Scottish Widows Fund Review (2024)


Scottish Widows was established more than 200 years ago with the purpose of setting up ‘a general fund for securing the provisions to widows, sisters and other females’. Now more than 6 million customers use their vast range of products that include life cover, critical illness, income protection, pensions, annuities and savings and investment products.

Their distinctive marketing and advertising campaigns have helped them to become one of the most recognisable and trusted financial institutions in the UK. And according to a research report from Hall & Partners, they were the pension provider UK consumers would be most happy to deal with.

Currently, UK consumers entrust Billions of pounds of their savings in Scottish Widow’s extensive range of investment and insurance products. But how competitive are these investments? To find out, we analysed the 1, 3 & 5-year performance and sector ranking for all 554 Scottish Widow funds and as identified in this report, more than 61% received a poor 1 or 2-star performance rating with the performance of some of their funds among the very worst in their sectors.

Deal Sees Aberdeen Receive £130 Million per Year To Manage Scottish Widow Funds

In 2000 Scottish Widows demutualised and in 2009 they became part of the Lloyds Banking Group where they were merged with Clerical Medical.

In 2015 Lloyds banking group sold Scottish Widows Investment Partnership to Aberdeen Asset Management in a deal reported to be worth £660 million. However, this deal did not include Scottish Widows, the groups' life, pensions and investment business.

However, as part of the deal, Lloyds gave Aberdeen a highly lucrative mandate, reportedly worth £130 million a year, to manage their extensive range of Scottish Widow funds, which held some £109 billion of client money.

About This Review

For ourScottish Widows fund reviewwe analysed each of their funds for cumulative growth over the recent 1, 3 & 5year period up to 1st August 2018, and compared this growth to all other similar funds that compete within the same sectors. This analysis identified that 66 of the 554 funds reviewed received a high 4 or 5-star performance rating by consistently outperforming 75% of competing funds. However, 338 or 61% of Scottish Widows funds consistently performed worse than their peers and received a poor performing 1 – 2-star performance rating.

Scottish Widows Fund Review (1)

The Best Scottish Widows Funds

From their range of 62 unit trust funds, only 38 have sector classification. Our performance analysis for these 38 funds identified that none had been able to achieve top quartile growth within their sectors consistently over the recent 1, 3 & 5-year period. The only 4- star rated Scottish Widows unit trust fund was the Scottish Widows HIFML UK Property fund. This property fund currently has £437 million of client funds under management, and over the recent one year period, it ranked 2nd in its sector for performance by returning growth of 12.55%. To provide a comparison, the average growth of all other competing property funds within the same sector was less than half at 5.6%. Over the longer term, this fund has maintained its competitive performance with 5-year cumulative growth of 68.88%, which was considerably higher than the 44.56% sector average, and better than 91% of competing funds.

The Best Scottish Widows Pension Funds

For this analysis, we reviewed the performance of 293 Scottish Widows pension funds (there are 297 Scottish Widows pension funds, but four funds had insufficient performance history). This analysis identified that just over 11% maintained a high level of performance in comparison to their peers and received a very good 4 or 5-star performance rating. Among the best performing Scottish Widows pension funds was the Scottish WidowsPension Portfolio One Pension Series 2 fund. This fund currently has more than £1.6 billion of client funds under management, and with a risk profile of 7, it is a fund that is more suitable for adventurous investors with a relatively high-risk tolerance. Over the recent 12 months, this fund returned growth of 6.92%, which was notably higher than the sector average of 3.69% and better than 83% of all other same sector funds. Over the recent 1, 3 & 5-year periods this fund has consistently outperformed the sector average and ranked among the best 25% of funds in its sector.

Scottish Widows Fund Review (2)

The Best Scottish Widows Life Funds

Scottish Widows are one of the largest suppliers of Life funds in the UK with just under 200 available to UK consumers. Our analysis of these funds identified that some of the strongest performers were from funds that were managed by third-party fund managers such as Schroders and Baillie Gifford. For example, the Clerical Medical Schroder Monthly Income fund is currently managed by Michael Scott of Schroders. Over the recent five year period this life fund returned growth of 32.51%, which was the 2nd highest in its entire sector.

Another Life fund managed by an external fund manager is the Scottish Widows BlackRock UK fund. This life fund is managed by Nick Little, who is a member of BlackRock’s UK Specialist Equity fund, and over the recent 12-months, it returned growth of 14.75%, which ranked 6th out of 600 funds in its sector. Over 5-years its performance has also been very impressive with its 5-year growth of 54.02% outperforming 94% of its peers.

One of the best performing Life funds under the management of Scottish Widows is their Defensive Managed fund. This fund primarily invests in bonds and sits within the LF Mixed Investment 0-35% Shares sector along with 103 competing funds that have at least 5-years performance history, With cumulative growth of 28.31% over the recent 5-year period this fund outperformed some 95% of all other funds in the same sector. Over the short term, this funds’ performance has also been strong with recent 1-year growth of 2.35% ranking higher than 89% of its peers.

Scottish Widows Fund Review (3)

Access the full report in the August 2018 edition of the Yodelar Magazine

61% of Scottish Widows Funds Have Consistently Underperformed

Despite their size and market share, Scottish Widows and a significant proportion of their funds have simply underperformed.

In our fund manager league table, we analysed 98 fund managers and provided a ranking to each based on the performance of their unit trust funds. In our most recent league table, Scottish Widows ranked a lowly 97th, with only St. James’s Place ranking lower.

One of their most disappointing funds was the Scottish Widows Corporate Bond fund, which has a sizeable £3.6 billion of client funds under management. This popular fund has continually underperformed, and over the recent 12 months, it returned negative growth of -1.52%, which was the worst of all 87 funds in its sector.

Another poor performer was the Scottish Widows Gilt fund which holds some £3 billion of client funds. This fund returned 5-year growth of 18.32% over the recent 5-year period, which was worse than 91% of its peers, and over the last 12-months, it ranked 23rd out of 26 same sector funds with negative growth of -0.35%.

From their pension fund range, 63% ranked among the worst performing funds in their sectors. One such fund was the Scottish Widows High Income Bond Pension. Thisserial under-performer has continually ranked among the worst funds in its sector for growth, and over the recent 5-year period its cumulative growth was the worst in its sector.

What does the future hold for Scottish Widows?

The widespread underperformance of a significant proportion of Scottish Widows funds has not gone unnoticed with questions raised as to the quality of the fund managers.

However, the recent merger between Aberdeen Asset Management and Standard Life has not gone down well at Lloyds. They believe this 2017 merger has made them a material competitor and therefore they have announced their intent to end their relationship and withdraw Aberdeen’s mandate to manage their funds.

A number of investment houses including BlackRock and Schroders are understood to be in the running to take over management of those assets, although Standard Life Aberdeen made it clear in May that it would not give up the mandate without a fight.

What this means for investors in Scottish Widows funds is still unclear, but based on the performance of their funds, a change in management may not be a bad thing for investors.

Access more reports featuring Scottish Widows >>

Scottish Widows Fund Review (4)

Scottish Widows Fund Review (2024)

FAQs

Is Scottish Widows any good? ›

Scottish Widows was awarded five stars in the 'Life and Pensions' and 'Investments' categories in the 2021 Financial Adviser Service Awards. Also, Scottish Widows level and decreasing life and critical illness insurance products received a 5-star Defaqto rating in 2022.

How good is Scottish Widows pension? ›

Scottish Widows delivered best return at 12.5 per cent over five years. The fund has 85 per cent of its assets invested in shares. Auto-enrolment provider Nest came close in second, with a return of 11.7 per cent. It takes the first place when the analysed period is only three years, the research shows.

What is the best Scottish Widows Fund? ›

The Best Scottish Widows Pension Funds

Among the best performing Scottish Widows pension funds was the Scottish Widows Pension Portfolio One Pension Series 2 fund.

What happens if Scottish Widows goes bust? ›

If you spend all of the money you've taken as cash from your pension, your only source of regular income in the future may be the State Pension. If you're made insolvent or bankrupt, and take your savings as cash, you lose the protection that savings in pensions has against your creditors (people you owe money to).

Why is my Scottish Widows pension going down? ›

It's normal for the value of your pension to go up and down over the short term. This is because your pension is likely to be invested in company shares and other stock market -investments that also carry risk.

Which is the best pension scheme in UK? ›

Best Private Pension Providers UK
  • SIPP. ...
  • SIPP. ...
  • SIPP. ...
  • SIPP. ...
  • SIPP. ...
  • SIPP. ...
  • Stakeholder Pension. ...
  • Stakeholder Pension. The Standard Life Stakeholder Pension allows you to invest your money in 30+ funds and 2 Lifestyle Profiles.
8 Sept 2022

How often should I review my pension? ›

It is recommended that you review your pensions regularly, at least once a year in order to ensure it is fully optimised to provide for your future.

Can I withdraw my Scottish Widows pension before 55? ›

If you are in ill health you can take your pension benefits before the age of 55, and may be able to take your whole pension pot as tax free cash. If this is the case, then transferring into a retirement account may not be right for you.

What type of pension is Scottish Widows? ›

A defined contribution pension could be private (set up by yourself) or provided by your employer. This pension is made up of contributions from you, your employer (if applicable) and tax relief from the Government. This can then be used to fund your retirement plans and provides flexibility on how you use the money.

Who owns Scottish widow? ›

Scottish Widows

How much do Scottish Widows charge? ›

For GIS, our management charge is 0.1% of your pension pot value a year. However, if you expect to take a guaranteed income for life in retirement this will gradually rise to 0.2% a year in the five years before you retire.

How many fund managers do Scottish Widows have? ›

The Scottish Widows Pension Fund range has 150+ funds managed by 20+ leading fund management firms.

Can I take my pension at 55 and still work? ›

The short answer is, yes you can. There are lots of reasons you might want to access your pension savings before you stop working and you can do this with most personal pensions from age 55 (rising to 57 in 2028).

Can you lose your pension? ›

Employers can end a pension plan through a process called "plan termination." There are two ways an employer can terminate its pension plan. The employer can end the plan in a standard termination but only after showing PBGC that the plan has enough money to pay all benefits owed to participants.

Is Scottish Widows owned by Lloyds Bank? ›

Scottish Widows is now the insurance arm of Lloyds Banking Group. The Group was formed in 2009, following the takeover of HBOS plc by Lloyds TSB.

Is Scottish Widows still going? ›

Financial Services Compensation Scheme (FSCS)

This means our CS Online service will no longer be available from 13th August 2022 for Scottish Widows Bond, Endowment and Protection customers.

How do I get my money back from a Scottish widow? ›

You can withdraw funds from your PIP by either requesting a regular payment or a one off lump sum. If you choose to withdraw more than your 5% tax deferred allowance per year there may be tax to pay.

Can I move my Scottish Widows pension? ›

Employees who have a Scottish Widows Workplace Pension policy number beginning with 'ZU' can transfer other pensions into that policy by calling us on 0800 032 1260 Monday-Friday 9am-5pm or by emailing us to request a transfer.

What is a good retirement income UK? ›

According to the trade association, a single person will need £10,200 a year to achieve the minimum living standard, £20,200 a year for moderate, and £33,000 a year for comfortable. For couples it is £15,700, £29,100 and £47,500.

Which pension plan gives highest return? ›

We at Scripbox have curated 10 best Retirement Plans available in India for you –
  • LIC Jeevan Akshay 6 Pension Plan.
  • Jeevan Nidhi Pension Plan of the LIC.
  • SBI Life Saral Pension Plan.
  • Reliance – Smart Pension Plan.
  • HDFC Life – Click to Retire.
  • HDFC Life – Assured Pension Plan.
  • Bajaj Allianz – Pension Guarantee.

Who is UK's biggest pension? ›

Royal London is one the largest mutual life, pensions and investment companies, offering personal and workplace pensions. The Group has around £100 billion funds under management.

How much is a good pension? ›

A good pension income will be dependent on your own circumstances and finances but, as a guide, a good starting point would be around 2/3 of your working salary.

How much should I have in my pension? ›

For a quick estimate, try the '50-70' rule. This suggests that you should aim for an annual income that is between 50 and 70 per cent of your working income.

What is the value of my pension? ›

The value of a pension = Annual pension amount divided by a reasonable rate of return multiplied by a percentage probability the pension will be paid until death as promised.

How much should I have in my pension at 50 UK? ›

At the age of 50, ideally, you would have wanted to save over 4 times your annual salary if you would like to retire comfortably. At this age, you should be considering putting 25% of your salary into your pension pot, if not more.

Can I cash in my pension at 35? ›

Yes, you can take out a lump sum from your pension before 55. But, any amount that is withdrawn from your pension before age 55 is subject to a 55% tax charge.

Can I use my pension to pay off debt? ›

It is possible to use your pension to clear debt. But taking money out of your pension could leave you in a worse position than you expected.

Is it worth paying into a private pension? ›

For many people, paying into a workplace pension is a good idea, even if you have other financial commitments, such as a mortgage or loan. This is because you could benefit from contributions from your employer and tax relief from the government. Over time, this money adds up and can grow.

Can I take my Scottish Widows pension as a lump sum? ›

You can take some, or all, of your pension pot as a cash lump sum, or you can leave it invested. However you decide to take your benefits, you'll normally be able to take 25% of your pension pot tax-free. The rest will be subject to tax.

Can I opt out of Scottish Widows pension? ›

If you want to opt out, you will need to submit a form, but some pension schemes may allow for opting out online. Your employer will tell you who you need to contact, but they are not permitted to handle the process for you, i.e. by giving you an opt-out form.

Does Halifax Own Scottish Widows? ›

Scottish Widows, Halifax and Lloyds Bank are all subsidiaries of Lloyds Banking Group.

Is Scottish Widows connected to Halifax? ›

Customers can access Scottish Widows' products and services through Independent Financial Advisers, directly, and through all Lloyds Bank, Bank of Scotland and Halifax branches.

Is St Andrews life part of Scottish Widows? ›

On that same date, the entire business and assets of Clerical Medical Managed Funds Limited, Halifax Life Limited and St Andrew's Life Assurance plc (as well as four other LBG UK Life Insurance companies) was transferred into Scottish Widows Limited.

Do Scottish Widows do drawdown pensions? ›

Flexible access to your pension savings. The ability to take money when you need it is known as flexible access. There are two flexible access options available – Flexi-access Drawdown and Partial Pension Encashment.

What is the difference between a retirement account and a pension plan? ›

A 401(k) allows you control over your fund contributions, a pension plan does not. Pension plans guarantee a monthly check in retirement a 401(k) does not offer guarantees.

What is the difference between a retirement account and a pension? ›

It helps to understand that a pension, original called a 'defined benefit' is linked to a monetary payout while retirement is linked to a time frame and an ending of working life. The name retirement pension has been adopted in some cases to link the fund and the timing together, but they are not the same.

How do pension funds make money? ›

Pension funds are made up of a portfolio of assets in which your pension contributions are invested, such as stocks and shares, bonds, cash and commercial property. You can receive a pension from three different sources: the state, personal pensions that you've set up yourself, and workplace pensions from employers.

How are management fees charged on funds? ›

Typical management fees are taken as a percentage of the total assets under management (AUM). The amount is quoted annually and usually applied on a monthly or quarterly basis. For example, if you've invested $10,000 with an annual management fee of 2.00%, you would expect to pay a fee of $200 per year.

What is Scottish Widows Balanced Growth Portfolio? ›

The Fund aims to provide capital growth by investing in regulated collective investment schemes. These collective investment schemes will provide exposure to shares together with exposure to a mix of asset classes (including fixed interest securities, property and cash) and absolute return strategies.

Do I pay National Insurance on my pension if I retire at 55? ›

You do not pay National Insurance after you reach State Pension age - unless you're self-employed and pay Class 4 contributions. You stop paying Class 4 contributions at the end of the tax year in which you reach State Pension age.

Can I take 25% of my pension tax free every year? ›

You can take money from your pension pot as and when you need it until it runs out. It's up to you how much you take and when you take it. Each time you take a lump sum of money, 25% is tax-free. The rest is added to your other income and is taxable.

Is it better to take a higher lump sum or pension? ›

Lump-sum payments give you more control over your money, allowing you the flexibility of spending it or investing it when and how you see fit. Studies show that retirees with monthly pension income are more likely to maintain their spending levels than those who take lump-sum distributions.

How much will I lose if I take my pension at 55? ›

Taking money out of your pension is known as a drawdown. 25% of your pension pot can be withdrawn tax-free, but you'll need to pay income tax on the rest. You can choose whether to withdraw the full tax-free part in one go or over time. This is the most flexible option.

How much do you lose if you retire at 65 instead of 66? ›

File at 65 and you lose 13.33 percent. If your full retirement benefit is $1,500 a month, over 20 years that 13.33 percent penalty adds up to nearly $48,000. AARP's Social Security Calculator can give you a sense of the financial impact of claiming benefits at various ages.

Do I lose pension if fired? ›

If your retirement plan is a 401(k), then you get to keep everything in the account, even if you quit or are fired. The money in that account is based on your contributions, so it's considered yours.

Why has my Scottish Widows pension dropped? ›

Market volatility and pensions

It's normal for the value of your pension to go up and down over the short term. This is because your pension is likely to be invested in company shares and other stock market investments that also carry risk.

Who is the current Scottish Widow? ›

Our brand icon, the Scottish Widow has been used in advertising since 1986. Our current Widow, Amber Martinez is seen as contemporary, confident, someone who's there watching over and providing support to our customers at key points during their lives.

When did Lloyds take over Scottish Widows? ›

Scottish Widows can trace its roots back to the early 1800s when the group was set up by a number of Edinburgh businessmen as a fund to care for the widows and families of soldiers killed in the Napoleonic Wars. Lloyds acquired the business in 2000 for around £7bn.

Can I cash in my Scottish Widows life insurance? ›

No. Life insurance policies have no cash-in value at any time. Also, if you don't pay your premiums on time your cover will stop, your benefit will end and you'll get nothing back.

Is Standard Life pension any good? ›

Poor performance for investors who hold a Standard Life pension. 104 of the 135 funds analysed consistently performed worse than at least half of their peers and were classified as poor performing 1 or 2-star funds.

How good is Royal London pension? ›

Royal London is by far the most popular pension provider among financial advisers, a new report by research firm Defaqto has found. The mutual came top in both the number of advisers that use its products, and the number who class it as their preferred provider.

How do I contact Scottish Widows? ›

You can speak to one of our consultants by calling 0345 716 6777. Our opening hours are: Mon to Fri 9am to 5pm.

How do I get my money back from a Scottish widow? ›

You can withdraw funds from your PIP by either requesting a regular payment or a one off lump sum. If you choose to withdraw more than your 5% tax deferred allowance per year there may be tax to pay.

Can I take money out of my Scottish widow pension before 55? ›

If you are in ill health you can take your pension benefits before the age of 55, and may be able to take your whole pension pot as tax free cash. If this is the case, then transferring into a retirement account may not be right for you.

How much can I take out my pension at 55? ›

While the main aim of a pension is to give you an income throughout your retirement, you have the flexibility to take out lump sums whenever you want from the age of 55 – and, in most cases, up to 25% of the total value of your pension can be withdrawn tax free.

What is the best pension fund to invest? ›

Top five personal pensions in 2022
  • Halifax portfolio. Best for: Customer experience. ...
  • Fidelity Personal Investing Cost Focus portfolio* Best for: Large range of ready made portfolios. ...
  • Evestor portfolio. Best for: Investors looking to invest small sums. ...
  • Nutmeg Fixed Allocation portfolio* ...
  • Vanguard Target Retirement portfolio.
31 Aug 2022

What's a good pension? ›

For a quick estimate, try the '50-70' rule. This suggests that you should aim for an annual income that is between 50 and 70 per cent of your working income.

What is a good pension scheme percentage? ›

In defined occupational schemes they should be a percentage of salary and be around half that of the employer with the total contribution ideally being at least 15% of salary. Private pension plans should allow for flexible contributions. Management charges should be as low as possible.

What is the average return on pension funds UK? ›

Pension fund growth hit 9.5% in 2021, up from 4.9% in 2020. Average annual annuity income was 3.9% in 2021, a positive change from the falls of the three previous years.

What is the average pension fund growth? ›

Pension fund growth hit 9.5% in 2021, up from 4.9% in 2020. That means a more typical 60/40 portfolio (60% equities / 40% bonds) has historically achieved around 4% after inflation. I use a 100% probability of the pension being paid until death because the payer is the federal government.

Should I combine my pensions? ›

By combining your pensions, you can significantly reduce how much you pay in charges. You'll receive less paperwork and can more easily keep track of how your pension is performing. Pension consolidation is particularly useful if you're planning on retiring in the near future.

Can I withdraw my pension early? ›

Can I withdraw my pension early? Under certain circumstances, it is possible to withdraw your pension early. However, this can end up being costly. It isn't against the law to withdraw from your pot before your retirement age but you may pay up to 55% tax on your withdrawals.

Does Halifax Own Scottish Widows? ›

Scottish Widows, Halifax and Lloyds Bank are all subsidiaries of Lloyds Banking Group.

Is Scottish Widows still going? ›

Financial Services Compensation Scheme (FSCS)

This means our CS Online service will no longer be available from 13th August 2022 for Scottish Widows Bond, Endowment and Protection customers.

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