Scottish Widows has told FTAdviser that it will be following the government-backed National Employment Savings Trust and undertaking a review of its default investment strategy in the wake of the Budget pensions overhaul.
Providers of auto-enrolment occupational pensions are split on whether default investment strategies need to be reviewed following the reforms that would allow savers to access all of their pension funds after age 55.
Nest said that “others in the industry” would inevitably review their positions following the changes, but Standard Life and Legal and General have told FTAdviser they believe there is no need to review default funds.
Ian Naismith, head of pensions market development at Scottish Widows, said the firm will be reviewing the default fund.
Mr Naismith said providers in the auto-enrolment market have “no choice” but to provide savers a default investment fund and that this scheme has to provide an investment strategy that requires no changes to be made by members.
He said: “We will be looking at what changes we can make. It becomes a lot more complicated as it depends on what a person wants to do.
“How quickly we will change things, we don’t know. We need to think about what will make it more appropriate - we will have to be reviewing it.
“Under auto-enrolment, a scheme has to exist where changes aren’t needed. It was more straightforward when people had to buy an annuity. We now need to think things through.”
Tim Jones, chief executive at the National Employment Savings Trust, described the changes announced in the Budget as “significant”, adding “we want to give them the careful consideration they deserve, along with others in the industry”.
He added: “We want our members to be able to access their retirement pots in ways that help them meet their aspirations and provide the flexibility they need in later life.
“Changes to the ways in which consumers want to access their pension savings, and what they are allowed to do with them, are likely to influence how we manage their risks and invest their money. It will also affect what help and guidance we provide to members about the choices they need to make.
“For the Nest Retirement Date Funds, our Foundation and Growth phases are likely to remain unchanged by the recent announcements. However, we will be reviewing our approaches in the Consolidation phase to ensure how we manage members’ money in that phase best matches a member’s planned method of taking retirement benefits.
“As we develop our thinking, we plan to consult widely to ensure that we bring the best ideas to bear on delivering appropriate solutions to our members.”
Standard Life said it is in a different position to other pension providers as it has a range of default funds and not just one.
Jamie Jenkins, head of workplace strategy at Standard Life, said he believes the Budget changes will affect firms differentl and that this “widens that need for guidance”, referencing the government pledge to ensure savers received “face-to-face advice” on their retirement choices.