Mercer has developed a range of tailored funds for its workplace savings product as part of efforts to improve retirement outcomes for members.
The funds have been designed around three groups of member behaviours and are labelled to reflect their risk and return profile rather than the asset classes held in the fund. Within its core funds, Mercer is offering both a range of growth funds and a range of target retirement funds.
The growth funds blend the firm’s best ideas across asset classes and managers, bringing in asset classes such as emerging market debt and commodities which are not traditionally used in defined contribution (DC) investment strategies.
Members will be invested in one of the growth funds for most of their working lives. When they approach retirement, they will be asked to choose a target retirement fund that best reflects their likely retirement date and their requirements for income in retirement.
Brian Henderson, European head of DC in Mercer’s investment consulting business and a member of the workplace savings development group, said: “When designing these funds we have focused on achieving the best possible outcome for members, given their contribution levels. For example, many young scheme members have no idea what they want from their pension when they retire so it is important to offer funds and strategies that are more aligned to their decision-making.
“By breaking away from the traditional focus on individual asset classes, we think it will be easier for members to understand and engage in the selection process, although there is also a default version for those who feel they are unable to participate in this process.”
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