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Now: Pensions reveals default investment shift after Budget bombshell

Auto-enrolment provider Now: Pensions has revealed changes to its default investment strategy in response to new freedoms announced in the Budget.

The insurer offers members a single investment fund made up of three components: a Diversified Growth fund, a Retirement Protection fund and a Cash Protection fund.

Currently, the firm’s default position is to put savers into retirement protection fund – which has a built-in hedge against interest rate fluctuations – ten years before retirement. This fund is designed for people intending to purchase an annuity with their pension pot.

Members’ money is then moved into a Cash Protection fund six and a half years prior to their selected retirement date.

Following the Budget changes, Now: Pensions says from this week it will be moving clients to a new Retirement Countdown fund ten years before their planned retirement date. The fund will invest in cash intruments in the same way as the Cash Protection fund.

Employers or members can also opt for a five or 15 year version of the strategy.

Now: Pensions chief executive Morten Nilsson says: “The pensions landscape is fundamentally shifting and any investment strategy that targets annuity rates needs to be urgently addressed.

“Given the profile of our members and their expected fund sizes over the coming years, we expect the vast majority to take all of their pension pot as cash at retirement. The new lifestyle investment strategy therefore focuses on funding for cash but gives consideration to those that want to take an alternative route. 

“As the market evolves we’ll continue to keep our investment strategy under review, adapting our approach to make sure our members are well served.”

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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Who is going to be happy with this rubbish? Thousands of funds on offer distilled down to 3. This is going back to the 1950’s – and not even as good!

    The industry has been knocking itself out providing diversity, choice and opportunity – now along comes the geniuses in Westminster who ensure that Jags, BMWs and Mercedes are no longer an option and everyone has to have a Dacia.

    Stalin would be proud.

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