Proposed transfer of the bulk purchase annuities business from Scottish Widows to Rothesay

If the transfer is approved, it won’t change:

• Your Policy terms and conditions (other than the change in the provider of your Policy)
• Your rights and obligations under the Policy
• Your pension amount (either in payment or accrued if you have not yet retired)
• How your pension increases (before and after retirement)
• The frequency and timing of your pension payments
• The benefits payable following your death (unless your spouse or civil partner is significantly younger than you, as explained further below)
• Your option (where entitled and eligible) to request a change to your guaranteed benefits under your Policy
• The servicing standards you can expect to receive
• Your Policy’s UK tax status.

If the transfer is approved:

• Rothesay will replace Scottish Widows as the provider of your Policy and become responsible for the administration and all obligations regarding your Policy (for example, paying your pension if applicable)
• You should contact Rothesay for any matters connected with your Policy
• The value of the benefits provided may differ if you choose to exercise an option to change your guaranteed benefits under your Policy, as explained below
• The pension payable to your spouse or civil partner following your death may differ if they are significantly younger than you and your Policy specifies a financially neutral reduction factor, as explained below.
   

How could the value of the benefits provided differ if I choose to exercise an option?

Where you are entitled and eligible to request a change to your guaranteed benefits (or exercise an ‘option’) under your Policy, you will still be able to do so after the transfer.

However, the value of the option benefits is not guaranteed, as the assumptions and methodology (“bases”) used to calculate option benefits will change over time. Prior to the transfer, we will set the bases used to calculate these benefits. After the transfer, Rothesay will set the bases. This may lead to a difference in the value of benefit provided if you exercise an option which could be higher or lower following the transfer.

For more common options such as exchanging some pension income for a tax-free lump sum at retirement, or retiring earlier or later than planned, the differences in the value of the benefits calculated using our and Rothesay’s bases are expected to be less than 5%. For less common options such as transferring the value of pension to another provider before retirement, or a spouse exchanging their entire ‘trivial’ pension income for a lump sum, the differences may be greater for some policyholders.

Comparing transfer values across all policyholders who have not yet retired, the average transfer values are similar. However, roughly 1 in 5 transfer values could be more than 5% lower calculated using the current Rothesay bases compared to the transfer value calculated using our current bases. Roughly 1 in 20 transfer values could be more than 5% higher using the Rothesay bases.

In our experience, very few policyholders take transfer values, so the number that actually receive a significantly lower value is expected to be very small. Younger policyholders are more likely to receive a lower transfer value after the transfer, but the exact difference will depend on other factors including whether the policyholder is married at the time of taking a transfer value and when they decide they may want to transfer.

If a policyholder dies and their spouse (or civil partner) has a small pension (with a total benefit value of less than £30k), the spouse may be able to ‘trivially commute’ the pension and receive a lump sum instead. Here too, the amounts calculated using our and Rothesay’s bases can vary more significantly.

Comparing across all eligible spouses, based on the data we currently hold, the vast majority (almost 9 out of 10) could receive a higher lump sum from Rothesay compared to Scottish Widows if they opted to take a trivial commutation. A small number could receive a lower benefit from Rothesay, and roughly 1 in 30 may receive a lump sum more than 5% lower. The exact difference will depend on a number of factors including age.

The Independent Expert appointed to assess the impact of the transfer on policyholders has considered this further in section 8.3 of his report and concluded that in his opinion the use of Rothesay’s bases to determine option benefits will not have a material adverse impact on the reasonable benefit expectations of Transferring Policyholders. That assessment is based on considering the impacts on groups of policyholders rather than any individual policyholder (as discussed in section 1.5.3 of the Independent Expert’s report). Please see section 2.3.7 of the Summary of the Independent Expert’s report and 8.3.36 to 8.3.51 of the Independent Expert’s report (both of which can be found in the relevant documents section) for further details.

Scottish Widows and Rothesay are continuing to work collaboratively together to ensure that, where differences in bases result in lower option benefits for an individual, those benefits align with the reasonable expectations of customers. The Independent Expert is aware of the ongoing work in this regard and noted in section 2.3.7 of his Summary report and in 8.3.42 of his full report (both of which can be found in the relevant documents section) that he will comment on it in his Supplementary report.
 

My spouse/civil partner is significantly younger than me, how could the pension payable to them differ?

The benefits payable following your death are outlined in your Policy. This may include details of any reduction applied to the pension payable to your spouse or civil partner if they are more than a specified number of years younger than you. Not all policies apply a young spouse reduction. Where a reduction is included in your Policy terms and conditions, it may be specified as a fixed percentage reduction. Fixed reductions will not change after the transfer. 

Alternatively, your Policy terms may specify that the insurer will apply a financially neutral reduction factor. Where a financially neutral reduction is applied, the bases used to calculate the reduction are not guaranteed and will change over time. Prior to the transfer, we will set the bases used to calculate the reduction. After the transfer, Rothesay will set the bases. This will lead to a difference in the reduction applied to the pension payable and it could be higher or lower post transfer.

The Independent Expert has considered this further in section 8.3 of his report and concluded that in his opinion the use of Rothesay’s bases to determine financially neutral young spouse reductions will not have a material adverse impact on the reasonable benefit expectations of Transferring Policyholders and Rothesay’s approach to determining financially neutral reductions, which the Independent Expert also refers to as a “discretionary YSR” in his report, is fair to the Transferring Policyholders. Please see section 8.3.36 to 8.3.51 of the Independent Expert’s report (which can be found in the relevant documents section) for further details.

Nothing will change in the run up to the Transfer Date. Scottish Widows will continue to administer your Policy and you can contact us as usual.

Where you are entitled and eligible to request a change to your guaranteed benefits under your Policy, for example to transfer the value of your pension to another provider, exchange some of your pension income for a lump sum, or to retire earlier or later than planned, you will still be able to do so.

If anyone else has an interest in your Policy (for example, potential beneficiaries such as dependents or trustees), please also make them aware of the proposed transfer as soon as possible. 

If you are a holder of a Bulk Annuity Individual Policy, we strongly recommend that you read the Transfer Guide for holders of a Bulk Annuity Individual Policy (which can be found in the relevant documents section below), which will also have been sent to you directly, as it contains important information about the transfer. 

If you (or anyone else with an interest in your Policy) don’t have any questions or concerns in respect of the proposed transfer, there is no need to take any further action in relation to the transfer. 

If you would like to receive further information about the transfer or have any questions, please contact us. Our contact details can be found below.

If you believe you may be adversely affected by the transfer, you can put your concerns or objections to the High Court. 

You can do this in the following ways: 

• You can call our helpline, send us an email, or write to us. Our contact details are included below.
• You may attend and present your objection at the High Court hearing in person or an appropriate representative can present your objection on your behalf. 

If you raise an objection, we will reply to you and send your objection, our reply and any subsequent, related correspondence to the High Court, the Independent Expert and our Regulators before the hearing. The details of the hearing can be found below, but please contact us if you have any questions. 

If you wish to attend the High Court hearing, it would be helpful if you could get in touch with us as soon as possible and preferably before 30 April 2025 setting out your grounds of objection and how you may be adversely affected. Our contact details can be found below.

By informing us, we will be able to let you know about the exact timing of the hearing as well as any changes that may be made in relation to the hearing, such as any change to the date, updates on which can also be found in our key dates section below. We may also be able to deal directly with any concerns you have.

If the transfer is approved, it won’t change:

• Your Buy-In policy terms and conditions (other than the change in the provider of your Buy-In policy)
• Your rights and obligations under the Buy-In policy
• Insured benefits will continue to be paid in line with your Buy-In policy terms.

If the transfer is approved:

• Rothesay will replace Scottish Widows as the provider of your Buy-In policy and become responsible for the administration and all obligations regarding your Buy-In policy (for example, funding the insured benefits)
• You should contact Rothesay for any matters connected with your Buy-In policy
• To the extent that any benefits insured under your Buy-In policy rely on insurer discretion, the value of such benefits may differ.

How could the value of benefits differ where discretion is applied? 

Where your Buy-In policy references financially neutral or cost neutral benefits, the bases used to calculate the value of these benefits are not guaranteed and will change over time. This could impact member options, for example transfer values, early and late retirements and commutations, and financially neutral young spouse reduction factors.

Prior to the transfer, we will set the bases used to calculate these benefits. After the transfer, Rothesay will set the bases. This will lead to a difference in the value of benefit calculated and funded to you where a scheme member exercises an option after the transfer. These differences could be higher or lower post transfer.

The Independent Expert, appointed to assess the impact of the transfer on policyholders, has considered this further in Section 8.3 of his report and concluded that in his opinion the use of Rothesay’s bases to determine option benefits and financially neutral young spouse reductions will not have a material adverse impact on reasonable benefit expectations of Transferring Policyholders. That assessment is based on considering the impacts on groups of policyholders rather than any individual policyholder (as discussed in section 1.5.3 of the Independent Expert’s report). Please see Section 2.3.7 of the Summary of the Independent Expert’s Report and 8.3.36 to 8.3.51 of the Independent Expert’s report (both of which can be found in the relevant documents section) for further details.

Scottish Widows and Rothesay are continuing to work collaboratively together to ensure that, where differences in bases result in lower option benefits for an individual, those benefits align with the reasonable expectations of customers. The Independent Expert is aware of the ongoing work in this regard and noted in section 2.3.7 of his Summary report and in 8.3.42 of his full report (both of which can be found in the relevant documents section) that he will comment on it in his Supplementary report.

Nothing will change in the run up to the Transfer Date. Scottish Widows will continue to administer your Buy-In policy and you can contact us as usual.

We strongly encourage you to make your pension scheme members or beneficiaries whose pension scheme benefits are insured under the Buy-In policy, aware of the information contained in this website and in the Transfer Guide we have separately sent you. We enclosed with the guide a draft template communication which you may wish to share with your affected pension scheme members or beneficiaries for this purpose. If you require any additional assistance communicating to your pension scheme members or beneficiaries, please contact us.

We strongly recommend that you read the Transfer Guide for Trustee Policyholders available in the relevant documents section below, which will also have been sent to you, as it contains important information about the transfer. Beyond this, if you don’t have any questions or concerns after reading this guide, there is no need to take any further action in relation to the transfer.

If you would like to receive further information about the transfer or have any questions, please contact us. Our contact details can be found below.

If you believe you may be adversely affected by the transfer, you can put your concerns or objections to the High Court. 

You can do this in the following ways: 

• You can call our helpline, send us an email, or write to us. Our contact details are included below.
• You may attend and present your objection at the High Court hearing in person, or an appropriate representative can present your objection on your behalf. 

If you raise an objection, we will reply to you and send your objection, our reply and any subsequent, related correspondence to the High Court, the Independent Expert and our Regulators before the hearing. The details of the hearing can be found below, but please contact us if you have any questions.

If you wish to attend the High Court hearing, it would be helpful if you could get in touch with us as soon as possible and preferably before 30 April 2025 setting out your grounds of objection and how you may be adversely affected. Our contact details can be found below.

By informing us, we will be able to let you know about the exact timing of the hearing as well as any changes that may be made in relation to the hearing, such as any change to the date, updates on which can also be found in our key dates section. We may also be able to deal directly with any concerns you have.

Your affected pension scheme members or beneficiaries (being those pension scheme members or beneficiaries whose pension scheme benefits are insured under the Buy-In policy) are deemed by the FCA to fall within the wide interpretation of "policyholder" for the purposes of a Part VII Transfer.

If your affected pension scheme members or beneficiaries believe they may be adversely affected by the transfer of your Buy-In policy to Rothesay, they also have the right to raise concerns or object to the transfer in the same way as other policyholders.

Your affected pension scheme members or beneficiaries may wish to contact you to raise their concerns or to make their objection. Please pass any concerns or objections received by you to us using our contact details below.

Your affected pension scheme members or beneficiaries may also contact Scottish Widows directly and present their objection at the High Court hearing in person or through an appropriate representative.

We have made an application to the High Court to transfer the Transferring Business to Rothesay under a legal process known as a Part VII transfer.  

A Part VII Transfer is the term used to describe the process of transferring insurance business from one insurance company to another using the legal process set out in Part VII of the Financial Services and Markets Act 2000.

The terms of the transfer are set out in a legal document called the "Scheme" which is submitted to the High Court for approval. The full version of the Scheme and a summary of the terms of the Scheme are included in the relevant documents section.

The Part VII transfer process is subject to various protections for policyholders, including: 

• Review by an Independent Expert specifically appointed to assess the impact of the transfer on policyholders and reinsurers whose contracts are to be transferred by the Scheme. You can find more details about the Independent Expert and their opinion. 
• Consultation with our Regulators – the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) have reviewed our approach to the transfer and will produce reports for the High Court to consider. 
• The approval of the High Court – the High Court will only approve the transfer if the necessary legal requirements have been satisfied and it considers that the proposals are appropriate.
• Policyholders and other affected third parties have the right to raise their concerns or object if they believe the proposed transfer could adversely affect them – you can read more about how to raise concerns or object in the sections above. The High Court will take objections into account in reaching its decision.

The High Court hearing, at which the High Court will decide whether or not to approve the transfer, is scheduled to take place on 14 May 2025 at The Rolls Building, Fetter Lane, London, EC4A 1NL. Please note the High Court hearing date could change – we will update the key dates section below accordingly.

Notification of any changes to the date of the High Court hearing or Transfer Date will be made on this page.

If the High Court approves the transfer and you are a Transferring Policyholder, your policy will transfer to Rothesay.

You are a Transferring Policyholder if you are:

• a trustee of a pension scheme that has a Bulk Purchase Annuity Buy-In policy with Scottish Widows; 
• a holder of a Bulk Annuity Individual Policy issued by Scottish Widows to or in respect of pension scheme members and/or contingent beneficiaries to effect the Buy-Out of certain Bulk Purchase Annuity policies preciously issued by Scottish Widows. These policy numbers start with a "BA"; 
• a holder of a residual risk policy issued by Scottish Widows; or 
• a trustee of one of three Lloyds Banking Group pension schemes that has a longevity insurance agreement with Scottish Widows.

The role of the Independent Expert (IE) is to review the likely effects of the transfer on all policyholders of Scottish Widows and Rothesay and other affected parties. The IE has prepared a report on the terms of the transfer to assist the High Court in understanding whether policyholders are being treated fairly. In particular, the IE has reviewed the likely effect of the transfer on the security of policyholders’ benefits and on the reasonable expectations of policyholders.  

The IE is Mr John Hoskin of Barnett Waddingham, an actuarial and consulting firm. Mr Hoskin is an actuary who is independent of the companies involved in the transfer. His appointment and the form of his report have been approved by the PRA, in consultation with the FCA. 

In his report, the IE has concluded:

“I am satisfied that the Scheme will not have a material adverse effect on:

• the security of the benefits of the policyholders of SWL and Rothesay, including the Transferring Policyholders
• the reasonable expectations of the policyholders of SWL and Rothesay in respect of their benefit expectations, service standards, management and governance, including the Transferring Policyholders.”

The full IE’s report, and a summary version of the IE’s report, can be accessed via the relevant documents section below.

In addition to the IE’s review, the Chief Actuary and With Profits Actuary of Scottish Widows have each considered the terms of the transfer and prepared reports. These reports can also be accessed via the relevant documents section below.

Following a strategic review, we made the decision to sell the Transferring Business as it is different in nature to the rest of our retail consumer-focused businesses. 

Rothesay is a leading pensions insurer with ongoing growth ambitions in the Bulk Purchase Annuity market and, like Scottish Widows, has a track record of delivering for policyholders.  It is dedicated to providing excellence in customer service and is the first insurance company to be PASA Accredited (recognised by the Pensions Administration Standards Association as evidencing compliance with their gold standard) for policyholder experience.

The legal process we are following does not require us to obtain the consent of individual policyholders or other affected parties in order to implement the transfer. However, you can object or raise any concerns you may have about the transfer - you can read more about how to raise concerns or object in the sections above. You can also reach out to us with further questions by contacting us.

Following the hearing, we will put the High Court’s decision on this page. If the transfer is approved, we will also confirm the Transfer Date agreed by Scottish Widows and Rothesay on this page.

If the High Court does not approve the transfer, the transfer will not happen, and we will continue to administer your policy.

If you are a Transferring Policyholder, following the transfer, you will be a policyholder of Rothesay. They will send you a welcome letter after the Transfer Date that will contain their contact details.

The Independent Expert has considered the potential impact of the transfer on the benefit security of all Scottish Widows and Rothesay policyholders, including the Transferring Policyholders. As discussed above, in the Independent Expert section, he has concluded that:

“I am satisfied that the Scheme will not have a material adverse effect on:

• the security of the benefits of the policyholders of SWL and Rothesay, including the Transferring Policyholders.”

No, all of the costs of the transfer are being met by Scottish Widows or Rothesay. 

If you are a Transferring Policyholder, all personal and financial data relating to your policy, and any associated consents previously granted to Scottish Widows in respect of your personal data, will be automatically transferred to Rothesay on the Transfer Date. Rothesay will take over all the rights and responsibilities in respect of your personal data from the Transfer Date. Details of their privacy policy can be found on their website.

We will continue to comply with our legal obligations under the data protection laws, including the General Data Protection Regulation (GDPR). We take collection and management of your personal data very seriously. A copy of our privacy notice is available via our website.

We are happy to provide you with support, contact us for more information. If you need this information in an alternative format, such as Braille, large print or audio, please contact us via phone or email using the details provided above.