In the U.K., asset managers are “designing default funds that accommodate all three of the options available to retiring defined contribution members,” according to The Cerulli Edge —Global Edition.
Cerulli says in the report that covering all bases is the right way to go for those managers. “This is the right approach for asset managers to be taking, given the uncertainty as to which of the options future DC retirees will go for,” André Schnurrenberger, Europe managing director of Cerulli Associates, is quoted saying.
Reforms termed “freedom and choice” enacted in 2015 in the U.K. allow DC members to opt for cash, annuity, or drawdown when they retire. Before those reforms, they had to buy an annuity, which meant that all default funds were designed to target annuitization.
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