Standard Life launch range of investment funds for drawdown and flexible drawdown proposition
Standard Life has made enhancements to its drawdown proposition with the launch this week of a range of drawdown funds and a flexible drawdown feature.
This is Standard Life's first launch in the UK since going live with adviser charging on its key post-RDR product range on the 15th of October.
Dynamic Drawdown Funds
The Dynamic Drawdown funds have been carefully designed for clients who plan to draw an income in retirement. The funds aim to meet the needs of these investors by targeting positive return goals over the medium term, regardless of market conditions.
Each fund gives exposure to Standard Life Investments' Global Absolute Return Strategies fund (GARS). This investment is then combined with an investment in the Standard Life Deposit and Treasury Pension Fund to achieve the desired risk level. There are three risk categories available, which will help the needs of a variety of people in retirement:
Dynamic Drawdown Pension I Fund
The Dynamic Drawdown Pension I Fund is the lowest risk of the Dynamic Drawdown Funds. It will typically have a lower allocation to GARS than the Dynamic Drawdown Pension II Fund
Dynamic Drawdown Pension II Fund
The Dynamic Drawdown Pension II Fund incorporates more risk than the Dynamic Drawdown Pension I Fund. It will typically have a lower allocation to GARS than the Dynamic Drawdown Pension III Fund
Dynamic Drawdown Pension III Fund
The Dynamic Drawdown Pension III Fund has a higher risk level than the other two Dynamic Drawdown Funds. It invests 100% in GARS.
The funds complement Standard Life's existing Standard Life Wealth and Managed Portfolio Service propositions and offer a comprehensive range of suitable investment options for people in retirement.
David Tiller, head of investment proposition and strategy at Standard Life said: "Our new range of Dynamic Drawdown funds have been developed specifically to meet the needs of drawdown investors. When people choose to go down the drawdown route, they need to make sure their investment portfolios are carefully managed. While there's risk associated with any investment, it can be even more acute for those in drawdown than it is for investors who are still accumulating wealth, particularly those who need to take a regular income.
"This increased sensitivity to market movements means the focus of investing after retirement should move away from simply looking at performance to include volatility management. Investment solutions need to avoid sharp falls and prolonged periods of negative returns as far as possible to minimise the erosion of capital and make income withdrawals more sustainable over the long term. In a nutshell, it's not about the overall performance of a portfolio; it's about a smoother journey."
Flexible Drawdown
Standard Life has added Flexible Drawdown as a feature on their SIPP and WRAP SIPP propositions. It has been designed to offer customers more choice over their retirement income. It will enhance the long-term saving and investment company's existing suite of Drawdown options - these include full capped Drawdown, phased capped Drawdown and drip-feed capped Drawdown.
For most customers there will be no increase in charges for using the facility (over capped Drawdown) and the set-up fee of £200 will be waived for the first three months from the launch of the feature.1
Flexible Drawdown could be the ideal solution for clients who would like:
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to take more income than allowed under capped Drawdown GAD (Government Actuaries Department) limits
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to have access to capital when they need it
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to pass on their wealth to their family
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to have increased control and flexibility over when and how they take their retirement benefits
Alastair Black, head of decumulation at Standard Life, said: "The launch of Flexible Drawdown is an important addition to our suite of Drawdown options. It gives people approaching retirement more choice and the flexibility needed to meet their individual priorities for selecting the appropriate retirement income. This includes a sustainable income, access to additional income, death benefits, flexibility and control.
"Retirement is when advisers can really prove the value of their service by helping their clients planning and selecting their retirement income. Deciding whether to take an annuity or to go down the Drawdown route is not easy and depends on individual circumstances. Advisers are in an excellent position to steer their customers through this journey, helping them secure the right retirement income for them and manage their tax position and risk effectively."
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