Keeping your mind on the long term can be a difficult business. Target date funds can help both schemes and savers do just that. 

TDFs manage a person’s savings in line with when they are due to retire. So if a member is due to retire in 25 years’ time, they’ll be saving in a 2040 TDF.

This illustrates one of the easiest-to-understand benefits of TDFs: they lend themselves to straightforward communication with members on what’s happening with their money. 

For the member, being in the ‘2040 target date fund’, is a subtle but unambiguous way of nudging their imagination to more distant horizons than that of any short-term movements of their pot. We believe this is helpful for pension savers. 

Target date funds can also represent a mass-market offer that feels bespoke to the individual because it is clearly about building up to their retirement year. 

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