The UK part of Johannesburg-listed Sanlam has expanded its offering with a new retirement income service.

London-based Sanlam Private Wealth has launched a retirement income service for those navigating recently introduced pension freedoms.

The Sanlam Retirement Income Service will focus on decumulation, the process of converting pension savings to retirement income.

“There has been a huge amount of research focusing on optimum investment strategies for the accumulation stage in an investor’s life, but very little on the topic of decumulation, which is one of the reasons why we commissioned our own academic research,” said the chief executive of Sanlam Private Wealth, Craig Massey.

“One of the biggest challenges for our industry is how to manage drawdown money safely and sensibly for clients, particularly with the large number of retirees now opting for drawdown rather than taking annuities,” he continued.

The service's structure of pension portfolios will comprise of three elements: a liquidity fund to meet immediate cash flow needs for the first two years; an asset matching fund to produce cash flows that meet anticipated spending for years three to five; and then onwards, a growth and income fund that seeks to maximise the longevity of investments and generate regular income streams to top up up the first two elements.

“By considering all of their financial assets, we can create an approach that reflects the fact they will be drawing income from one source – most clients use ISAs, investment property and other types of capital in unison to generate income,” said Massey.

“The Sanlam Retirement Income Service allows a portfolio to be unbundled between as many tax wrappers as needed. This ability allows us to choose and allocate assets that are ideally suited to both the pattern of income a client intends to draw as well as the tax treatment that each wrapper confers on them personally,” said the firm's head of discretionary portfolio management, Charles Brand.