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Corporate
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Innovative default design delivers higher private markets exposure, with the aim of boosting member outcomes in retirement.
17 Dec 2024
Legal & General (‘L&G’) has announced that it will introduce its Lifetime Advantage Funds1 as the new core default strategy for contract-based DC clients from the beginning of 2025.
Launched in July 20242, the Lifetime Advantage Funds are a ‘to and through’ target date fund range, offering members extended access to a diverse selection of growth assets, including a range of private market assets. Members will have exposure to 100% growth assets up until 15 years before retirement, including a 15% allocation to the L&G Private Markets Access Fund.3 with its direct exposure to assets such as affordable housing, university spinouts, and renewable infrastructure.
This will be supplemented by an 85% exposure to a range of ESG and factor based equity strategies, including:
As the member moves towards retirement, the Lifetime Advantage Funds transition gradually into a more income-focused portfolio, with the aim of protecting growth and delivering the flexibility that members are increasingly looking for in decumulation.4
Modelling by L&G suggests the new funds have the potential to deliver value for money and better outcomes in retirement. In research comparing the Lifetime Advantage Funds with the firm’s current Multi-Asset Fund default, a 20-year-old member5 would have a c. 40% better outcome in retirement, based on median projections.6
Rita Butler-Jones, Head of Defined Contribution, Legal & General: “We’re really excited to be introducing the Lifetime Advantage Funds as the new core default for our contract-based DC scheme clients. In our view, the funds offer members access to an innovative, growth-oriented portfolio of investments with the potential to deliver excellent performance and value over the long term.”
The decision to set the Lifetime Advantage Funds as the new default strategy for contract based schemes is supported by the firm’s Independent Governance Committee (IGC), which in its latest annual report7 suggested that the move has the potential to boost member outcomes over the long term. The Lifetime Advantage Funds will be available alongside L&G’s existing Target Date Fund (TDF) range and a broader range8 of investment options for schemes to select from.
L&G is the largest DC provider in the UK market, looking after the retirement savings of 5.3 million members, with £176 billion in AUM.9
References
3L&G Private Markets Access Fund.
4Illustrative asset allocation chart for the Lifetime Advantage Fund included in Notes to Editors.
5Example assumes a £0 starting pot, £20k starting salary, 8% contribution, salary increasing in line with CPI.
6Source: Asset Management, L&G. December 2024.
7Legal & General Independent Governance Committee Annual report for the year ending 31 December 2023.
8Legal & General -Workplace pensions: Target date funds.
9AUM data as at L&G Half Year Results. 7 August 2024.
Will Throp
Communications Manager
Asset Management
T: +44 (0)7791 899779
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with £1.2 trillion in total assets under management (as at HY24) of which c40% (circa £0.5 trillion) is international.
We have a highly synergistic business model, which continues to drive strong returns. We are a leading international player in Institutional Retirement, in Retail Savings and Protection, and in both public and private markets through our Asset Management division. Across the Group, we are committed to responsible investing and dedicated to serving the long-term savings and investment needs of customers and society.
As at 11 December 2024, Legal & General has a market capitalisation of 13.7 billion.
L&G’s Asset Management division is one of Europe’s largest and a major global investor across public and private markets, with £1.2 trillion in assets under management1.
The division combines deep expertise in asset management and origination with global distribution capabilities to deliver positive outcomes for our clients, which include individual savers, pension scheme members and global institutions, investing alongside L&G’s own balance sheet. As a global investor, we are present where our clients need us – from Hong Kong and Singapore, to major European financial hubs, to Chicago – operating under the Legal & General and LGIM brands.
We provide investment solutions across the full spectrum of asset classes, ranging from index-tracking and active funds to liquidity and liability-based risk management strategies. Through our private markets platform, we utilise our rich heritage and extensive network of partners to offer access to a wide range of purposeful alternative investment opportunities, including specialist real estate, clean energy, infrastructure, venture capital, unlisted equities and private credit.
Our division is underpinned by our enduring commitment to responsible investment, dedicated to creating long-term, sustainable value for our clients and partners.
1Data as at 31 December 2023.