Life Cycle Investing

Life cycle investing (or ‘life style investing’) is the process of adjusting the defined contribution (DC) pension fund members’ asset allocation over time to reflect their changing risk attributes and financial goals.

The decline in defined benefit (DB) pension plan provision in many countries has led to strong growth in the DC market. This changeover presents pension funds with new choices and opportunities, but also new complexities.

Professionals from the Investment Solutions Center have been developing successful DC life cycle solutions for many years. Our in-depth knowledge of this very specialized and technical field can help you solve the challenges you are likely to encounter as you enter the DC world, or as you look to reassess what you currently offer your members. We also use Asset-Liability Management to help illustrate projected outcomes and risks under different life cycle strategies to clients.

The selection of the asset classes to include within the life cycle and how the balance between those asset classes should vary over time is paramount. Our life cycle strategies take into account the changing circumstances of plan participants during their working lives and during retirement, the specific financial circumstances of a plan's participants, and the frequently changing regulations.

An important change to regulation has been the move towards continued investing after retirement (versus the traditional route of purchasing an annuity) – our professionals work with clients to successfully create new life cycles which take these developments into account.