Fidelity Investments Canada ULC today announced the launch of the Fidelity Income Replacement Portfolios, a low-cost retirement income solution for Canadians in or approaching retirement.

The portfolios are a flexible suite of 11 portfolios designed to last for different lengths of time, from 10 to 30 years.

They convert investors’ retirement assets into a stream of monthly cash flow over specified time horizons. The portfolios have horizon dates ranging from 2017 to 2037, in two year increments.

Investors maintain full access to their money and can turn payments on and off as their retirement income needs change.

An automatic withdrawal system provides investors with monthly payments until the portfolio reaches its end date, by which time the original investment and any market returns will be paid out.

The portfolios are comprised of 10 underlying Fidelity mandates that are designed to maximize growth potential early on and become more conservative over time.

Fidelity says the investors with non-registered retirement assets will benefit from the tax efficiencies built into the portfolios as the monthly payments will include a portion of the original investment, which is not subject to tax.

“Saving enough for retirement is difficult. But turning those savings into a secure retirement income can be even more challenging,” says Darren Farkas, vp, product solutions, Fidelity Investments Canada. “That is where the Fidelity Income Replacement Portfolios can help. Representing a first for Canadian investors, the portfolios combine professionally managed asset allocation with a professionally managed withdrawal strategy.”

Fidelity says these new portfolios are designed to be used in combination with other retirement income sources including government income, annuities and other investments.

Similar to lifecycle funds, the equity allocations in the portfolios gradually become more conservative over time. However, the portfolios take the lifecycle investing concept to the next stage by offering integrated investment and withdrawal strategies with monthly payments that are designed to keep pace with inflation over the specified time horizon, Fidelity says.