Changes to your Scottish Widows Master Trust Workplace 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.  

This is where Scottish Widows focuses its attention, aiming to ensure its pension funds have the right mix of investments – also known as assets – in the right amounts to achieve the best possible returns over the longer term. This is called asset allocation.  

Scottish Widows believes asset allocation accounts for most of the long-term performance of pension funds, so making the right choices is vital.   

With oversight from your Trustees, Scottish Widows specialists regularly review and adapt the PIA investments.  This might be because of changes in markets, changes in their view of the long-term potential of different investments, or if they see new investment opportunities.  

PIA funds have historically favoured investment in UK company shares.   

Scottish Widows is adopting a more globally-diversified approach, with the aim of enhancing risk-adjusted returns by capturing more growth opportunities in high-performing international markets.  

Scottish Widows is moving your PIA pension savings to the new asset mix gradually over 2025. 

The way the Trustees invest isn’t only important to help you reach your retirement goals. It can also have an important role to play in shaping a better world to retire into. This is because the money you save into your pension is likely to be predominantly invested in companies. These companies have an impact on the world around us. By investing in them, you can have an impact too.

The Trustees seek to invest responsibly, and in a manner that seeks to avoid harm to society and the environment. They believe that responsible investment should be embedded in all the investments in your pension.  

It’s important we take into account how companies behave in relation to the planet and people, and the way they’re managed. These are known as environmental, social and governance factors – or ESG for short.   

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

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 businesses and the negative impact they have on the planet and society.    

Find out more about Scottish Widows responsible investment approach

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 three 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.