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Making changes for our customers

We’ve been studying customer behaviour since the introduction of the 2015 pension freedoms and we've seen that the majority plan to remain invested or to take income flexibly, rather than following the traditional path of buying an annuity.  For customers to take full advantage of the new freedoms, and use their pension fund the way they want to in later life, it’s particularly important for them to be invested appropriately.
 
We’ve made strides in helping workplace customers to become more engaged with their retirement savings so that they can proactively make informed decisions on their future, but our research shows that there is still more to be done. To reflect their changing behaviour, we’re changing our default investment strategy from targeting an annuity to targeting flexible access. This means that the value of customers' pensions will be gradually moved into a mix of equities as well as bonds and cash over the five years preceding their selected retirement date.
 
The change will take place in April for new customers and from June for existing customers. We strongly believe that this is in the best interests of the majority of our customers, and will help them to make the most of the choices available to them. However, customers who don’t want us to change the investment of their plan will be able to opt out of the change.
 
During the next couple of months we will be writing to you, to employers and to customers to explain these changes and options further.

 

What we are changing:

Current Default Investment Strategy

  • Our default investment strategy for workplace pension schemes currently targets a secure income via the purchase of an annuity.

New Default Investment Strategy

  • We’re changing our default investment strategy to target flexible access. This means that the value of a customer’s pension will be gradually moved to a mix of equities, bonds and cash over the five years preceding their selected retirement date.
  • We will automatically switch customers invested in our current default investment strategy to the new strategy if they have more than five years to their selected retirement age and they do not ask to opt out.

 

Next steps:

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February April to May June to July
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 Supporting information

We believe the new default investment strategy better supports the increased flexibility customers will have at retirement.

Read more information on our Pension Investment Approaches or speak to your Business Development Manager or Telephony Account Manager.

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Scottish Widows Limited. Registered in England and Wales No. 3196171. Registered office in the United Kingdom at 25 Gresham Street, London EC2V 7HN. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number 181655.

Scottish Widows Unit Trust Managers Limited. Registered in England and Wales No. 1629925. Registered Office in the United Kingdom at Charlton Place, Andover, Hampshire SP10 1RE. Tel: 0345 300 2244. Authorised and regulated by the Financial Conduct Authority. Financial Services Register number 122129.

HBOS Investment Fund Managers Limited, registered in England number 941082. Registered office in the United Kingdom at Trinity Road, Halifax, West Yorkshire HX1 2RG. Authorised and regulated by the Financial Conduct Authority. Financial Services Register number 119223.

Scottish Widows Bank is a trading name of Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales, no. 2065. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under number 119278.

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