LV has launched its investment pathway funds before the regulator’s deadline to help non-advised savers when drawing income from pensions.
LV’s package 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 use the four pathways for existing clients who wish to enter drawdown, but have no desire to take advice.
Although LV flagged they can be adopted and used as part of an advice process by IFAs as well.
The pathways include funds managed by Legal and General and Vanguard and investment management charges start from 0.11 per cent.
David Stevens, savings and retirement proposition director at LV, said: “LV=’s pathway options have been designed to meet the FCA’s requirements and provide savers with simplified options about how to invest their retirement funds, supported by high quality guidance as part of the customer journey and with each fund taken through an in-depth selection process to match the objective selected by the customer.
“We think the four pathways investment options will also appeal to financial advisers who are also looking to adopt a set of funds structured to align to their clients’ retirement needs, assessed against the four FCA outcomes.”
LV’s four pathways are as follows:
Investment Pathway Statement
Investment Management Charge
LV= Pension Savings Pathway Option 1
I have no plans to touch my money in the next 5 years
LV= Pension Savings Pathway Option 2
I plan to use my money to set up a guaranteed income (annuity) within the next 5 years
LV= Pension Savings Pathway Option 3
I plan to start taking my money as a long-term income in the next 5 years
LV= Pension Savings Pathway Option 4
I plan to out take all my money within the next 5 years
Mr Stevens added LV was one of the first providers to implement the pathways into its drawdown solutions, despite “all the disruption coronavirus has caused for financial services providers”.
He said: “Accessing drawdown is a big decision for pension savers and poses many considerations and challenges for savers, particularly those who are choosing not to take financial advice and may not appreciate all the consequences of their actions.”
The FCA’s work
It will become mandatory for investment pathways to be offered to non-advised drawdown customers from February 2021.
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.
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