Our default investment for workplace pension members is changing from the Royal London Balanced Lifestyle Strategy (Annuity) to the Royal London Balanced Lifestyle Strategy (Drawdown).
Our experience tells us that more people are choosing to go into drawdown in retirement, rather than buying an annuity. This means that most people now prefer to have flexible access to their retirement savings, instead of a secure income. We believe that changing our default to the Balanced Lifestyle Strategy (Drawdown), will help us meet the majority of your employees’ retirement needs.
Our default investment will now target drawdown at retirement, instead of an annuity. If your scheme's invested in our default, we'll change it for all your employees who are invested in it. This means their retirement savings will now be invested in a solution designed for flexible access.
Of course, any employees moved into the new default investment can choose to opt out. We’ll write to affected employees in August to let them know what’s happening and how they can opt out of the new default.
For those employees who have chosen their own investments or are in their final year before retirement, their retirement savings will stay invested where they are.
The default investment will change in November 2018, but we’ll write to your employees from August to give them plenty of notice, as well as the opportunity to opt out if they want to.
The change to our default investment also ties in with the launch of our new retirement engagement packs, which we’ll send to your employees every year, starting five years before their chosen retirement age. Connecting with your employees earlier will give them the opportunity to make sure their investments still meet their needs.
If your scheme’s invested in our default, we’ll be in touch soon with more information. In fact, you may have heard from us already.
We've added some information to your pension website which explains more about what the change means for your employees and to help them understand the options they have.