Scottish Widows Pension Investment Approaches (PIA) is “evolving” with the launch of Scottish Widows Lifetime Investment.
Lifetime Investment, the new pension default, will be available immediately for new employers and for all customers on a self-select basis.
Existing customers, who are invested in the current £60bn+ PIA default offering, will also transition to the new default.
The Lifetime Investment has been “developed to maximise pension growth potential for customers” and to help people meet their retirement goals.
Lifetime Investment has a high exposure to equities in its growth phase and a shorter de-risking phase.
Lifetime Investment starts to move members into lower-risk investments 12 years from their selected retirement age. With PIA this currently starts at 15 years.
Scottish Widows has also worked with Robeco to ensure Lifetime Investment delivers on its responsible investing commitments. Research has showed that customers increasingly want their pensions invested in a way that improves the world that they will retire into.
The new funds will tilt towards companies that have a positive impact on the UN’s Sustainable Development Goals.
The new default will offer members a choice between two risk options – the Growth Path, where 100% of savings will be invested into growth assets initially, and the Balanced Growth Path, where 85% of savings will be invested in growth assets. The remaining 15% will be invested into more defensive assets.
As a key enhancement, Scottish Widows will also continue to derisk customers beyond selected retirement age (SRA), creating a to-and-through retirement option.
Scottish Widows also plans to incorporate private markets investment into its proposition, with further details to be announced soon.
Scottish Widows managing director, workplace and intermediary wealth Graeme Bold said: “The introduction of Lifetime Investment comes at a time where more and more savers are at risk of a poor standard of living in retirement or having to work longer to supplement their income. In fact, our research shows that 47% of over 55s fear that they will run out of money during retirement.
“The new default has been developed as a direct response to these issues, as we aim to give savers the best chance of maximising the growth of their retirement pots.
“PIA has constantly evolved over the nearly two decades since launch and has performed for members over this time. We are excited to evolve this into Lifetime Investment to take account of changes, such as longer life expectancies and phasing of retirement.
“Whilst today’s announcement is an exciting milestone for us, there’s more to come as Lifetime Investment evolves and we continue to work towards better retirement outcomes for our customers.”
