Each fund covers a range of five years and is designed for employees retiring within that timeframe. They are initially available for a range of retirement dates from 2020 to 2065.
How they work
The funds are designed to reduce investment risk and protect customers’ savings over time by automatically reducing the percentage allocated to equities to curb the portfolio’s overall risk as the retirement date approaches.
The launch sees Zurich team up with investment research firm Morningstar, which will advise on the asset allocation switches.
As the next five-year stage approaches, Zurich will add the 2070 fund and liquidate the 2020 fund into the Zurich Retirement Income Fund.
Product integration
Zurich’s TDFs have an annual management charge of 0.55% and can only be accessed through the company’s international corporate savings products.
As such, they are designed to complement the provider’s existing range of workplace investment options and are primarily aimed at employers with a Zurich International Pension Plan.
Morningstar tie-up
Zurich has appointed Morningstar to create and manage the TDFs and provide independent advice on their asset allocation switch.
“By appointing a fully independent asset manager and incorporating an open architecture approach, the structure allows Morningstar to select from the full universe of offshore funds including both active and passive strategies,” the Swiss insurer said.
“Morningstar will continually monitor and actively manage each Target Date Fund to ensure they are aligned with the appropriate asset allocation at each stage of the investment.”
Target dated funds are among the most popular type of pension plan default strategy in the United States, with total assets under management growing to $880bn (£669bn, €748bn) at the end of 2016 up from $184bn at the end of 2007, according to data released by Morningstar.
Earlier in July, Zurich International had announced the launch of Simple Wealth, a unit-linked insurance policy to enable customers in the United Arab Emirates to manage and grow their wealth.
