Legal & General Retail Retirement has launched its investment pathways solution early with a drawdown product for non-advised savers.
L&G’s Personal Pension Drawdown allows savers to select from a choice of four investment solutions, with each pathway aligned to a separate fund which is suited to different drawdown objectives.
The provider will trigger any alerts should an individual change their drawdown habits, or start withdrawing too much money too quickly.
Prompts will also be sent to savers if they do something that is not in line with their selected investment pathway.
Emma Byron, managing director of L&G Retail Retirement Income, said: “Since pension freedoms, the proportion of people choosing to manage their retirement finances themselves, and enter drawdown without advice, has risen substantially.
"This has been driven by a range of reasons, including concerns about affordability, or the simple desire to take more control.
“While there are some signs of people considering financial advice in the wake of recent market volatility, the reality is that many will continue to go it alone.
“For these people, we felt it was important to create a flexible product that comes with customer support and is simple and engaging.”
Across each pathway L&G has a service charge of 0.25 per cent irrespective of the fund size.
Fund management charges then vary between 0.14 and 0.31 per cent depending on the investment pathway chosen.
Combined with the service charge, overall fees are between 0.39 and 0.56 per cent.
Individuals will be able to apply for and manage the drawdown product online through a self-service portal.
L&G’s four pathways are as follows:
Objectives | Investment fund | Service charge | Fund management charge | Total |
I have no plans to touch my money in the next 5 years | Multi Index 5 fund | 0.25 | 0.31 | 0.56 |
I plan to use my money to set up a guaranteed income (annuity) within the next 5 years | Sterling Corporate Bond Index fund | 0.25 | 0.14 | 0.39 |
I plan to start taking my money as a long-term income within the next 5 years | Multi Index 4 fund | 0.25 | 0.31 | 0.56 |
I plan to take out all my money within the next 5 years | Short Dated Sterling Corporate Bond Index fund | 0.25 | 0.14 | 0.39 |
Ms Byron said: “In an uncertain investment environment people might consider splitting their pension pots to combine the potential investment benefits and flexibility of drawdown with the guaranteed income of annuities.
"We want to offer customers the option to access their pension flexibly, with the ability to choose from a range of retirement income options.
“In essence, we’re providing our customers with a selection of straightforward, simple to select investment pathways that, together with the right support and tools, should give them more confidence in managing their money."
As part of its latest work on retirement the FCA proposed pension providers offer their non-advised customers a choice of four investment pathways to meet their retirement objectives.
This was after it found many consumers were solely focused on taking tax-free cash from their pensions and were "insufficiently engaged" with deciding how to invest funds that moved into drawdown.
The proposed pathways included an option for consumers who have no plans to touch their money in the next five years and for those who plan to use their money to set up a guaranteed income within the next five years.
The regulator also proposed an option for consumers who plan to start taking money as a long-term income within the next five years and those who plan to take out all their money within the next five years.
amy.austin@ft.com
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