Fees  

LV reduces charges on smoothed pension funds

LV reduces charges on smoothed pension funds

Mutual insurer LV has reduced the fees it charges for its smoothed pension funds for new customers.

LV waived its 0.15 per cent annual service charge on its smoothed pension funds for new customers in the first year.

The reduced fee will apply to all applications received between January 22 and April 5, 2020.

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To qualify, the pension plan must be 100 per cent invested in LV’s flexible guarantee funds.

Smoothed funds are designed to provide long-term growth with a degree of investment risk, but offering a smoother return profile than is generally available from other multi-asset funds. 

The smoothing they offer can help to take away the day-to-day worry of investing by reducing the impact of short term market volatility. 

LV’s smoothed fund range includes three global multi-asset funds: cautious, balanced and managed growth, which are risk-rated as 3, 4 and 5 respectively.

The funds are managed by Columbia Threadneedle Investments alongside LV’s investment management group.

They incorporate a smoothing mechanism that works by taking the average daily unit price over the previous 26 weeks to help reduce short-term market volatility.

Clive Bolton, managing director of savings and retirement at LV, said: “This new offer serves to reward savers who choose our smoothed managed funds by waiving pension wrapper fees during their first year of investment. 

“As a mutual, this is a great example of how we can give something back to our members. LV can also reward its eligible members with a mutual bonus, which provides a potential investment boost. Our goal is to incentivise more people to save strategically for their retirement.”

LV’s mutual bonus is available after a year of investment and is based on the performance of LV over the preceding year. This bonus is applied to the flexible guarantee funds. 

Tim Morris, independent adviser at Russell & Co, said: "I'm not a big fan of smoothed funds, partly because they have historically been expensive and not transparent with charges. Also because the majority of my clients have sufficient assets to have a reasonably high capacity for loss.

"In addition, if you manage clients expectations and help them fully understand how their money is being invested, they tend to be comfortable with the ups and downs of the stock market.

"The degree to which they participate in the markets depends on their risk profile. The clients who I use smooth funds for are those who are at the cautious end of the spectrum. I still wouldn't use them for clients with a high appetite for risk."

amy.austin@ft.com

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