Findings from an FCA review of life insurers' lifestyle investment strategies in pensions
Written on 10/08/2018

The FCA published a new webpage setting out its findings from a review of life insurers' pension lifestyle investment strategies this month of June 17.  

see pension-lifestyle-investment-strategies-findings 

FCA explains that firms should review the lifestyle investment strategies and tell their clients how the lifestyle strategy relates to their retirement options. 

In a recent review the FCA found that life firms firms use a number of different names for the various books of pension business they operate and then apply different strategies to each one..

  • Post-2012 auto-enrolment contracts. The FCA said they were pleased that most firms had reviewed the lifestyle strategies for new business and post-2012 auto-enrolment contracts. They also found most firms had created new default funds and lifestyle "glidepaths", and had told the clients what they were doing.
  • Business written pre-2012. The FCA is concerned at the timeliness of the reviews in this cohort, particularly for customers approaching their crystallisation dates – the so called de-risking phase. 

Of course the world has changed, particularly with the no-annuity-cliff-edge situation the FCA is pushing for "deemed consent" and finding out when customers really do want to retire. For many post retirement can afford to take more risk, not less as their outgoings stabilise and they may live for decades more.

Lifestyling is an early form of algorithmic trading, and in a changing world it was always open to criticism. 

IFAC say that lifestyling is for lazy IFAs, and to earn your one per cent you need to be proactive today.

All news