Wealth management group St. James’s Place is launching its InRetirement fund range, developed specifically for those looking to support a regular income through their retirement.
The firm has identified the next 10 years as the decade of retirement and one of the key challenges is the ‘Baby Boomer’ generation retiring.
Today in the UK, there are around 12 million people over the age of 65, roughly 20% of the population, and many are living longer. But it poses a challenge, to provide a sustainable income in retirement.
In response, SJP has worked with State Street Global Advisors to roll out three funds, which are named Prudence InRetirement, Balance InRetirement and Growth InRetirement.
The funds will launch on 21 September and will meet client goals in decumulation, from prioritising a steady income to maximising the value of an inheritance.
They will be highly liquid, with a total return focus, designed for investors who are looking to achieve a regular income through ongoing withdrawals from their investment pots.
- The Prudence InRetirement fund has the least investment risk, suitable for clients who have only some capacity for loss and flexibility within their individual circumstances;
- The Growth InRetirement fund has the most investment risk, suitable for clients who have a greater capacity for loss and flexibility within their individual circumstances; and
- The Balance InRetirement fund is situated in the middle of the two other fund profiles.
State Street Global Advisors will manage the funds, with responsibilities including ongoing rebalancing of the underlying funds, cash flow management and currency hedging.
The decumulation challenge
Rob Gardner, director of investment management at SJP, said: “The next decade is going to be the decade of retirement. In the past 100 years we’ve seen a rapid increase in life expectancy. At the turn of the last century you could expect to live until age 38, today the figure is into the 80s. And children born today have a 50% of reaching their 100th birthday.
“We have an aging population, too. The proportion of the UK population aged 65 or over versus those 18 and under is the highest it’s ever been. They have spent the past forty years in the workplace, earning a salary and, hopefully, saving towards their retirement.
“The question is: how do they turn their retirement savings into an income stream that lasts as long as they live? But not only that, how does that income keep pace with inflation? A comfortable income today may not be enough in ten, twenty- or thirty-years’ time.
“The challenge, the decumulation challenge as we call it in the industry, is simply solving the problem of turning your retirement savings into a lifetime income stream.
“At SJP, we believe that the solution is best achieved through the combination of high quality relationships, an advice process that specifically focuses on mitigating the risks in retirement supported with goal-based planning tools, and access to an investment solution that has been purpose-built to deliver an inflation-proof income stream in retirement.”