National Employment Savings Trust, London, launched a new investment strategy Monday that will allow its participants to remain invested in NEST's funds during the decumulation phase, a spokesman said.
In a move to support investment choices in retirement, the U.K. defined contribution multiemployer plan opened the NEST Guided Retirement Fund, which is aimed at helping participants aged 60 to 70 who have £10,000 ($13,049) or more in their retirement accounts. The NEST Guided Retirement Fund will keep most of the participants' savings invested, while simultaneously keeping an annual amount ready to be withdrawn as a lump sum up to age 85. A proportion of the savings will be also set aside for an annuity purchase.
While the number of NEST's participants needing the new investment option is currently low, according to NEST's spokesman, the £10 billion plan expects that 1.75 million participants might seek to select the new option by 2025.
"By 2025, NEST will have more than 1.75 million members aged 55-plus and for most of them retirement is no longer a cliff edge," said Mark Rowlands, director of customer engagement at NEST, in a news release. "Many are likely to choose to work for longer, for example, and we don't think they should miss out on investment returns during these transition years."
"Our new retirement hub and support services will help guide our (participants) through their choices, and for those who are still making up their minds we've now got more appropriate investment funds to suit them," Mr. Rowlands added.
NEST participants who do not notify NEST they intend to withdraw savings in the form of a lump sum by their intended retirement age will be automatically placed into the NEST Guided Retirement Fund by July 2020, NEST said in the news release.