Scottish Widows launches Retirement Account

Scottish Widows has responded to the imminent regulation of the SIPP market by launching its new “Retirement Account” – a pension plan with a highly transparent charging structure, wide investment choice and a market leading rate on cash holdings.

SIPPs become regulated in April, with full disclosure requirements mandatory from November. Scottish Widows believes this is the first product with such a broad investment choice launched by a major insurer that already fully meets the requirements of SIPP regulation. The Retirement Account offers greater choice, flexibility and transparency than comparative products in the market.

Transparent charging structure

All Scottish Widows’ administration charges will be expressed as a percentage of the fund, with no flat-rate monetary charges. The administration charge will be applied monthly based on the total value of assets held in the SIPP, and the percentage will reduce as the value grows.

The product will disclose the total expense ratio TER of investments on quotations, showing the complete cost to the client for a particular investment. This enables the customer to make a decision on a fully informed basis, knowing from the outset how much the investment will cost them. This is far more transparent than other products in the market which allow for the annual management charge but not dealing costs and other expenses associated with the investments.

Greater fund choice

In addition to this transparent charging structure, the Retirement Account offers customers choice of a comprehensive range of internally and externally managed funds and approximately 1,000 funds within its Fund Supermarket. Scottish Widows has teamed up with Fidelity FundsNetwork to offer clients a wide range of funds to invest in. All of these funds are traded at Net Asset Value (NAV), with no initial charges. In addition, Scottish Widows has negotiated a unique arrangement whereby all fund-based commission paid by the investment houses is rebated back to the customer through their pension plan. All adviser remuneration is taken from the product wrapper, which gives greater certainty about the amount and timing of payment.

Scottish Widows has also put in place arrangements with discretionary fund managers to manage larger investments on an individual basis. Again, all transactions will be at NAV. Investment in commercial property will also be available.

Iain McGowan, Head of Individual Pensions at Scottish Widows comments: “Scottish Widows has launched the Retirement Account having examined the A Day legislation extensively to design a product that really meets the customers’ needs and that we believe goes further than other products in the market. For many clients, charges within SIPP products can be confusing so we have developed a highly transparent charging structure where all costs are clear, unlike many other SIPP products. The current lack of clear disclosure in the SIPP market means that the charges are often not that visible to the customer. It is also an opportunity for customers with existing pension arrangements to consolidate all of these within this one product that is clear and easy to understand.”

Cash investments

A unique feature of the product is the cash holding account – known as the Control Account. It currently pays the equivalent of the full Lloyds TSB bank base rate, higher than traditional SIPP investments.

Iain McGowan comments further: “A key principle of our investment offer is that clients can access the full range of options, with no bias to in house funds. Through our existing fund options and the deals with Fidelity FundsNetwork and discretionary fund managers, we are offering customers a comprehensive choice all within one product. The high interest rate on cash investments, with no deduction from bank base, ensures that customers can make this choice – safe in the knowledge that they won’t get punished for holding funds in cash. All of these features support our broader aim of ensuring Retirement Account stands out in the market for its flexibility, value and transparency.”