Norwich Union finance director Mike Urmston has given a stark warning that lifestyling on pensions is a flawed concept which will trap people in low-performing assets as they approach retirement.He says the problem is compounded by the continued dominance of fixed annuities over unit-linked variants which means that many people are spending up to their last 30 years almost solely invested in fixed interest. Urmston argues that no one providing an asset allocation model for a younger person would recommend a portfolio solely comprised of bonds and he questions why retirees and those approaching retirement should be shoehorned into an undiversified portfolio. Hargreaves Lansdown inv-estment manager Ben Yearsley says that while, in theory, life-styling has its benefits, in practice, a one size fits all approach is too arbitrary. He says this does not factor in crucial details that would affect an individual’s optimum port- folio structure such as their retirement age and attitude to risk. Urmston wants the industry to devise new products such as guaranteed income veh- icles that offer a form of longevity insurance. He says people who are set to retire at 65, having had their portfolio lifestyled for the last five years, still have an average life expectancy of around 20 years and considers this makes little sense particularly with annuity rule changes coming in next year. Urmston says: “Lifestyling does not seem to make a lot of sense and I cannot help thinking if the annuity rules are changing, then this policy should be reviewed. “The majority do not buy unit-linked annuities and yet you would not advise this asset allocation to anyone younger investing for such a length of time.” Yearsley says: “You will get no capital growth from bonds and no rising income. Equity income would be better for many but no one size fits all.”
We are a private limited company and want to know if there are alternative options to holding our cash on deposit at the bank, where the interest is not particularly
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