F&C has launched two annuity-matching funds for defined contribution pension schemes, run by the firm's liability-driven investment (LDI) team.
The funds are designed to reduce the conversion risk – the risk that annuity benefits will fall in value due to changing interest rates – as scheme members buy level or index-linked annuities.
“Current annuity protection solutions do not work, with most pre-retirement funds in the market today doing a poor job of managing conversion risk,” said Julian Lyne, head of global consultants and UK institutional business at F&C.
“We believe our market leading funds bring the very latest investment thinking to help DC members manage their risk as they near retirement, and offer increased certainty around delivering income in retirement.”
F&C claims the F&C Fixed Annuity Conversion Fund and F&C Inflation-Linked Annuity Conversion Fund are the first products of their kind to be offered to UK pension schemes.
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