Lessons Learnt: Designing Whole of Life DC TDFs Based on Drawdown Fund Experience

28 July 2023

7 min read

Henry Smith, CFA| Investment Strategist—Multi-Asset Solutions

UK DC default investment solutions need to change. We think members’ default fund journey should in future extend from their accumulation phase through their decumulation phase. What design changes does that entail in practical terms?

Good default fund design based on practical experience is essential for both phases if DC savers are to achieve their retirement goals. At AB we have 14 years’ experience designing and managing TDFs for UK DC pension plan members’ accumulation savings. We also have eight years’ experience in managing their decumulation savings through our Retirement Bridge income drawdown fund range.

Retirement Bridge complements our TDFs and has paved the way for our new Whole of Life DC TDF range, which provides UK DC pension plan members with a seamless transition from accumulation to decumulation. Retirement Bridge has also provided valuable lessons for our Whole of Life TDFs’ design in three areas: Investment Design, Pay-Out Management and Communication, and Product Strategy.

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The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams. Views are subject to revision over time.

About the Author

Henry Smith, CFA

Henry Smith is a Vice President and Investment Strategist on AB’s Multi-Asset Solutions team. He is responsible for the product strategy and communication of AB’s UK defined contribution, custom multi-asset and sustainable multi-asset solutions. Smith joined the firm in 2019, following more than two years at Lane Clark & Peacock, where he provided investment, research and governance advice to a range of UK defined contribution pension schemes. Before that, he worked at Capita Employee Solutions, where he advised both UK defined contribution and defined benefit pension schemes. Smith holds a BSc in financial economics from the University of Essex and is a CFA charterholder. Location: London

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