How my investments work

How do investments affect my IWDC pot?

When you and your employer pay into the Industry-Wide Defined Contribution (IWDC) Section, the money is then invested into funds, with the aim of building your savings over time.

How these funds perform determines how much money is in your pot (known as your Personal Retirement Account) and whether its value goes up, or down. That’s why it’s important to understand your options and check your investments regularly to make sure they’re still working for you. Read on to find out more.

A sign, with different arrows pointing to this and that, stood next to a small plant pot with a green plant growing. There's also a separate pile of coins and a £50 note

Your investment choices

When you invest the money you pay into your IWDC pot, you can:

have your investment choices managed for you. We call this a Lifestyle strategy
make all of the investment decisions yourself, choosing from the range of investment funds, or;
have a mix of both

You can find out more about Lifestyle strategies and investment funds below and on the my fund choices page. If you don't choose, you will automatically be invested in the Flexible Drawdown Lifestyle strategy.

Always remember there’s a risk that the value of investments can go down as well as up.

IWDC investment guide

Before making any choices, take a look at our IWDC investment guide, which offers support on the investment options available and things to consider when choosing what's right for you.

Download the guide

Having your investments managed for you with a Lifestyle strategy

If you don’t feel comfortable looking after your investments directly, you can opt for a more ‘hands-off’ approach and choose a ‘Lifestyle strategy’.

How a Lifestyle strategy works

Lifestyle strategies build your pension savings while you’re still working and reduce the risk of a fall in value as you near retirement. They do this by investing in a selection of underlying funds and changing your allocation to each fund as you get closer to your Target Retirement Age (TRA).

While you are still a long way from retirement, more of your money will be allocated in higher-risk funds to try to help them grow more. As you get within ten years of your TRA, your money will gradually be moved into lower-risk funds to help reduce the risk and protect the value of the pension pot you've already built up.

Visit the Target Retirement Age page for more information about your TRA, including how to check and change it.

Target Retirement Age (TRA)

You can set, check, and change, your TRA in your myRPS account if you've chosen to invest in a Lifestyle strategy. Go to the My Pension area of your account and select the Funds page.

Choosing a Lifestyle strategy

There are 3 Lifestyle strategies offered by the Scheme:

Annuity Purchase Lifestyle strategy
Flexible Drawdown Lifestyle strategy
Full Cash Withdrawal Lifestyle strategy

You can learn more about each of these on the my fund choices page. Which one(s) you choose could be based on:

how much risk you are prepared to take
how you might want to use your pot when you retire. For example, this could be as a one-off lump sum, as flexible payments though drawdown, or as fixed payments in an annuity.

The Trustee invests your IWDC pot on your behalf, based on your choices.

Check your choices regularly

It’s really important that you take an active interest in your investment choices and review them regularly. You are still able to change your fund choices even if you leave the IWDC Section and no longer pay into it. No investment is 100% safe and you may want to change your choices depending on your circumstances or world events.

A man sits in his living room looking over paperwork

Managing your investments yourself, choosing from a range of funds

If you feel comfortable looking after your investments and want to be more hands-on, you can manage your investments by yourself.

You choose:

which funds to invest in
how much of your IWDC pot you want to invest in each fund

Your fund choices

There are 7 funds to choose from:

Corporate Bond Fund
Deposit Fund
Global Equity Fund
Long Term Growth Fund
Socially Responsible Equity Fund
UK Government Fixed-Interest Bond Fund
UK Government Index-Linked Bond Fund

You can find out about each of the investment funds, including their risk ratings, on the my fund choices page.

Alongside these 7 funds, you can also invest in any of the 3 Lifestyle strategies mentioned above.

Fund risk ratings and what they mean for you

Each fund has a different objective and risk rating, so you can choose the one that’s right for you. For example, the lowest risk rated fund is the Deposit Fund but there are medium and high-risk funds too. Please check the factsheets for your chosen fund(s) to make sure you are comfortable with the level of risk.

Higher risk funds are expected to get higher returns, but they could also drop more sharply in value. Lower-risk funds are less likely to grow much in value but are also more stable so less likely to drop in value. You might want to consider higher risk funds if you're further from retirement and are willing to take a bit more risk for potentially higher rewards.

All funds can experience rises and falls over the short to medium term. The higher the risk rating, the larger the rises and falls are likely to be.

If you choose this hands-on investment funds approach, your money will not automatically move from high to lower-risk funds as you get closer to retirement. This means it’s up to you to choose if and when that’s necessary, and to make any fund switches yourself.

Fund risk ratings

You can find the risk ratings for each of the funds on the fund risk ratings page.

Visit now

Making the right choices for you

When choosing which investment options are right for you, ask yourself:

How involved do I want to be in my investments?
How do I plan to use my pot?
How much risk am I prepared to take?
When do I want to retire?

Your answers will help you work out which options suit your own personal plans and circumstances. You can always change your choices later.

Watch the videos below to learn more about investment risk and the level of risk you're comfortable taking.

Your attitude to risk
Risk and reward

Checking and changing your investment choices

You can check and change your investment choices at any time by logging in to your myRPS account. Go to the 'My Pension' section of your account and the 'Funds' page.

If you’re invested in a Lifestyle strategy, you can also check, and change, your Target Retirement Age (TRA) in your myRPS account. Any changes you do make to your TRA may affect your investments, including the allocation of your pot between investment funds and the risk profile of your investment.

Try out the Retirement Modeller to help you understand how changing your Target Retirement Age could affect your pot. The modeller is available in the 'Planning for the future' section of your myRPS account.

You may also want to speak to an Independent Financial Adviser (IFA) before making any changes. You can find more information on the guidance and advice page.

What to read next...

My fund choices

Learn more about different investment options available to you as a member of the IWDC Section.

My Target Retirement Age

Your Target Retirement Age (TRA) is the age you plan to take your IWDC pot. You should set a TRA if you invest in a Lifestyle strategy so your funds are switched at the right time.

Guidance and advice

Where to go for further support on your options.

I'm here to help.

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Each of Railpen Limited (registered in England and Wales No. 2315380) and Railway Pension Investments Limited (RPIL) (Registered in England and Wales No. 1491097) is a wholly owned subsidiary of Railways Pension Trustee Company Limited (Registered in England and Wales No. 2934539). Registered office for each company: 100 Liverpool Street, London EC2M 2AT. RPIL is authorised and regulated by the Financial Conduct Authority for some of its activities. The administration of occupational pension schemes is not a regulated activity. Full details about the extent of RPIL's authorisation and regulation by the Financial Conduct Authority are available from us on request.