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The problems that come with an ageing population are likely to make portfolios which provide a steady level of income while leaving investors a pot of capital the future of investing, a fund manager has claimed.

Steven Hay, co-fund manager of the Baillie Gifford Multi-Asset Income fund, said a rise in technology coupled with the fact investors would need their funds to last longer in retirement would result in a significant chunk of the population involved in part-time or flexible work in what is currently considered retirement age.

This in turn would mean a large part of the investor market would be after an “attractive monthly income” to supplement their lower-paid later-life work while retaining sizeable pot of capital to pass on as an inheritance, according to Mr Hay.

He said: “People are living longer so how do you fund this retirement? How do you fund these extra years?”

Pension freedom rules mean those aged over 55 no longer have to purchase an annuity to access their pension income but can instead enter drawdown, take a cash amount or buy an annuity.

Annuities rates have also become a less attractive option recently due to falling rates and back in September, income from annuities fell to an all-time low.

Mr Hay added: “It’s possible this will be the future of investing. A growing level of income but still looking after your capital as you go on.

“With the current ageing population, people are either going to have to be working flexibly or not working at all for a lot longer.”

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