Changes to Retirement Account
We sent you a letter recently about changes we’re making to your Retirement Account, including changes affecting the Control Accounts. You’ll find more information on the changes below.
Q – What changes are Scottish Widows making?
We’re making a small number of changes to your Retirement Account on 1st October 2023, including changes affecting the Control Accounts.
Currently, we invest money from Control Accounts in instant access deposit accounts. These deposit accounts used to pay interest in the past, but don’t any more. That means any amount you hold in a Control Account isn’t growing in value.
Once we make the changes, we’ll be able to invest the money from Control Accounts in a wider range of deposit accounts, some of which may pay interest. Where interest is paid to us, each month we’ll add part of it to your Control Accounts if you had a positive balance in that month. We call this a ‘positive balance adjustment’, and it means any amount you hold in a Control Account can grow in future.
We’ll also keep part of the interest as a charge in return for identifying and selecting appropriate deposit accounts and ensuring your Control Account money is always available in your Retirement Account. You can find more details below.
As well as making the changes to the Control Accounts, we’re also making the following changes:
- We won’t offer the opportunity to invest directly in commercial properties in future. We’ve already contacted customers who are invested in commercial property to explain their options.
- We’ll clarify the information we need before we can accept a request to transfer to another plan. If you do request a transfer, until we have the information we need to determine whether your request can be accepted, your plan will remain invested.
We’re updating your Retirement Account policy provisions (terms and conditions) to make these changes. You can read more about the changes in the endorsement we sent you.
Q - Why are Scottish Widows keeping some of the interest earned?
We’ll keep part of the interest as a charge in return for identifying and selecting appropriate deposit accounts and ensuring your Control Account money is always available in your Retirement Account. You can find more details in the questions below or by going online at www.scottishwidows.co.uk/adjustmentrates
Q – What portion of the interest will Scottish Widows keep?
We’ll keep the difference between the interest we receive and the positive balance adjustments we add to each Control Account. What portion we pass on and what portion we keep will depend on the interest rates we expect to receive. We’ll make sure that information on the interest we keep is available to customers on our website.
Q – Scottish Widows paid positive balance adjustments on Control Account balances in the past, why have you not been paying them recently?
Previously, the banks who Scottish Widows deposited Control Account money with paid interest on instant access accounts. Banking rules changed, which meant that they no longer pay us interest on instant access accounts. As a result, we’ve been unable to make positive balance adjustments in the last few years. Making this change will allow us to place Control Account money in a wider range of deposit accounts with different banks, and means we could start paying positive balance adjustments again.
Q – When will any positive balance adjustments be added?
The amount of any positive balance adjustment will be calculated daily, based on the balance you hold in a Control Account, then applied to the Control Account on the monthly anniversary of starting your policy.
Q – Where can I find detail of the current rate of positive balance adjustments?
We’ll let you know the current rate of positive balance adjustments, and those which may apply for different ranges of interest, on our website. You can also ask us for this information at any time.
The table below shows the rates of positive balance adjustments we may add. The rates shown are yearly equivalent rates. We may change these rates in future, and if we do we’ll let you know.
|Expected interest rate (yearly)||Positive balance adjustments (yearly)|
|0 – 1%||0 – 0.48%|
|1 – 2%||0.48% - 1.05%|
|2 - 3%||1.05% - 1.72%|
|3 – 4 %||1.72% - 2.5%|
|4 – 5 %||2.5% - 3.38%|
You can view any positive balance adjustments added to a Control Account at any time by logging in to the Scottish Widows website - look for the Retirement Account Control Account history.
We’ll give information on any interest we’ve kept – we refer to this as a Control Account charge - in your Retirement Account annual statements.