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Scottish Widows takes £258m hit from RDR and pension reforms

Scottish Widows has set aside £258m since the beginning of 2013 to cover the costs of the RDR and Government pension reforms.

Providers and advisers have been hit with a raft of policy changes following the implementation of the RDR at the end of 2012.

In September last year, insurers agreed to carry out an audit of legacy pension policies after an Office of Fair Trading review raised concerns about value for money in workplace schemes.

In addition, the Department for Work and Pensions has announced a clampdown on auto-enrolment pension charges, with a cap of 0.75 per cent set to be implemented in April next year.

Active member discounts and schemes written on a commission basis pre-RDR will also be banned for auto-enrolment from April 2016.

Lloyds Banking Group’s annual results for 2013 show Scottish Widows made a £158m provision for the year “driven primarily by a revision of pensions lapse assumptions and allowance for the impact of the Office of Fair Trading review on fairness of legacy pension charges”.

A Scottish Widows spokesman says: “The additional provision in our 2013 full year results covers changes in relation to future income from our existing book, where changes such as the RDR, pensions reform and the anticipated outcome of the OFT review are projected to have an impact.”

LBG’s interim management statement, published earlier this month, revealed Widows had set aside a further £100m to cover the cost of implementing the charge cap and the AMD ban, taking the total cost of regulatory and pension reforms since the start of 2013 beyond £250m.

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  1. Malcolm Coury 12th May 2014 at 3:05 pm

    Political meddling is expensive and ultimately does it serve the customer?

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