Launched today, the Timewise Target Retirement Choice Fund sits under State Street’s range of funds for UK workplace pension schemes, and targets a balance of capital stability and growth.
It offers full flexibility, recognising that members might want to drawdown income over time, take periodic cash withdrawals, or purchase an annuity.
“Following the pension freedom reforms, we thoroughly researched the attitudes of members in both the saving and pay-out phases,” said Nigel Aston, head of SSGA’s defined contribution business in Europe.
“What became very apparent was the desire for a default option in retirement that allowed people to keep their options open and that inspired investment confidence.”
The UK-domiciled fund is highly diversified across developed and emerging market equities, government and corporate bonds and a range of alternative assets.
All the funds in the range are structured on passive building blocks with active asset allocation laid over the top.
They are designed to evolve and adapt over time in line with changing markets and investor attitudes, incorporating an annual review to ensure the fund’s asset allocation remains relevant.
No sudden moves
“People don’t always know in advance exactly when they will retire, but our research suggests that they think it will be a gradual process rather than a sudden move,” said Aston. “They are also unsure about how they will use their savings now that they have more options.
“Retirement can be unpredictable and default funds need to be more intuitive by providing a broadly appropriate level of risk for members based on their stage of life – rather than targeting a specific outcome, be it cash, annuity or drawdown on a particular date.”
He added: “Our mission is to ensure that people can be confident that their investments are being expertly managed across each phase of the retirement savings journey and beyond.”
