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.
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:
Find out more about your default investment responsibilities in our Guide to default investment
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.
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).
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 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
|Risk category||At 15 yrs +||At 10 yrs||At 5 yrs||Retirement|
|Balanced||Governed Portfolio 4||Governed Portfolio 5 (Drawdown)||Governed Portfolio 6 (Drawdown)||GRIP 3|
You can find further details on Balanced Lifestyle Strategy (Drawdown) in the strategy factsheet
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.