Standard Life has launched a new ‘ready made’ non-advised drawdown option, which it says is designed to help savers spread investment risk while aiming to grow savings throughout a person’s entire retirement.
The Standard Life Active Retirement product is designed for non-advised customers using a three-pot model each with differing risk levels.
It is based around the concept of ‘lifestyling’ - shifting risk allocation depending on age and assumed risk tolerance - and tailors risk to the expected time horizon income is being taken over. In short: the shorter the income horizon, the bigger the allocation to lower-risk funds.
The first pot contains very low-risk investments designed to remain fairly stable; the second houses investments selected to provide a better return while still relatively low risk; and the third is filled with medium-risk investments selected to provide a higher return over the longer-term.
Allocation is automatically set at outset based on information about the customer and their expected withdrawal patterns. In some circumstances individuals may even start with money in two pots not three, the firm explained in a statement.
“For example, if you’re taking a regular income and tell us you plan to take all your money within seven years, your money is automatically invested in pots one and two and not in pot three as this aims to deliver a higher return over the longer term,” a guide explained.
The provider stated that the 6 April pension freedoms shifted savers’ focus from the single, fixed goal of purchasing an annuity to an investment approach designed to achieve a series of goals with different time windows.
Jenny Holt, head of investment solutions at Standard Life, said that post-retirement solutions must now be designed to make pension savings last and give savers confidence to invest and to stay the course during retirement.
“We recognise that people will use their retirement savings in a variety of ways and they need help building a portfolio to provide a regular income for the rest of their lives, for a fixed period of time, or to take ad hoc payments as and when needed.”
The firm added that support comes in the form of its Expert Centre, with staff ready to guide or advise customers through their options over the phone.
The pots are managed by Standard Life’s internal teams, who review them to check that they are meeting their aims and can make changes if they think it’s appropriate.
peter.walker@ft.com
