Legal & General (L&G) will introduce its Lifetime Advantage Fund as the new core default strategy for contract-based defined contribution (DC) clients from the beginning of 2025, targeting exposure to 100% growth assets up until 15 years before retirement, including 15% allocation to the L&G Private Markets Access Fund.
L&G’s Private Markets Access Fund has a 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 United Nations’ Sustainable Development Goals (SDGs), including clean water, clean energy, and healthcare;
- Climate Action Global Equity Fund – an actively managed, high-conviction strategy that 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 a member moves towards retirement, L&G said 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.
L&G added that its modelling suggests the new funds have the potential to deliver value for money and better outcomes in retirement. It added that research comparing the Lifetime Advantage Funds with the firm’s current Multi-Asset Fund default, a 20-year-old member would have a c. 40% better outcome in retirement, based on median projections.
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 report suggested the move had 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 range of investment options for schemes to select from.
Rita Butler-Jones, head of DC at L&G, said: “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.”
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