Latest news with #ScottishWidows
Daily Mail
a day ago
- Business
- Daily Mail
Blow to City as pension provider Scottish Widows prepares to cut its exposure to UK equities
Pension provider Scottish Widows is preparing to cut its exposure to UK equities in a fresh blow to the City. The company, which is owned by Lloyds Banking Group, manages £72billion of workplace pension assets in its default funds. It is reducing the allocation to London-listed shares in its highest-growth portfolio from 12 per cent to 3 per cent, according to a document seen by the Financial Times. The move comes as ministers and City grandees battle to encourage pension schemes to invest more in British assets to reverse an exodus of companies from the London stock market. A major shift in retirement fund portfolios from British stocks is seen as a key factor in holding back valuations of UK-listed companies. Many have left for Wall Street – with fintech firm Wise the most recent example – or are being snapped by bargain-hunting overseas predators, as in the case of Alphawave, which is being acquired by America's Qualcomm. And a dearth of flotations means departing companies are not being replaced. The Government has responded by persuading 17 pension providers to pledge to invest at least 5 per cent of their default funds in UK private market assets. However, Scottish Widows did not, and it has now told clients it would adopt a 'more globally-diversified approach' with the ambition of 'capturing more growth opportunities in high-performing international markets', the FT reported. US markets have delivered much better returns over the past decade than the FTSE 100, making it more attractive to investors on this side of the pond – though, more recently, the uncertainty created by Donald Trump's erratic policy-making has sowed doubts. Sources close to Scottish Widows, which has total assets under administration of £230billion, say it is already heavily weighted to the UK. Of the £165billion in 'discretionary' funds run for clients, more than a fifth is invested in the UK. And out of £72billion default pension investments, £5.5billion is in London-listed equities. The switch from UK equities relates to a sub-fund that it is being moved to a 'baseline' allocation to global equities already widely used by other providers. It is expected to be completed by December or January. Scottish Widows said it would review the allocations annually and 'where appropriate may include a home bias'.
Yahoo
a day ago
- Business
- Yahoo
Britain's biggest bank to cut UK investments in snub to Reeves
Lloyds Bank is to pull billions of pounds from Britain's stock market in a major blow to Rachel Reeves's efforts to boost the UK economy. Scottish Widows, the bank's pensions division, plans to cut its exposure to the UK and move more money into better-performing markets such as the US. It is a blow to the Chancellor, who has been encouraging pension funds to invest more in British stocks to boost both the market and the economy. The Telegraph previously revealed that Scottish Widows, which manages £230bn, had refused to sign up to an industry pledge to invest a certain amount of funds into Britain. The pact, known as the Mansion House Accord, will see 17 of Britain's largest workplace pensions providers invest at least 5pc of funds held in their defined contribution schemes into UK stocks by 2030. At the time, Chirantan Barua, Scottish Widows' chief executive, said: 'We will continue this investment approach to support our communities where it generates strong returns for pensioners.' Scottish Widows is planning to lower its exposure to UK stocks in its highest growth fund from 12pc to 3pc, the Financial Times reported. The Edinburgh fund manager also plans to cut UK investments in its most conservative fund from 4pc to 1pc. It aims to complete the changes by January 2026. The overhaul means Scottish Widows' £72bn default workplace pensions fund will take a 'market weight' approach, meaning the amount of money allocated to each country will depend on the size of their stock market. In practice, this will mean less investment in Britain. At the moment, Scottish Widows has more of its assets invested in the UK than other markets relative to the size and value of Britain's economy. Of its £72bn workplace pension pot, it invests £5.5bn, or 7.6pc, in Britain. The decision to cut back comes after an extended slump for the London Stock Exchange. The relative value of the UK's stock market has fallen sharply over the past two decades, from around 11pc of the MSCI World Index in 2000 to 4pc today. Big investors have increasingly pulled away from British stocks because of dwindling returns since the financial crash of 2008. Conversely, American stock markets have surged. Pension funds had 53pc of their assets invested in UK stocks in 2000 but that has fallen to 6pc today, according to a report from New Financial. Scottish Widows declined to comment. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more. Sign in to access your portfolio
Telegraph
a day ago
- Business
- Telegraph
Britain's biggest bank to cut UK investments in snub to Reeves
Lloyds Bank is to pull billions of pounds from Britain's stock market in a major blow to Rachel Reeves's efforts to boost the UK economy. Scottish Widows, the bank's pensions division, plans to cut its exposure to the UK and move more money into better-performing markets such as the US. It is a blow to the Chancellor, who has been encouraging pension funds to invest more in British stocks to boost both the market and the economy. The Telegraph previously revealed that Scottish Widows, which manages £230bn, had refused to sign up to an industry pledge to invest a certain amount of funds into Britain. The pact, known as the Mansion House Accord, will see 17 of Britain's largest workplace pensions providers invest at least 5pc of funds held in their defined contribution schemes into UK stocks by 2030. At the time, Chirantan Barua, Scottish Widows' chief executive, said: 'We will continue this investment approach to support our communities where it generates strong returns for pensioners.' Scottish Widows is planning to lower its exposure to UK stocks in its highest growth fund from 12pc to 3pc, the Financial Times reported. The Edinburgh fund manager also plans to cut UK investments in its most conservative fund from 4pc to 1pc. It aims to complete the changes by January 2026. The overhaul means Scottish Widows' £72bn default workplace pensions fund will take a 'market weight' approach, meaning the amount of money allocated to each country will depend on the size of their stock market. In practice, this will mean less investment in Britain. At the moment, Scottish Widows has more of its assets invested in the UK than other markets relative to the size and value of Britain's economy. Of its £72bn workplace pension pot, it invests £5.5bn, or 7.6pc, in Britain. The decision to cut back comes after an extended slump for the London Stock Exchange. The relative value of the UK's stock market has fallen sharply over the past two decades, from around 11pc of the MSCI World Index in 2000 to 4pc today. Big investors have increasingly pulled away from British stocks because of dwindling returns since the financial crash of 2008. Conversely, American stock markets have surged. Pension funds had 53pc of their assets invested in UK stocks in 2000 but that has fallen to 6pc today, according to a report from New Financial.
Spectator
a day ago
- Business
- Spectator
Your pension fund is right to flee Labour's Britain
One of Chancellor Rachel Reeves's few big ideas for boosting growth was to persuade pension funds to invest more of their assets in Britain. But hold on. Today, we learned that Scottish Widows, one of the biggest funds, is dramatically reducing its exposure to this country – and it is quite right to do so. Over the last decade, the S&P 500 has delivered a total return of 235 per cent, compared with just 92 per cent for the FTSE 100 The fund managers at the Lloyds-owned Scottish Widows, which controls £72 billion of workplace pensions assets, clearly didn't get the memo about how this was the moment to put more of their money in the UK. According to a report in the Financial Times, its pension fund is planning to cut its allocation to UK equities in its highest growth portfolio from 12 per cent to a mere 3 per cent, while in its more conservative portfolio it will be cut from 4 to just 1 per cent. In effect, if your pension is managed by Scottish Widows almost none of the money you are putting aside for your retirement will be invested in the UK. By contrast, the allocation to North America in the higher risk portfolio has been increased from 46 to 65 per cent. It clearly thinks President Trump's United States is a far better bet. The fund manager will no doubt get some flak for this. Last month, it was the only one of the big pension managers not to sign up to a voluntary pledge to invest at least 5 per cent of its 'default fund' assets in UK private market assets. It clearly has very little faith in the UK to generate meaningful returns. It's not hard to see why. Over the last decade, the S&P 500 has delivered a total return of 235 per cent, compared with just 92 per cent for the FTSE 100. Sure, that is history, but it is very hard to see things changing any time soon. The Labour government has already made one big tax raid on business with its increase in National Insurance charges for employers in the last Budget, and it will almost certainly raise corporate taxes in some form or other in the autumn. Higher taxes on companies means there is less money left over for shareholders, and, in turn, for the pensioners who rely on the flow of dividends to fund their retirement. Meanwhile, the UK is stuck with stagnant growth, meaning there is very little potential for companies to expand, and there is a steady drift of companies to New York – the fintech giant Wise is the latest example. This means the London market largely consists of a handful of retailers, banks and oil companies that are more than a century old. The job of a pension fund manager is to maximise returns for their policy-holders. That means they are completely right to get out of Labour's zero-growth economy – and the quicker the better.
Daily Mirror
2 days ago
- Business
- Daily Mirror
'I'm £9,000 a year better off thanks to work scheme - more people should use it'
Salary sacrifice allows you to exchange some of your salary for a non-cash benefit, such as pension contributions - and it can actually increase your take-home pay as it reduces how much tax you pay One man has explained how he has boosted his pension pot by around £9,000 a year by opting into a workplace scheme. Caleb uses salary sacrifice to exchange some of his salary for pension contributions. As well as increasing your retirement pot, salary sacrifice also reduces your tax bill, as the deduction is taken from your gross salary. This means you may find your take-home pay actually goes up. However, you should be aware of the potential impactions of salary sacrifice if you are taking out credit. For example, mortgage lenders often calculate your affordability based on your gross salary, so a lower salary might reduce the amount you can borrow. Caleb said: 'I've opted into a salary exchange scheme primarily for the pension tax benefits and National Insurance savings. It's been a smart move financially, and I've noticed the long-term gains in my pension contributions without affecting my take-home pay much. 'The opt-in process was fairly straightforward. My employer had clear steps laid out, and the HR system made it easy to enroll. There were no major complications. 'Our HR team provided a simple guide explaining how salary exchange works and the benefits. They were also available for any questions, which helped clarify the impact on payslips and pension growth.' New figures from Scottish Widows show workers could boost their pension pots by £41,200 by opting into salary sacrifice. Someone with an average salary of £37,430 would increase their pension pot by £528 a year. For a worker aged 30 and retiring at age 67, and assuming 5% investment growth, this would add £41,200 to their pension savings by the time they retire. Susan Hope, Scottish Widows Retirement Expert, commented: 'Questions loom over the future of salary exchange, despite it being the best way to maximise workers' retirement savings. 'Cutting or abolishing it completely would ignore the long-term boost it delivers to people's finances. Our data shows not only the positive impact on people's take home pay, and pension wealth, but also the halo effect it has on people's financial confidence. 'The term 'salary sacrifice' is a red herring because neither the employer nor employee has to give anything up when they take advantage of this scheme. It's truly a win win. 'The key to unlocking additional savings into pensions is awareness, and this needs improving so schemes like salary exchange can positively impact more people's finances. We should be empowering our workforce's future and salary exchange is one way to do this.'
