pension is following a lifestyling glide path.

2. Compare your current allocation with drawdown requirements.

3. Consult a qualified financial adviser to craft an appropriate portfolio.

Ready to take control? Use our free tools to see how your pension stacks up, or book a no-obligation chat with a drawdown specialist today.