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Changes to our target lifestyle strategies
Following a recent review of our Governed Range investment solutions, we’ve made some changes to our target lifestyle strategies, including our default investment solution, the Balanced Lifestyle Strategy (Drawdown).
What we’ve changed
We’ve increased the amount that the target lifestyle strategies allocate to equities, which offer greater growth potential for younger employees.
We’ve done this by changing the Governed Portfolios used in the growth stages of the lifestyle strategy glidepaths. (As a reminder, lifestyle strategies are designed to gradually move your employees’ pension savings into lower-risk investments as they get closer to retirement.)
Here’s a summary of the changes we’ve made:
| Old Governed Portfolio | New Governed Portfolio | |
| Cautious Lifestyle Strategies | Governed Portfolio Growth | Governed Portfolio Enhanced |
| Moderately Cautious Lifestyle Strategies | Governed Portfolio Enhanced | Governed Portfolio Dynamic |
| Balanced Lifestyle Strategies | Governed Portfolio Enhanced | Governed Portfolio Dynamic |
| Moderately Adventurous Lifestyle Strategies | Governed Portfolio Dynamic | Governed Portfolio Total Equity |
| Adventurous Lifestyle Strategies | Governed Portfolio Dynamic | Governed Portfolio Total Equity |
Any of your employees who are invested in one of our target lifestyle strategies and are more than 10 years from retirement will benefit from these changes.
There isn’t any increase in your scheme management charge* and the investments used in the other stages of the lifestyle strategies aren’t changing.
*There’s a slight increase in additional investment charges for our range of Active lifestyle strategies. This is because of the higher allocation to equities through the RLP Global Blend Core Plus (RLP Global Growth) Fund, which has an additional investment charge for accessing externally managed equity funds. There’s no increase in charges for other lifestyle strategies, including the Royal London default.
Why we’ve made these changes
We regularly review our lifestyle strategies to make sure they continue to have the potential to deliver the best possible outcomes. As part of this most recent review, we carried out extensive analysis, covering thousands of potential scenarios, to understand the impact that changes to investments could have on expected pot values at retirement.
The analysis showed how the changes we’ve made could increase the pot value for your employees at retirement, without significantly increasing the risk of poorer potential outcomes.
As an example, the analysis for a 35-year-old with a £30,000 starting pot, invested in our default Balanced Lifestyle Strategy, showed, on average, a 4% increase in expected pot value at retirement relative to the default’s old investment strategy.
What do you need to do?
You don’t need to do anything – we've already made the changes.
Other upcoming changes to our target lifestyle strategies
We’re also currently reviewing the investment mix of all the portfolios used in our target lifestyle strategies – known as the strategic asset allocations. This involves looking at the investment mix of our seven Governed Portfolios and five Governed Retirement Income Portfolios. We’ll share the updates in August.
As part of these regular investment mix reviews, we look at existing investment types as well as new opportunities, with the aim of continuing to deliver the best possible outcomes for your employees.
We’ve long believed in holding more than just stocks and shares and bonds which are listed publicly. Assets such as property are also a key part of our default and other lifestyle strategies. And, as signatories to the Mansion House Accord, we’ve already exceeded the 10% target of investing in illiquid assets in the growth stage of our default lifestyle strategy.
In addition, we’re continuing to expand our capabilities to make sure your employees benefit from other opportunities beyond publicly listed investments. For example, in the recent strategic asset allocation review, we looked at alternatives to traditional fixed income investments, with the aim of adding further diversification benefits in the current challenging economic environment.
Looking for more information?
If you have any questions about the changes to our lifestyle strategies, please reach out to your usual Royal London contact.