Enhancing our default

9 September 2015
We've got a long and proud history when it comes to product innovation and investment solutions. Our latest example proves we're by no means finished just yet.
Further information

Our Target Lifestyle Strategies offer a choice of three desired client outcomes, equity management style and five risk levels.

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Our default investment is the RLP Balanced Lifestyle Strategy (Pension & Cash). This strategy takes investors on a journey through our Governed Portfolios before gradually switching their investments to a final end point of 75% index linked, 25% cash. This is designed for those clients wanting to purchase an annuity at retirement.

We're making a change to this end point, and the investment mix, for the final five years to make it better equipped to deliver superior outcomes for those clients who prefer income certainty.

What are we doing?

From 18 October, we're going to be using a new asset mix in those final five years before retirement for the strategies that are designed to target annuity purchase.

Instead of targeting a fixed allocation customers will be gradually moved into a new actively managed fund of funds which provides more flexibility and further diversifies by investing across the fixed interest spectrum.

Why are we making this change?

Low interest rates and expensive index linked investments are making it harder and harder to confidently deliver above inflation growth in those final five years before retirement where investors are typically invested in lower-risk assets.

An exposure of 75% to index linked is an expensive asset to buy for inflation protection and can potentially lock customers into a negative real loss due to the real yield curve being negative at all durations.

Instead, we believe that tactically investing across a mixture of different fixed interest and cash assets provides more opportunity to add value and deliver better outcomes for our customers who are targeting annuity purchase.

Don't want to target an annuity?

No problem. Our Target Lifestyle Strategies offer a choice of three desired client outcomes including cash and drawdown options.

Our new Target Drawdown Strategies guide investors through our Governed Portfolios and then align the asset allocation to a Governed Retirement Income Portfolio.

These remain the only suite of risk graded Centralised Investment Portfolios (CIPs) designed exclusively for customers taking regular income from a pension.

With the added flexibility of the annuity strategies, we now have a range of options driving innovation in delivering desired client outcomes.

About the author

Ryan Medlock

Investment Proposition Manager

Ryan’s remit includes speaking investment matters at adviser events, regularly contributing to Royal London websites and trying to beat his colleagues in the fantasy fund manager competition.

Last updated: 20 Nov 2015

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The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London EC3V 0RL.