Guaranteed income overlay decumulation solution launched

Copia Capital Management has launched what it describes as the first decumulation portfolio strategy purpose-built to work in conjunction with a guaranteed income solution. The guaranteed income asset is delivered by Just Group’s Secure Lifetime Income (SLI).

The Copia Select Retirement Income Plus (RI+) portfolios use guaranteed income alongside a managed portfolio. The range of five risk-rated portfolios is designed to address the four main decumulation risks: sequencing, longevity, inflation and interest rate, and help advisers meet the new Consumer Duty rule to “avoid causing foreseeable harm”.

Copia’s complimentary investment proposition works alongside the guaranteed income solution to offer investors in drawdown some protection against the effects of ‘pound cost ravaging’ by reducing the need to sell assets in unfavourable markets to generate income.

Robert Vaudry, managing director of Copia, says: “People in retirement face very different risks to those who are still working and building their wealth. Those in drawdown have had a stark reminder of the risks facing their income over the last few months. Market volatility has meant many in decumulation have had to continue taking an income during unfavourable market conditions, while the cost of living crisis is eroding the spending power of retirement savings and increasing the possibility of people running out of money sooner than required. At the same time, central bank efforts to quell inflation through interest rate rises are hitting bond capital values, adding further uncertainty to investment outcomes.

“To properly manage these risks, decumulation requires a different investment approach to accumulation, and yet many advisers use the same portfolio ranges for both objectives. Our new RI+ portfolios are purpose-built for decumulation to support advisers in delivering improved portfolio value and guaranteed income over time, compared with a traditional 60/40 decumulation portfolio, without increasing the investor’s overall risk.”

Paul Turner, managing director, retail of Just Group, says: “The Financial Conduct Authority’s thematic review of retirement income advice will surely conclude that a different approach is required for people approaching and in-retirement compared to people in the accumulation phase. Using our new fixed income guaranteed asset class, delivered through our secure lifetime income solution, alongside a managed portfolio is a really innovative way to optimise asset allocation in retirement income portfolios.  It helps investment managers and advisers manage the risks facing investors in decumulation while achieving more certainty over investment outcomes. We’re excited to be supporting Copia in delivering this pioneering new range of portfolios.”

¹ Example based on 70-year-old, average health non-smoker persona, with a £400,000 total portfolio value, taking £16,000 (4%), non-escalating income pa 1.75% AMC/ongoing adviser charge, SLI scenario assumes a £60,000 (15%) SLI purchase price and include the cash-in value within total portfolio value, graph shows median scenario of 1,000 stochastic projections.

Select Retirement Income Plus & SLI combined asset allocation

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