Changes to your Scottish Widows Master Trust Pension

Diversification, or having a mix of different investments, is crucial for spreading risk. This is because different types of investments can perform better or worse than others at different times depending on many factors, such as the state of the economy, interest rates, and world events.  So, if one type of investment falls in value, others could rise in value, cushioning the impact.  It’s also important to ensure investments are diversified across different markets and parts of the world.

The funds PIAs invest in are ‘passively-managed’. This means they aim to match, or track, the performance of a benchmark which is typically a relevant stock market index. A stock market index is a selection of publicly-listed company shares. 

Scottish Widows is moving to a more globally-diversified benchmark based on the MSCI All Companies World Index to aim to capture more growth opportunities from across different markets and parts of the world.

Scottish Widows is doing this gradually over 2025.   

Scottish Widows reviews its approach on an annual basis and, where appropriate, may include a higher weighting to UK company shares which is sometimes known as a home bias.

Scottish Widows is enhancing its responsible investment approach for PIAs, to better manage ESG opportunities and risks.

It will invest more in companies with stronger ESG credentials. These include companies that are fair and inclusive, those working hard on things like reducing their negative impact on the planet and society, reducing their carbon emissions and those developing environmental solutions like clean energy. They're typically better positioned to adapt to long-term challenges, such as climate change.

It will invest less in companies it believes aren't dealing well with ESG factors - like carbon emissions, waste and water management, workers' rights, gender equality and board diversity. They're more likely to suffer falls in their value from scandals or fines, or because they've fallen out of favour with their customers or investors.

It won't invest in companies it believes present too much investment risk due to the nature of their business and the negative impact they have on the planet and society.

Find out more about Scottish Widows responsible investment approach and the Trustees responsible investment approach (PDF, 120KB).

If you’re invested in a PIA, when you're years away from your selected retirement age, Scottish Widows invests with the aim of giving you what it believes is the best chance of growth. As you get closer to your selected retirement age, it gradually moves your pension savings into lower-risk investments with less growth potential. This is known as a ‘glidepath’ and aims to help protect your pension’s value.

Currently, we start to move you into lower-risk investments from 15 years before your selected retirement age. We’re shortening this to 12 years, meaning your pension will benefit from greater growth potential from being in higher-risk investments for longer.

Your PIA currently moves a significant amount of your pension to cash-type investments starting when you’re five years from your selected retirement age. While cash investments can protect your pension value in the short term compared to other types of investments, they typically produce lower long-term returns and might not keep up with price inflation.   

• If you’re in a PIA that’s targeting flexible access or annuity, Scottish Widows is removing this build-up of cash.  
• If you’re less than 2 years to your selected retirement age you’ll retain an allocation to cash. 
• If you’re targeting encashment (taking all your pension as a cash lump sum) you won’t be affected by this change.