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Scottish Widows eyes ‘money back’ guarantee pensions

Toby Strauss, Scottish Widows
Toby Strauss, Scottish Widows

Scottish Widows is exploring the practicalities of offering a “money back” guarantee pension product as the Government investigates ways to increase security for auto-enrolment savers.

In July last year, pensions minister Steve Webb challenged insurers to develop products which guarantee members get back at least the value of their pension contributions. 

He argued that people have a “huge appetite” for certainty about their pension saving.

The Government explored how these products could be delivered in a paper on “defined ambition” pensions, published in November.

Speaking at the launch of the annual Scottish Widows UK pensions report in London last week, Widows chief executive Toby Strauss said the provider expects there to be “strong demand” for guaranteed pension products following the launch of automatic enrolment.

He said: “We have done some specific research and people who are not yet members of DC schemes would value very highly a guarantee that they will get their money back, plus the employer’s contribution and tax relief.

“We think there is a very strong demand for that sort of product, particularly among people who are not yet saving into a pension.

“The next stage is working out how you do it, which is more complicated. We need to think about how to price it and how that price would change over time.”

Webb said a paper containing more detailed proposals for defined ambition pensions will be published in the summer.

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