Aegon has launched a range of lifestyle funds to better cater for clients saving for retirement during ‘constrained economic conditions'.
The seven Core Risk Profile Lifestyle Portfolios each have a different risk profile and follow Aegon's launch of the Core Risk Profile Portfolios in June.
Aegon said one of the biggest concerns for pension savers who want to buy an annuity is that as they near retirement they don't know what size of pension they'll be able to afford.
It said the lifestyling funds aim to address the problem by providing more certainty about the size of annuity investors can buy as they near retirement.
During the initial years (the growth stage), each fund aims to provide long-term capital growth by investing in a diversified portfolio that's aligned to the investor's risk appetite.
In the second stage (the lifestyle stage), which starts a few years before a target retirement date, the funds progressively switch into long gilts and cash to preserve the size of pension an investor will be able to buy.
The lifestyle portfolios assume investors wish to buy an annuity, to provide an income for life (or a specified number of years), on retirement.
The allocation to cash is to cater for the tax-free cash entitlement, which, based on current legislation, is up to 25% of a pension pot.
The Core Risk Profile Lifestyle Portfolios are currently designed in conjunction with Morningstar OBSR.
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