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It is quite interesting how some product and service providers in the retirement funds industry promoted life staging a few years ago, as the answer to investment structuring in retirement funds, professing to be thought leaders. We have never been excited about life staging, and have done a desk study to show why we are not proponents of life staging.

We always believed that good old fashioned investment smoothing by means of the fund maintaining an investment reserve is in the interests of members and offers a superior mechanism that allows the fund to maximise investment returns at low cost. Unfortunately there are very few funds left who still apply this 'good old fashioned' mechanism, not only as the result of product providers promoting life staging, but also often as the result of individuals having seen an opportunity to benefit from the once-off investment reserve distribution.

Is this thought leadership or are these product providers only after their own interests of rehashing products in order to generate new income streams?

Another article 'Life staging solutions try to find the middle path' looks at some of the shortcomings of this sort of structuring. Read it here...

For the benefit of trustees who may still contemplate the life stage model for their fund, the article 'Stress tesing the life stage model' was published on our site in 2011. Read it here...

Important notice and disclaimer
This article summarises the understanding, observation and notes of the author and lays no claim on accuracy, correctness or completeness. Retirement Fund Solutions Namibia (Pty) Ltd does not accept any liability for the content of this contribution and no decision should be taken on the basis of the information contained herein before having confirmed the detail with the relevant party. Any views expressed herein are those of the author and not necessarily those of Retirement Fund Solutions.

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