Schroders has significant experience of managing DC assets and of helping pension scheme managers, trustees and sponsors to operate pension schemes efficiently. We manage assets for DC pension schemes in the UK and also have relationships with institutional investment platforms.
We believe the DC journey can be divided into 3 stages:
Source: Schroders. For illustration only.
A growth phase, from when a saver starts work – typically in their 20s – to their early 40s. In this period of roughly 20 years they need to build their pension savings, so they can afford to take risks with their investments. Indeed, they need to take risks if they are to generate the growth that will turn their pension contributions into something more substantial.
Schroders' growth solutions
The Schroder Life Diversified Growth Fund aims for equity-like returns with two-thirds of the volatility of global equities over a typical market cycle (around five to seven years).
The Schroder Life QEP Global Core Fund is an enhanced index strategy constructed to take many diversified positions seeking to deliver outperformance of the benchmark in all major market environments.
A stable growth phase, from a saver’s mid-40s to their mid-50s. During this period their need for returns becomes more balanced with potential risks. Growth is still important, particularly as it can have much more impact on what is likely to be a bigger pot. At the same time, the saver can less easily afford to make losses, as there is less time for them to make up for any downturn through further savings or investment returns.
Schroders' stable growth solutions
The Schroder Life Dynamic Multi-Asset Fund seeks growth with lower risks by using dynamic techniques to invest in multiple assets. It allocates between passive and active managers, both internal and external.
A transition into retirement phase, from a saver’s mid-50s on. At this stage, the balance starts shifting decisively towards risk: a loss for a saver in the years just before they retire is likely to be irretrievable, given the limited time they have to make it up. However, while they need stability, the saver also needs to take account of both the corrosive effects of inflation on their savings and how they are going to generate an income once they give up work.
The Schroder Life Flexible Retirement Fund aims to keep members’ options open by providing them with the right balance between growth and security.
Of course, for some older savers who may want to plan ahead, an annuity at or around retirement may still make sense. For them, a more traditional fund that aims to match annuity rates in the years immediately before retirement is likely to be better suited to their needs.
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