Platforum: Widows gets with the programme


Scottish Widows’ investment in digital is helping it to move on from historical technical problems, says Miranda Seath, senior researcher at Platforum

Scottish Widows, the life and pensions arm of Lloyds Banking Group, has had a tough four years but looks to be turning a corner. As auto-enrolment was rolled out across the UK, Widows’ administration of schemes floundered, unable to cope with the scale of the challenge. Since then the company has made a major investment to revitalise its proposition, especially its service standards.

Scottish Widows scored poorly on workplace pensions in our last survey, receiving the lowest mark for the efficient administration of AE schemes and new forms of engagement. There were tepid ratings for the key metrics of ease of use for employees and costs and charges. Clearly there is a lot of work to do so it is good news that Lloyds has spent £50m on improving its investment capability, its digital proposition and its member engagement.

EBCs generally favour providers that cater for more employee needs than Widows currently does. For example, the company does not offer a GSipp or a general investment account. Despite this, Scottish Widows is on the panel of a range of consultancies and says it is keen to respond to EBCs’ requests for a more flexible fund range.

Advisers we spoke to generally viewed Widows as a traditional provider, its scheme set-up still fairly manual. A perhaps unintended consequence of this is that the company, with its past AE woes largely resolved, was deemed to give good support to employers at set-up.

The Government and regulators have put pressure on providers, Widows among them, to root out practices that exploit deferred members. In response, the company has recently developed pension transfer capabilities. It tells us it can facilitate transfers in five days – an important step forward. Ultimately, it would like all members to have a better understanding of all its charges.

Exit fees have been abolished and high charging on legacy pensions is under the spotlight. Widows has little choice but to get with the programme and it has been swift to do so with exit fees.

It was also one of the first to announce a commitment to ensuring its customers are on the right glidepath. Ensuring that members are on the right glidepath is critical; the pension freedoms and dismal annuity rates have caused most pension scheme members to opt for drawdown in decumulation.

Widows has worked with McKinsey and Sapient Nitro to overhaul its digital proposition. It has challenged teams from across group functions to come up with ideas to benefit different customer types. The top 10 ideas are tested on customers in what it calls a ‘sprint process’. We believe this test-and-learn approach is less risky than a ‘big bang’ launch.

Widows will launch its employer prototype later this year. We expect a choice of seven communications kits, for which there is no charge. There will also be an improved contribution submissions process that collects and formats data from the employer’s HR system.

Scottish Widows is redeveloping its member portal and we are encouraged by its prototype. The value of the pension pot is visible at a glance and tax relief clearly marked with the value expressed in pounds rather than as a percentage.

The most innovative tool in development allows employees to compare contribution and saving rates across schemes in the same sector or region.

The Scottish Widows digital programme could provide the boost the company needs to improve its user feedback in 2016.