Understanding default investment

As an employer, by law you have to offer your employees a suitable default investment.
Our default investment guides
  • Find out more about how default investment works with our Guide to default investment - Download now
  • Help your employees understand where their workplace pension is invested with our handy guide - Download now

It’s very important to get the default investment right for your employees as it’ll have a big impact on how much they’ll have in their retirement pot and how long this will last.

Your responsibilities

The government has issued guidance on how default investments for workplace pensions should be governed.

So, when it comes to the default investment you’ll need to consider:

  • Does the default meet the retirement goals and attitude to risk of most of your employees?
  • Does the default give your employees’ money the chance to benefit from good performance over the long term?
  • Does your default manage risk to give your employees the confidence to stay invested?
  • Are there other choices for employees who don’t want to stay in the default?
  • Does your default communicate regularly to employees?
  • Is your default affordable?

Find out more about your default investment responsibilities in our Guide to default investment

How can we help?

We’ve designed our default investment options based on the Department for Work and Pensions (DWP) guidelines, so with one of our pension schemes you can feel confident you’re offering your employees investment options that are in line with the regulator’s recommendations.

Our default investment options offer you:

  • Solutions designed by our investment experts
  • A selection of lifestyle options
  • Flexibility over default choice
  • Governance you can count on
  • Communications to your employees
  • Affordable solutions

The Royal London default investment

If you’d prefer to let us choose the default investment for you, the Royal London Default Investment is the Royal London Balanced Lifestyle Strategy (Drawdown).

What does the default invest in?

The Royal London Balanced Lifestyle Strategy (Drawdown) invests in three of our risk-targeted Governed Portfolios that are built for saving for retirement. On retirement, members will move into a Governed Retirement Income Portfolio that is designed for taking a regular income in retirement.

The lifestyle journey

The diagram below outlines our default investment’s lifestyle journey. The Royal London Balanced Lifestyle Strategy (Drawdown) automatically reduces the investment risk as members move closer to retirement.

It gradually switches from higher to lower risk Governed Portfolios, ending in our Governed Retirement Income Portfolio 3 from which members can take a regular income.

  The lifestyle journey
lifestyle journey diagram, the Royal London Balanced Lifestyle Strategy (Drawdown) automatically reduces the investment risk as members move closer to retirement.
Risk category At 15 yrs + At 10 yrs At 5 yrs Retirement
Balanced Governed Portfolio 4 Governed Portfolio 5 Governed Portfolio 6 GRIP 3

You can find further details on Balanced Lifestyle Strategy (Drawdown) in the strategy factsheet

Other default investment options

If you’d prefer to keep responsibility for the suitability of the investment default or design your own default, we can help you meet the government guidelines and deliver a good outcome for your employees.

You can find out more about our full range of default investment options in our Guide to default investment.

Remember, the value of investments can fall as well as rise and your employees could get back less than they invest.

The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London EC3V 0RL.