ch
CH
Switzerland
de-CH
ch_intm_classes
intm
Intermediary
de
de
For use by professional clients and/or equivalent investor types in your jurisdiction (not to be used with or passed on to retail clients).
Happy couple came to an agreement with their real estate agent in the office

Insights

Lifestyling: the Achilles heel in DC pensions

Mahon_Christopher
Christopher Mahon
Head of Dynamic Real Return, Multi-asset

Why too much derisking – the accepted orthodoxy in UK defined contribution pensions – is a bad thing

  • Derisking in DC pensions stemmed from the historical rule to purchase an annuity on retirement. Despite Pension Freedom scrapping the annuity requirement back in 2015, derisking (lifestyling) remains the accepted orthodoxy in the UK
  • Other DC pension systems, notably Australia, do not ‘derisk with age‘ making the UK something of an outlier
  • The cost of this excessive de-risking is twofold:
    • To the saver: The average performance drag is 2.3% per year, or around £12,000 to a typical £100,000 pre-retirement pension pot. Every five-year period since data began (2013-2018) has seen lower returns to the de-risked/lifestyled cohorts.
    • To the nation: Tackling excessive derisking could deliver a £10 billion-£25 billion boost to UK capital markets and investment. The excessive de-risking in DC pensions contributes to the outflows and related decline of UK financial markets and the lack of capital to support domestic growth.

In August, I teamed up with Policy Exchange’s James Vitali to publish Growing Pension Capital – Lessons From Australia, with a foreword penned by former Pensions Minister Baroness Altmann.1 The report highlighted the steps the UK will need to take for defined contribution (DC) to emulate the success of Australian superannuation. 

One key observation was that the UK DC system is too risk adverse, a hangover from the “safety first” approach of the defined benefit (DB) system. By contrast, Australia adopts a more proportionate approach to both risk and return.

Interested in learning more?

The embrace – and overreach – of lifestyling and the resultant de-risking exemplifies the risk aversion within the UK DC system. This note expands in more detail to show how the glidepaths around de-risking are costing savers (and the country) excessively.

Hauptthemen

Abonnieren Sie Insights

Optimieren Sie unsere auf Sie zugeschnittene E-Mail, indem Sie die Arten von Insights und Informationen, die Sie von uns erhalten möchten, individuell anpassen.

Aktuelle Beiträge

Our fixed income team provide their weekly snapshot of market events.
It is no exaggeration to say that financial markets and governments across the world have greeted the clean sweep by Republicans in the US elections with some nervousness.
2025 könnten geopolitische Risiken und politische Unsicherheit schwerer wiegen als die starken Fundamentaldaten der Unternehmen und die aktuellen Innovationstrends
Hauptthemen
Verwandte Themen

PDF

Lifestyling: the Achilles heel in DC pensions

Important information:

For use by professional clients and/or equivalent investor types in your jurisdiction (not to be used with or passed on to retail clients). For marketing purposes.
This document is intended for informational purposes only and should not be considered representative of any particular investment. This should not be considered an offer or solicitation to buy or sell any securities or other financial instruments, or to provide investment advice or services. Investing involves risk including the risk of loss of principal. Your capital is at risk. Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. The value of investments is not guaranteed, and therefore an investor may not get back the amount invested. International investing involves certain risks and volatility due to potential political, economic or currency fluctuations and different financial and accounting standards. The securities included herein are for illustrative purposes only, subject to change and should not be construed as a recommendation to buy or sell. Securities discussed may or may not prove profitable. The views expressed are as of the date given, may change as market or other conditions change and may differ from views expressed by other Columbia Threadneedle Investments (Columbia Threadneedle) associates or affiliates. Actual investments or investment decisions made by Columbia Threadneedle and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be suitable for all investors. Past performance does not guarantee future results, and no forecast should be considered a guarantee either. Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This document and its contents have not been reviewed by any regulatory authority.
In Australia: Issued by Threadneedle Investments Singapore (Pte.) Limited [“TIS”], ARBN 600 027 414. TIS is exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001 (Cth) and relies on Class Order 03/1102 in respect of the financial services it provides to wholesale clients in Australia. This document should only be distributed in Australia to “wholesale clients” as defined in Section 761G of the Corporations Act. TIS is regulated in Singapore (Registration number: 201101559W) by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289), which differ from Australian laws.
In Singapore: Issued by Threadneedle Investments Singapore (Pte.) Limited, 3 Killiney Road, #07-07, Winsland House 1, Singapore 239519, which is regulated in Singapore by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289). Registration number: 201101559W. This advertisement has not been reviewed by the Monetary Authority of Singapore.
In Hong Kong: Issued by Threadneedle Portfolio Services Hong Kong Limited 天利投資管理香港有限公司. Unit 3004, Two Exchange Square, 8 Connaught Place, Hong Kong, which is licensed by the Securities and Futures Commission (“SFC”) to conduct Type 1 regulated activities (CE:AQA779). Registered in Hong Kong under the Companies Ordinance (Chapter 622), No. 1173058.
In Japan: Issued by Columbia Threadneedle Investments Japan Co., Ltd. Financial Instruments Business Operator, The Director-General of Kanto Local Finance Bureau (FIBO) No.3281, and a member of Japan Investment Advisers Association and Type II Financial Instruments Firms Association.
In the UK: Issued by Threadneedle Asset Management Limited, No. 573204 and/or Columbia Threadneedle Management Limited, No. 517895, both registered in England and Wales and authorised and regulated in the UK by the Financial Conduct Authority.
In the EEA: Issued by Threadneedle Management Luxembourg S.A., registered with the Registre de Commerce et des Sociétés (Luxembourg), No. B 110242 and/or Columbia Threadneedle Netherlands B.V., regulated by the Dutch Authority for the Financial Markets (AFM), registered No. 08068841.
In Switzerland: Issued by Threadneedle Portfolio Services AG, Registered address: Claridenstrasse 41, 8002 Zurich, Switzerland.
In the Middle East: This document is distributed by Columbia Threadneedle Investments (ME) Limited, which is regulated by the Dubai Financial Services Authority (DFSA). The information in this document is not intended as financial advice and is only intended for persons with appropriate investment knowledge who meet the regulatory criteria to be classified as a Professional Client or Market Counterparty and no other person should act upon it. This document and its contents and any other information or opinions subsequently supplied or given to you are strictly confidential and for the sole use of those attending the presentation. It may not be reproduced in any form or passed on to any third party without the express written permission of CTIME. By accepting delivery of this presentation, you agree that it is not to be copied or reproduced in whole or in part and that you will not disclose its contents to any other person.
This document may be made available to you by an affiliated company which is part of the Columbia Threadneedle Investments group of companies: Columbia Threadneedle Management Limited in the UK; Columbia Threadneedle Netherlands B.V., regulated by the Dutch Authority for the Financial Markets (AFM), registered No. 08068841.
Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.

Verwandte Beiträge

2 Dezember 2024

Steven Bell

Chief Economist, EMEA

The US under the new President: four good years or four bad?

It is no exaggeration to say that financial markets and governments across the world have greeted the clean sweep by Republicans in the US elections with some nervousness.
11 November 2024

Steven Bell

Chief Economist, EMEA

Will trade wars end the Equity Bull market?

Assessing the impact of Trump-era trade tariffs.
4 November 2024

Steven Bell

Chief Economist, EMEA

Britain's big Budget - will it work?

The sheer scale of the fiscal changes in the recent budget were surprising, and confirmed growing fears around tax rises. But might UK businesses respond by boosting productivity?
4 Dezember 2024

In Credit Weekly Snapshot – December 2024

Our fixed income team provide their weekly snapshot of market events.
2 Dezember 2024

Steven Bell

Chief Economist, EMEA

The US under the new President: four good years or four bad?

It is no exaggeration to say that financial markets and governments across the world have greeted the clean sweep by Republicans in the US elections with some nervousness.
22 November 2024

Melda Mergen

Global Head of Equities

Ausblick auf den Aktienmarkt im Jahr 2025: Reichen niedrigere Zinsen und hohe Gewinne aus, um die Märkte zu stützen?

2025 könnten geopolitische Risiken und politische Unsicherheit schwerer wiegen als die starken Fundamentaldaten der Unternehmen und die aktuellen Innovationstrends

Important information:

For use by professional clients and/or equivalent investor types in your jurisdiction (not to be used with or passed on to retail clients). For marketing purposes.
This document is intended for informational purposes only and should not be considered representative of any particular investment. This should not be considered an offer or solicitation to buy or sell any securities or other financial instruments, or to provide investment advice or services. Investing involves risk including the risk of loss of principal. Your capital is at risk. Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. The value of investments is not guaranteed, and therefore an investor may not get back the amount invested. International investing involves certain risks and volatility due to potential political, economic or currency fluctuations and different financial and accounting standards. The securities included herein are for illustrative purposes only, subject to change and should not be construed as a recommendation to buy or sell. Securities discussed may or may not prove profitable. The views expressed are as of the date given, may change as market or other conditions change and may differ from views expressed by other Columbia Threadneedle Investments (Columbia Threadneedle) associates or affiliates. Actual investments or investment decisions made by Columbia Threadneedle and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be suitable for all investors. Past performance does not guarantee future results, and no forecast should be considered a guarantee either. Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This document and its contents have not been reviewed by any regulatory authority.
In Australia: Issued by Threadneedle Investments Singapore (Pte.) Limited [“TIS”], ARBN 600 027 414. TIS is exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001 (Cth) and relies on Class Order 03/1102 in respect of the financial services it provides to wholesale clients in Australia. This document should only be distributed in Australia to “wholesale clients” as defined in Section 761G of the Corporations Act. TIS is regulated in Singapore (Registration number: 201101559W) by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289), which differ from Australian laws.
In Singapore: Issued by Threadneedle Investments Singapore (Pte.) Limited, 3 Killiney Road, #07-07, Winsland House 1, Singapore 239519, which is regulated in Singapore by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289). Registration number: 201101559W. This advertisement has not been reviewed by the Monetary Authority of Singapore.
In Hong Kong: Issued by Threadneedle Portfolio Services Hong Kong Limited 天利投資管理香港有限公司. Unit 3004, Two Exchange Square, 8 Connaught Place, Hong Kong, which is licensed by the Securities and Futures Commission (“SFC”) to conduct Type 1 regulated activities (CE:AQA779). Registered in Hong Kong under the Companies Ordinance (Chapter 622), No. 1173058.
In Japan: Issued by Columbia Threadneedle Investments Japan Co., Ltd. Financial Instruments Business Operator, The Director-General of Kanto Local Finance Bureau (FIBO) No.3281, and a member of Japan Investment Advisers Association and Type II Financial Instruments Firms Association.
In the UK: Issued by Threadneedle Asset Management Limited, No. 573204 and/or Columbia Threadneedle Management Limited, No. 517895, both registered in England and Wales and authorised and regulated in the UK by the Financial Conduct Authority.
In the EEA: Issued by Threadneedle Management Luxembourg S.A., registered with the Registre de Commerce et des Sociétés (Luxembourg), No. B 110242 and/or Columbia Threadneedle Netherlands B.V., regulated by the Dutch Authority for the Financial Markets (AFM), registered No. 08068841.
In Switzerland: Issued by Threadneedle Portfolio Services AG, Registered address: Claridenstrasse 41, 8002 Zurich, Switzerland.
In the Middle East: This document is distributed by Columbia Threadneedle Investments (ME) Limited, which is regulated by the Dubai Financial Services Authority (DFSA). The information in this document is not intended as financial advice and is only intended for persons with appropriate investment knowledge who meet the regulatory criteria to be classified as a Professional Client or Market Counterparty and no other person should act upon it. This document and its contents and any other information or opinions subsequently supplied or given to you are strictly confidential and for the sole use of those attending the presentation. It may not be reproduced in any form or passed on to any third party without the express written permission of CTIME. By accepting delivery of this presentation, you agree that it is not to be copied or reproduced in whole or in part and that you will not disclose its contents to any other person.
This document may be made available to you by an affiliated company which is part of the Columbia Threadneedle Investments group of companies: Columbia Threadneedle Management Limited in the UK; Columbia Threadneedle Netherlands B.V., regulated by the Dutch Authority for the Financial Markets (AFM), registered No. 08068841.
Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.

Das könnte Ihnen auch gefallen

Investmentansatz

Teamwork bildet eine wichtige Grundlage unseres Anlageprozesses, der so strukturiert ist, dass er die Ausarbeitung, Bewertung und Umsetzung fundierter und vielversprechender Anlageideen für unsere Portfolios erleichtert.

Fonds

Columbia Threadneedle Investments bietet eine umfangreiche Palette von Investmentfonds an, die eine Vielzahl von Anlagezielen abdeckt.

Anlagekapazitäten

Wir bieten eine breite Palette aktiv verwalteter Anlagestrategien und -lösungen für globale, regionale und inländische Märkte und Anlageklassen.

Thank you. You can now visit your preference centre to choose which insights you would like to receive by email.

To view and control which insights you receive from us by email, please visit your preference centre.

Woman listens to music through headphones
Play Video

CT Property Trust- Fund Manager Update

Sed ut perspiciatis unde omnis iste natus error sit voluptatem accusantium doloremque laudantium

Bitte bestätigen Sie einige Angaben zu Ihrer Person, um Ihr Präferenzzentrum zu besuchen

*Pflichtfelder

Etwas ist schief gelaufen. Bitte versuche es erneut

Vielen Dank. Sie können jetzt Ihr Präferenzzentrum besuchen, um auszuwählen, welche Einblicke Sie per E-Mail erhalten möchten.

Um zu sehen und zu aktualisieren, welche Erkenntnisse Sie von uns per E-Mail erhalten, besuchen Sie bitte Ihr Preference Center.