L&G includes private markets in default DC pension scheme
Legal & General (L&G) is set to make its new private markets fund part of the core default strategy for its defined contribution (DC) pension schemes from the beginning of 2025.
The Lifetime Advantage Funds were launched in July 2024 as a ‘to and through’ target date fund range, offering members extended access to a selection of growth assets, including a range of private market assets.
Members will have exposure to 100 per cent growth assets up until 15 years before retirement, including a 15 per cent allocation to the L&G Private Markets Access Fund, which includes direct exposure to assets such as affordable housing, university spinouts, and renewable infrastructure.
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This will be supplemented by an 85 per cent exposure to a range of ESG strategies, including a sustainable focus equity strategy, climate action global equity fund, and access to companies leading the technological revolution.
As the member moves towards retirement, the Lifetime Advantage Funds transition gradually into a more income-focused portfolio, with the aim of protecting growth and delivering the flexibility that members are increasingly looking for in decumulation.
L&G said modelling suggests the new funds have the potential to deliver better outcomes in retirement. In research comparing the Lifetime Advantage Funds with the firm’s current default multi-asset fund, a 20-year-old member would have an approximately 40 per cent better outcome in retirement.
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“We’re really excited to be introducing the Lifetime Advantage Funds as the new core default for our contract-based DC scheme clients,” said Legal & General head of defined contribution Rita Butler-Jones. “In our view, the funds offer members access to an innovative, growth-oriented portfolio of investments with the potential to deliver excellent performance and value over the long term.”
The decision to set the Lifetime Advantage Funds as the new default strategy for contract-based schemes is supported by the firm’s independent governance committee, which in its latest annual report suggested that the move has the potential to boost member outcomes over the long term.
The Lifetime Advantage Funds will be available alongside L&G’s existing Target Date Fund range and a broader range of investment options for schemes to select from.
L&G is the largest DC provider in the UK market, looking after the retirement savings of 5.3 million members, with £176bn in assets under management.
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