When looking to solve the post-retirement challenge, investment strategy alone will not be enough

“To partner with schemes and trustees, the investment piece can’t be plucked out without reference to the rest of the solution”, said Carol Young, head of group pensions at RBS.

She was speaking as part of a panel at the NAPF investment conference in Edinburgh.

Joined by Tim Banks, managing director of the pensions strategy group at AB and Mark Fawcett, chief investment officer of NEST corporation, the panel was charged with solving the post-retirement challenge. No mean feat



All three panellists were keen to point out that investment solutions alone are not a panacea.

Young warned that it’s all too easy to think about the investment part of the equation without matching it up to what members will do.

Her fellow panellists agreed.

Banks highlighted that no one is really sure yet what retirees will do. “No one knows what’s going to happen after April 6th. Is there going to be a mad dash for cash?”

This uncertainty creates complications.

It’s hard to design investment products when no one knows what members will want or need. However, the panellists argued, that doesn’t mean that we should be designing products without at least trying to understand how they might meet member expectations.

Banks pointed to AB research, which suggests there are three key features products need if they want to work in the post-April 6th world.

Simplicity and scale

Flexibility and choice


Fawcett told us that members are going to be very daunted by the new freedoms. Without guidance and advice, he said, “It’s a bit like crossing a bridge with no guard rails”.

For Fawcett good default funds that give members that level of flexibility are the answer.

He argued that the key features of the default fund should be flexibility in the early years, sustainability and good value for money, and a product that keeps pace with inflation.

In the later years, he made the case for some sort of deferred annuity product.

The panellists were also concerned that the ability to take cash could leave members making sub-optimal decisions.

“The lure of cash is very strong”, said Young.

However all panellists agreed that the answer to this is engagement and partnership. Creating guided outcomes that take members through to retirement and provide them with both flexibility but also crucially support.

As long as the member is central to the process, delegates were told, we can create post-retirement solutions that will work in the brave new world of freedoms.