By Lorna Blyth, Investment Strategy Manager
Five years of resilience
Designed exclusively for customers looking to take a sustainable income from their pension, the GRIPs have shown resilience in challenging market conditions.
They’ve coped with the ups and downs of market behaviour such as China devaluations, Brexit and the US elections, and outperformed their respective benchmark — delivering an average return of between 5.6 and 10.7 per cent per annum.*
More gripping than guaranteed investments?
Launched in 2012, the GRIPs were one of the first centralised investment propositions (CIPs) designed exclusively for customers looking to take sustainable income from their pension.
Five years on, there are still only a small number of multi-asset portfolios designed specifically for the pension decumulation market. And one of the FCA’s key concerns is that product innovation has been limited to date, particularly for the mass market.
Every retiree will have different preferences for income, security, flexibility and value for money and these preferences will change over time. So finding a solution that fits all your clients is unlikely. For example, smoothed funds tend to have higher charges and limited upside, which can reduce the amount of income the client gets over their retirement. GRIPs are a good option for drawdown customers who are looking to capture market upside while also looking for a solution that can cope with downside market risk events.
You can read a review of the UK retirement income market, produced by Milliman, to understand how well different products meet the income requirements for different example customers.
A gripping future
We now have a five-year proven track record in good performance, governance and risk management for the GRIPs. But there’s always room for improvement.
Royal London Asset Management (RLAM) will continue to manage the GRIPs within a tightly controlled risk framework and we will continue to review the asset allocations each quarter — to ensure each portfolio is on target to achieve its particular level of risk and income.
Here’s to another gripping five years.
*Source: Lipper, 29/08/2017
Past performance is not a guide to the future. Prices can go down as well as up. Investment returns may fluctuate and are not guaranteed so you could get back less than the amount paid in. GRIP returns are net of 1.00%.