• Lifestyle 

– The investment mix automatically moves towards cash and fixed interest as the retirement age approaches, as it assumes that the client will buy an annuity and possible use the PCLS

– The switch starts 5 to 10 years before the retirement age

– The downside is that the change is automatic and doesn’t consider the economic climate or market conditions.

– It also assumes the client will take an annuity which isn’t always the case with clients moving into drawdown

– The client may retire earlier or later than expected, means the client could be exposed to too much or too little risk

• Target Date

– Used by NEST (National Employment Savings Trust)

– The fund has a year which it will move into cash by, not by the member’s retirement age. This means the member can swap around funds if the retirement plan changes

– However the fund is actively managed and unlike lifestyle funds it can choose when to convert into cash to take into account market conditions

• • 3 stages of fund targets: 

        – Foundation – plans to keep pace with inflation when term to retirement is over 39 years

        – Growth – returns inflation plus 3% with a well-diversified fund for 10-39 years before retirement

        – Consolidation – to reduce volatility and have real value growth for the last 10 years before the target          date