People’s Pension moves £6bn fund to enhance retirement outcomes

People’s Pension has changed the way it manages £6bn in its pre-retirement default fund, which invests for around 1.7 million members close to retirement. 

The aim is to offer better long-term returns for older members, while still managing drawdown risk.

The fund’s fixed income section has shifted, with less money held in cash due to falling interest rates making cash less attractive. 

With segregated mandates now in place, there is no longer a need for a cash buffer. 

The fund has also reduced its exposure to sovereign bonds, like gilts and treasuries, due to recent fiscal concerns increasing volatility and lowering risk-adjusted returns.

Now, the fund will mainly invest in a global portfolio of high-quality, short-dated corporate bonds, managed by Invesco. 

The investment management agreement between Invesco and People’s Pension includes responsible investment expectations, covering climate targets, exclusions, environmental, social and governance (ESG) reporting and other objectives. 

Dan Mikulskis, chief investment officer at People’s Partnership, said: “These changes reflect both our asset ownership model which constantly evolves our investment strategy in line with market realities and member needs and the power of our partnership with Invesco. 

“By focusing on high-quality corporate credit, we aim to deliver better real returns while managing risk responsibly.”

Chris Fagan, chair of the investment committee for People’s Pension, said: “Our driving focus is always to improve outcomes for our members. 

“These changes are grounded in deep analysis and clearly defined investment beliefs, and we firmly believe they will help us to continue to deliver more stable and rewarding retirement journeys for millions of savers.”

Tony Wong, senior managing director & co-head of investments at Invesco, said: “Invesco is delighted to have supported People’s Pension in the restructuring of its pre-retirement proposition and to play a bigger role through our active credit funds in creating positive outcomes for members at this critical stage in the retirement journey.”