Case study

Constructing an effective and future-proofed DC offering

Pensions & benefits DC trustee consulting DC pensions

We helped Lend Lease to redesign their DC offering following the introduction of Freedom and Choice so that the scheme was competitive and future-proofed.

The background

The introduction of Freedom and Choice in April 2015 prompted the Trustee to review their DC arrangements to make them appropriate in the new world. The trustee wanted an investment strategy they had conviction in, focussing on a default strategy that enabled members to access the new flexibilities.

Our solution

We worked with the client to delve into their current arrangements and interrogate their membership data to examine key demographics including data such as salary, current and projected account values and default lifestyle take-up rate.

Following the detailed employee segmentation analysis, the key opportunities identified were to:

update and streamline the investment options available to members; and
ensure that investment strategies are future-proofed against further changes.

Analysis of the membership (and projected pots) showed that there was a reduction in the number of members likely to take an annuity at retirement, so the current default was unsuitable. We implemented a common growth strategy for all DC members; with the default “at retirement” asset allocation targeting drawdown, as the Trustee believed this was the most appropriate option for their membership.

The ‘future-proofing’ of the investment design included closing three legacy lifestyle strategies, and ‘white-labelling’ the whole fund range to ensure funds are clearly named and that any future changes can be implemented quickly and efficiently.

The results

The client was satisfied that the investment strategy reflected the needs of the membership, and was flexible enough to withstand any further changes. Ensuring a streamlined investment offering not only reduced the governance burden they faced, but also make choosing investment options easier for members.