Fidelity launches range of drawdown pathway funds

Fidelity has launched a new new investment pathways solutions across which will be available to both its workplace and retail pension customers.

These new pathways, which offer a single fund solution for each option, come into effect ahead of the regulatory deadline of February 2021.

This pathways initiative was launched by the FCA and is designed to ensure those entering drawdown without advice have access to easy -to-understand and value for money investment strategies that meet a range of different retirement objectives. 

The FCA originally planned to make these pathways mandatory in 2020, but this was delayed due to the coronavirus pandemic.

Fidelity will offer four options depending on how customers plan to use their drawdown pot over the next five years. 

Fidelity said that by presenting real-life objectives and guiding customers through the decision-making process more people should choose an investment solutions that aligns with their retirement goal and achieve better outcomes as a result.

The investment funds used within each pathways will be monitored and governed by Fidelity to ensure they remain appropriate over time.

Customers can choose how they use the investment pathways within their drawdown account. They have the opportunity to spread their money over more than one pathway solution and can move money from one to another.

The will also be able to invest a portion of their fund in one of these pathway funds, and the rest in a range of investments of their choosing.  Fidelity said this flexibility will allow customers to adjust their choices as their circumstances change.

Fidelity International head of pension products James Carter says:  “We are delighted to be among the first few providers to launch investment pathways.

“The Fidelity Investment Pathways are designed to help our customers make better investment decisions when entering drawdown, knowing that behind each pathway lies a fund which is most suited to their selected retirement goal and that it will be governed appropriately.

“There is no charge for moving money into or out of an investment pathway. Customers will also be free to invest in any combination of investment pathways they choose. However, it’s important to remember that each Investment Pathway is designed to meet a single, overall objective once using pension drawdown.”

He adds: “Investment Pathways is the FCA’s solution to help customers better navigate retirement decisions. It found many prioritised taking tax-free cash from their pensions and needed more guidance when deciding how to invest funds which have moved into drawdown. With four retirement goals to choose from, each with a five-year time horizon, these pathways provides customers with an easy to understand solution.”

The four pathways are: 

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