What is Aegon doing to help me review my existing scheme default fund?Thu Nov 19 14:20:00 GMT 2015 Back to results
New pensions flexibility legislation and changing retirement patterns mean that fewer pension scheme members will choose to buy an annuity when they retire. Many will choose to retire earlier or later than planned and will want the flexibility to retire in stages and perhaps to take their benefits in a variety of ways.
This is a concern for employers of existing schemes as they may find that their existing scheme default is no longer the most appropriate option for their workforce, especially if it moves into long gilts as retirement approaches as part of an annuity target retirement strategy.
Should I change my default fund?
In the future we believe most employees will want the flexibility to choose near the point of retirement whether they want to draw down an income from their savings, purchase a guaranteed income, or cash-in their savings.
In light of the new pension freedoms, many employers are already reviewing their scheme default fund. But don’t worry if you haven’t done anything yet.
What is Aegon doing to help?
If your scheme already uses a lifestyle fund from Aegon as its default fund we’ll change it so that the strategy keeps savers’ options open as retirement nears, rather than getting them ready to buy an annuity.
Instead of moving into long gilts and cash as retirement nears, from early 2017 our lifestyle funds will use our Flexible Target strategy(Opens new window) which moves savers into less risky investments with the aim of sheltering them from the worst of a market fall, should one occur in the final years of saving.
We’ll write to you later this year to explain in detail how your default lifestyle fund will change and we'll manage the transition for you. We'll also write to any of your scheme members affected to explain why we’re making the changes, giving them time to choose an alternative investment if they want to.
If you want your scheme to opt out of the change, you will be able to choose an alternative fund from our new Workplace Target range(Opens new window). This range includes funds that use a more traditional Annuity Target strategy(Opens new window).
What if I’m in Aegon’s own default fund?
We’re also moving our scheme default funds to the new Flexible Target strategy because we believe it’s likely to suit the majority of schemes in the future. Again, we'll be in touch with you to let you know what's happening and give you the chance to review your options.
If you want to find out more about the changes please speak to your usual Aegon contact.