A step forward for inclusive workplace pensions

Engagement remains a fundamental challenge in workplace pensions. And for some groups, that challenge is even more pronounced.

Research shows that 78% of UK Muslim employees with pensions cite a lack of Shariah-compliant investment options as a key barrier to engagement¹, while nearly 4 million Muslims live in the UK². 

This represents a significant, underserved audience where traditional pension propositions have struggled to resonate.

At the same time, employers are increasingly focused on supporting diverse workforces and improving financial wellbeing. Providing more inclusive investment solutions is an important step in addressing both challenges.
 

Meeting a clear and underserved need

Our new Scottish Widows Islamic Aware investment proposition has been designed in response, helping remove barriers to participation and enabling more people to engage with their long-term savings. In short, making pensions more accessible, relevant and inclusive. 

It provides access to investments that align with Islamic principles, while maintaining the strength, governance and simplicity employers and members expect from our workplace pension offering.

By addressing this unmet need, our Islamic Aware proposition provides a practical way for employers and advisers to unlock engagement, improve inclusion and support better long-term financial outcomes.
 

A clear and transparent approach

The underlying funds in our new range are Shariah-compliant and overseen by qualified Islamic scholars, providing ongoing oversight and compliance. All underlying investments are selected, screened and monitored by specialist managers with expertise in Shariah-compliant investing.

This approach allows us to offer accessible, scalable solutions within our existing pension framework, while maintaining clear and accurate communication for customers.
 

A complete, end-to-end proposition

Rather than offering a standalone fund, we’ve developed a full investment solution to support members from joining to all the way through retirement.

• Lifestyle solution
  Our Lifetime Investment Islamic Aware Growth Path automatically adjusts risk over time as retirement approaches, continuing to de-risk through retirement. This provides a simple, hands-off solution for the majority of members. 

• Flexible self-select options
  For more engaged members, the range includes a growth fund investing in Shariah-screened global equities, a bond fund and defensive bond fund investing primarily in sukuk investments, which are Shariah-compliant alternatives to bonds.

A robust and outcome-focused design

We’ve designed our lifestyle solution with a clear focus on improving member outcomes, combining global diversification, specialist Shariah-compliant assets and a more sophisticated approach to managing risk over time. 

• Stronger growth foundations
  In the early years, members invest in a globally diversified Islamic equity portfolio, managed by BlackRock, giving broad exposure to global markets while staying true to Shariah principles. This supports long term growth in a traditionally more concentrated investment universe.
• Smarter de risking
  From 12 years to retirement, the strategy moves into a diversified sukuk allocation, also managed by BlackRock, introducing a different return source and helping to reduce risk as retirement approaches.
• A more sophisticated defensive phase
  In the final five years, a dedicated defensive sukuk fund is introduced, specifically designed to reduce volatility and provide greater stability at a critical point for members. Developed by Franklin Templeton, we believe this is a genuine step forward in DC design, bringing more sophisticated risk management to Shariah investing, where diversification options are typically more limited.
• Value focus
  Using our open architecture approach, we’ve carefully selected cost-effective, Shariah-compliant building blocks helping schemes meet increasing value-for-money expectations.
• Support that continues into retirement
  We’ve extended our thinking beyond the point of retirement. Our to-and-through retirement glidepath continues to manage risk and support members post-retirement. 
   

To conclude

What sets our proposition apart is:

• Clarity - transparent positioning on Shariah alignment
• Completeness - a full lifecycle investment solution
• Investment robustness - designed for diversification, resilience and value

By combining faith-aware design, specialist investment expertise and a fully integrated solution, our Islamic Aware proposition enables more people to engage with their pensions, helping drive better outcomes today and more secure retirements tomorrow.
 

Sources

¹1/3 of Muslims Will Lose £13 Billion Over Next Generation In Pensions, Islamic Finance Guru, 2025

²British Muslims in Numbers: Census Summary Report 2025, Muslim Council of Britain, 2025