Scale, surpluses and tech: engagement is the real proof point​

What’s front of mind across our industry?

The economy, scheme scale, DB surpluses and their implications for DC schemes are clearly big talking points. How much is AI changing things – and the ongoing challenge of driving member engagement to improve retirement outcomes. 

These themes also shaped some of the discussions at our ‘Future Forum’ Town Hall in London in September. 

I love these Town Halls, we have such diverse audience of advisors, trustees and lawyers and it stimulates brilliant conversations in the networking and drinks afterwards.  

There was an insightful briefing on economic challenges from Michael Sawicki, chief economist at Lloyds Banking Group, on how AI could affect the economy and markets, and what might happen in the US mid-terms. Closer to home, he discussed the levers he thinks the UK government might pull in the UK Budget.

Bigger is better

Then there’s scale: a big focus ever since government reforms called for ‘fewer, bigger, better pension schemes’ to deliver better value, consolidation and stronger member engagement.​

What makes this particularly compelling is seeing the impact of this at first-hand. This year, we welcomed more than 50,000 Lloyds Banking Group colleagues to the Scottish Widows Master Trust following an extensive consultation where we had to demonstrate we had the scale, rigour and expertise to onboard such a significant client.

But it’s what it has meant for members that is a story worth telling at the town halls - and sharing more widely. Members now get a market-leading digital experience where they can see and manage their retirement savings in our app and benefit from ongoing investment in technology. 

Those who have a bank account with Lloyds or Bank of Scotland can see their pension in their banking app, too - showing them what they’ve got every time they log in.

The real proof point

That’s a real step forward for the member experience and their response has been brilliant. Queues formed around offices and questions flooded in during member events, helping members see what they’ve got, if it is enough - and if not what to do next. Key action focused on downloading the Scottish Widows app to take control of their future.​

Biggest talking point

Perhaps the biggest talking point right now, is around the very recent increases in DB surplus.

DB surplus is driving movement to either bundled own trust or master trust to utilise the surplus.  So aside from the above what are trustees looking for? Clearly very mindful of their fiduciary responsibilities, investment is key.  

DC defaults have traditionally relied heavily on listed equities and bonds. While these remain core portfolio components, relying on them alone can concentrate risk and restrict access to a wider range of return opportunities.  

There has clearly been huge emphasis on public and private market alternatives that complement traditional assets by broadening return drivers, improving diversification and strengthening resilience across different market conditions. 

Earlier this year, we gave workplace pension members access to private markets, and we are now developing our liquid alternatives allocation, focused on accessing uncorrelated sources of return and improving downside resilience, while retaining the liquidity required for daily dealing pension funds.

For the members who prefer not to self-select, they get investment independence, and solutions built for member behaviours, sourced from the best in the market. 

For members who want to choose their own investment path, a strong self-select fund range should provide broad but purposeful choice for those who want greater control, reflecting different needs, risk appetites, investment aims and preferences.  

The aim is clear: to help members build stronger financial futures. By bringing together scale, technology, investment expertise and purposeful engagement, we can make pensions easier to understand and inspire more people to take control of their retirement planning.