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Views on Scottish Widows
Dennis .
Posted: 30 September 2017 08:21:56(UTC)

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My daughter has just accepted a job with a private school. Apparently they pay 10% of salary into Scottish Widows for pension. I hear that Scottish have high charges, any comments or suggestions?
Captain Slugwash
Posted: 30 September 2017 11:43:14(UTC)

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Sorry, couple of questions first.

Is that 10% total, or is your daughter required to put in money with the employer matching contributions, i.e 5% each?

If your daughter set up a SIPP would the employer contribute into this rather than Scottish Widows?, which would be a better solution if your daughter has the appetite to run her own SIPP.

That being said, even if it was only 5% from the employer, and it has to be with Widows, it is still free money at the end of the day, which I personally would take whilst in their employment, and transfer out to a SIPP if I left in the future.

I am not a IFA, which is why my opinion is free, and is just that. An opinion :)

Chris Dean
Posted: 30 September 2017 15:12:02(UTC)

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Suggest you check out their website as some of these big pensions firms have re-vamped their old series charges and now have some low-cost mixed asset index funds for around 0.10% along with account or platform fees of around 0.30%. A total annual charge in the region of 0.40% would seem quite competitive!
Tim D
Posted: 30 September 2017 17:06:07(UTC)

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It's important to understand any charges and what she's getting for them.

A quick google for S.Widows' charges led me to here: and the various PDFs of charges linked from it. If she's in the "group personal pension 1% AMC" the charges do indeed look steep to me (e.g Woodford for 1.75%; that can be had for 0.7% on a "platform"; FTSEAllShare tracker for 1%? Those can be got for 0.1% or less elsewhere!). However it's not impossible the scheme she'll be in will have negotiated some additional discount. Beware of an "initial charges" too although I'd hope those were a thing of the past everywhere by now. Of course it's possible she'd find any advice that comes along with those 1% fees quite useful, at least initially. Paying 1% on the first few years of accumulation and then moving the value to a cheaper platform isn't nearly as damaging as keeping the funds on a 1% platform for multiple decades of a career's-worth of savings.

Despite all those concerns, assuming that "10%" you mention consists of 5% employee's contribution and a matching 5% employer's contribution, it's absolutely crazy not to contribute to the max and miss out on the "free money" from the employer. (If the employer's contribution is a whole 10% even better! Fill your boots!) If having them pay into a personal SIPP isn't an option, the thing to do is keep an eye on the charges vs. alternatives and once the pot gets big enough that it's worth the hassle (every few years ?) do a partial transfer to a SIPP on a cheaper platform (while continuing to be a member of the employer's scheme for so long as employed there of course). Partial transfers out while employed are a recurring question on these and other forums; I've done a big one successfully myself and only wish I'd done it sooner.

This is not advice, just some personal reflections on your question.
Alan Selwood
Posted: 30 September 2017 22:48:33(UTC)

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This weekend's papers included a survey of pension fund past performance, and Scottish Widows did well, mainly because they had a high equity content to their default fund.

For the very long term, I would expect a fund with high equity content to do well, though it will suffer higher volatility along the way.

One key issue with all group pension schemes is whether the member gets any choice in the fund into which the contributions go.
Jim Thompson
Posted: 01 October 2017 05:20:13(UTC)

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First thought was that its a final salary scheme where you pay in a certain percentage of your salary, and have no choice in what the money is invested in. And maybe you shouldn't care as long as the pension is defined benefits.

Scottish Widows offers security by being part of the Lloyds group. It came out on top in the battle of the parent group pension companies (Clerical Medical which was also part of the same group lost it's identity, as presumably they didn't need two pension companies).
Posted: 01 October 2017 11:35:16(UTC)

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Dennis .;51560 wrote:
My daughter has just accepted a job with a private school. Apparently they pay 10% of salary into Scottish Widows for pension. I hear that Scottish have high charges, any comments or suggestions?

Impossible without sight of the detail. Is it solely 10% from employee?; what matching options exist where employer matches employee contributions? what actually are the charges?

It's possible she may be saving some National Insurance on her element of contributions which she wouldn't get via a SIPP - especially if her contributions are made via salary sacrifice.
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Tim D on 01/10/2017(UTC)
Dennis .
Posted: 02 October 2017 18:59:16(UTC)

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Thanks for all of the input so far. She believes that the school puts 10% of her salary in and she is expected to add another 8% so 18% going in on total. She hasn't had the full details yet. Assuming its a DC scheme.
Dennis .
Posted: 03 October 2017 07:02:13(UTC)

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I might add that my son worked for Lloyds until 2010 and was always embarrassed by the charges that were built into Scottish Widows Things might have changed of course.
Catch The Pigeon
Posted: 03 October 2017 09:22:38(UTC)

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I suspect it is a Scottish Widows auto-enrolment pension scheme and therefore the fees will be capped at 0.75% per annum, which is pretty good. It is most likely lower than this anyway.

Find out a bit more information if you can but generally nothing to worry about.
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