Scottish Widows calls for customer benchmarking of providers

Scottish Widows hopes other pension providers will agree to develop a framework during 2016 for the research to be carried out.

The IGC’s primary role is to scrutinise workplace pensions to assess whether customers - those currently contributing and those who have stopped contributing - are getting value for money. Scottish Widows’ IGC believes a customer benchmark of providers will help establish fair value.

Scottish Widows has capped charges at 0.75% for all auto enrolment schemes in April 2015, capped charges for legacy products at 1% of their fund in any given year, and removed all exit charges.

Scottish Widows has agreed to communicate with customers with older products, bringing to their attention the availability of more modern products.

An alternative to cash investments - which were producing low returns reflective of the low interest rate environment - has been developed to deliver a higher return for those seeking a low risk option.

Babloo Ramamurthy, independent chair of the Scottish Widows IGC, said:

“We believe Scottish Widows offers reasonable value for money relative to the market and is making what we believe are sensible efforts to continue to improve value for money in the future.

“We are comfortable Scottish Widows has designed investment options which are appropriate for its customers and has aligned its interests with those of its customers through its charging structure.

“Equally important is helping customers understand how to get the best from their pension. We were encouraged by the quality and nature of the support Scottish Widows introduced last year to help customers understand the new pension freedoms, and we are pleased it has earmarked substantial funds to develop a wider digital communications platform for employees, with enhanced supporting material for their employers to help customers engage more effectively with their pensions.

“There are, of course, areas where Scottish Widows and the industry as a whole can improve and we will continue to monitor and challenge where appropriate.”

Ronnie Taylor, Pensions Director at Scottish Widows, said:

“We established our IGC well in advance of Government legislation, so were already well placed to respond quickly to meet the challenges it set us. We are working hard to make the pensions market work better for customers and fully embrace the ethos behind this independent governance.

“We are particularly supportive of the creation of an industry-wide customer benchmarking of providers which will give insight into what customers consider to be fair value.”