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SSGA launches flexible post retirement fund for the UK DC market

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State Street Global Advisors (SSGA), the asset management business of State Street Corporation (NYSE: STT), has launched the Timewise Target Retirement Choice Fund – a solution developed specifically for scheme members likely to remain invested in retirement.

The Timewise Target Retirement Choice Fund targets a balance of capital stability and growth. The fund is highly diversified across developed and emerging market equities, government and corporate bonds and a range of alternative assets. It uses advanced proprietary risk controls to mitigate volatility and avoid the sequencing risk that can be detrimental in the early years of income withdrawal.

The fund is designed to offer full flexibility by acknowledging that members may draw down income over time, take periodic cash withdrawals, annuitise or a combination of these.

Nigel Aston (pictured), head of SSGA’s defined contribution business in Europe, says: “Following the pension freedom reforms, we thoroughly researched the attitudes of members in both the saving and pay-out phases. What became very apparent was the desire for a default option in retirement that allowed people to keep their options open and that inspired investment confidence.

“People don’t always know in advance exactly when they will retire, but our research suggests that they think it will be a gradual process rather than a sudden move. They are also unsure about how they will use their savings now that they have more options. Retirement can be unpredictable and default funds need to be more intuitive by providing a broadly appropriate level of risk for members based on their stage of life – rather than targeting a specific outcome, be it cash, annuity or drawdown on a particular date.

The fund is the latest addition to SSGA’s range of funds for UK workplace pension schemes. SSGA’s Timewise Target Retirement Funds, use passive building blocks with an active asset allocation overlay; they are designed to evolve and adapt over time in line with changing markets and member attitudes.

The investment design of the funds incorporates an annual review to ensure the fund’s asset allocation remains relevant. The inclusion of new asset classes or approaches may be considered if it makes sense to further diversify the asset mix. This process involves drawing on macroeconomic and member behaviour research alongside SSGA’s deep investment knowledge to determine the most efficient allocation for the fund.

“Our mission is to ensure that people can be confident that their investments are being expertly managed across each phase of the retirement savings journey and beyond,” says Aston.

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