BF&M Life Insurance Company Limited today launches their Horizon Plan for pensions and other savings goals. BF&M’s new plan is designed to automatically rebalance a client’s investment portfolio to reduce exposure to high risk/return assets as the target date for retirement or other financial goals approaches.BF&M Investment Services senior vice President Miguel Da Ponte, and vice president of pensions in BF&M Life Insurance Company, Alyson Nicol, explained the strategy is a traditional one, but the approach to it is new for Bermuda, though it is the standard in Europe and North America.Currently, the individual investment plan holder is responsible for arranging that their plan be reassigned to a different risk category to ensure their portfolio is increasingly risk averse the closer they are to their target date.BF&M states another advantage is that unlike traditional risk profiles, which tend to have an over-allocation of stocks in order to gain returns, Horizon Profiles remain well diversified by introducing several non-traditional asset classes to which investors would normally not have access.“Inflation and major market shocks are a major threat to eroding long-term savings and purchasing power needed for retirement,” BF &M says.“Horizon Profiles have been designed to protect investors in order to sustain spending in retirement.”Mr Da Ponte added: “We saw a lot of problems with pensions and savings in Bermuda pension plans — people pick a pension profile (early on) and they never change it.“In 2008, we had the market downturn, so those who had signed up for the high risk/high return profile and had never changed it, all of a sudden were still in an aggressive profile, and had lost 25 to 30 percent of their plan two years before retirement.”Ms Nicol explained: “And young people don’t take the appropriate amount of time on this.“You end up with a dichotomy — young people don’t want to put a lot of money to work.”Mr Da Ponte added: “Those who are about to retire become too aggressive to make up for that.”Educating investors to adjust their portfolio has been difficult.“You can do as much as you like to educate people, but if they don’t show up you’re not getting to them,” he said.Additionally: “Bermuda is highly conservative. Thirty percent of people have their money in cash.“The problem is, you’re only getting a quarter to a half of a percent in interest, and with inflation, at 2.5 percent you’re losing 1.5 percent in value.”In designing the new Horizon Portfolios, BF & M went to one of the largest investment consultant firms. “We have used Hewitt EnnisKnupp, an Aon company. They are one of the top four investment consultants in the world.”He explained the strategy BF & M have designed with Hewitt EnnisKnupp is not just for retirement, but for savings goals.“For the education of children, for that first house. We also wanted to protect people against big movements in stocks. The most important part of this (investment strategy) is the ‘glide path.’“The path of your investment is based on your age or the number the number of years you are away from achieving your goal,” he said.“So, if you have just had a child and want to save for their university education, you will need that money in 2037. “How does it transition if you stay the course with your portfolio — or if you don’t remember to move?”Hewitt EnnisKnupp assisted BF & M with designing the glide profile and the asset classes as the target date comes closer.“This is much better than chopping and changing — or forgetting to change.“And in working with Hewitt EnnisKnupp, it’s been really good — ‘local knowledge, leveraging international experience,’” he said.“They act as a third party oversight for the glide path, and help our investment committee.“We want to guard against extreme market events — we want to look and see if we get an event like this, how do we best protect investors?“We want to have a better outcome for savers and retirees.”