L&G sets Lifetime Advantage Funds as new default strategy for contract-based DC clients

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:

• Sustainable Focus Equity Strategy: Delivering thematic exposure to a number of the UN’s Sustainable Development Goals (SDGs), including clean water, clean energy, and healthcare.
• Climate Action Global Equity Fund: An actively managed, high conviction strategy which focuses on actively engaging with climate laggards to accelerate progress and unlock improvements.
• A Technology Sleeve: A focused 100 stock portfolio with an ESG overlay, providing access to companies that are leading the technological revolution.

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

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

¹Lifetime Advantage Fund

²L&G unlocks private markets access for 5.2 million DC members through launch of Private Markets Access Fund.

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.