Investment Themes
Defined Contribution - DC Decumulation​
Generating retirement outcomes to be enjoyed and not endured
If retirement is to be enjoyed and not endured, in a world of freedom and choice, largely unsupported by the provision of accessible frames of reference, guidance and advice, we must look at how to overcome the risks and complex decision making challenges DC investors face at and in retirement.
Indeed if, in seeking flexibility and income security in retirement, people are to secure a desired standard of living and not sleepwalk into retirement penury, then the solution surely lies in the provision of a well governed, auto-enrolled, institutionally-managed default income drawdown fund, with a secure and sustainable long-term income stream underpinned by a dynamically-managed multi-asset fund, longevity insurance and a minimum income guarantee.
Decision-making patterns among defined contribution (DC) retirees suggest they need more support to make good retirement choices.
The commonly held view that spending in retirement is U-shaped is flawed. In fact, recent evidence shows that spending steadily declines as people age. Even so, many people are drawing down their savings too quickly, leaving them at risk of running out of money.
A well-governed collective default decumulation fund is needed to give defined contribution retirees the reliable income stream they need and the flexibility they desire.
Press release
Planning for retirement is harder than naming a child – this is what we found when we surveyed UK adults about to retire. While people are comfortable thinking about when they might retire and how long they might live, they find it difficult to assess how long their pension savings might last, how best to convert these savings into a regular income and how much is likely to be needed to sustain a comfortable standard of living in retirement. We believe auto-enrolling retirees into income drawdown funds with a preset investment strategy, sustainable rate of income withdrawal and longevity insurance could address this confusion and create better retirement outcomes.
