Savers with more than £10,000 in their pension pots will be able to enter into a Scottish Widows drawdown contract without an adviser, chief executive Toby Strauss says.
In July last year, Money Marketing revealed Scottish Widows was planning to launch a simplified drawdown product.
Now the provider is firming up its offering. Customers with over £10,000 will be able to enter non-advised drawdown with “semi-default” funds designed around how long customers plan to keep their money invested.
Scottish Widows chief executive Toby Strauss says: “In April there will be a non-advised simplified drawdown with some new fund choices which are designed for that new world of whether you want to leave savings in cash for a short period and then take it out, whether you want to leave it invested or whether you want to buy an annuity.”
Customers will be able to choose from “inner” or “outer” funds.
Strauss says: “There’s an inner ring of semi-default funds and then the full traditional retirement account beyond that. We expect the vast majority of people to pick from the simple defaults.
“The funds are designed around how long money will be invested. It’s a semi-cash fund if you take it out fairly quickly, there will be a balanced managed fund if you want to stay invested, and there will continue to be the kind of annuity matching fund if you want to buy an annuity but you’re likely to defer that decision for a while.”
ABI sales figures published yesterday show drawdown is rapidly growing in popularity, while annuity sales continue to fall.
Final results announced today show the insurance division of Lloyds Banking Group, which includes Scottish Widows, saw underlying profits fall by 15 per cent in 2014 to £922m, down from £1.1bn in 2013.
The provider blames the fall in profits on the impact of a £100m hit from the charges cap on auto-enrolment funds and a “significant reduction in the volume of annuities purchased as a result of deferring because of the Budget changes”.
Strauss says the fall would have been higher but was offset by better-than-expected sales of new corporate pensions business and a strategy of investing in higher-yielding assets.