Navigating 2024’s big pension changes

Navigating 2024’s big pension changes

2024 is going to be a big year for pensions and significant investment in our workplace business means we’re ready for it.

2024 looks likely to be a pretty big year for pensions, with plenty of government policy changes, legislation and consultations underway.

Major investment in our workplace business, with even more to come in 2024, means we’re more than ready for it. Last year’s business transformation moved 1.3m customers and £23bn of assets onto our new platform with all our main products in one place. It means we can do more, better and quicker, for everyone we work with, so that members can benefit from better retirement outcomes. 

Our Scottish Widows app and digital platforms are a hive of activity with members checking their money, planning their future, and transferring in old pension pots, nominating beneficiaries, and fund switching. We’re not letting up on making our app even better this year. 

Big changes ahead

This year we’re investing even more in tech and data to support employers and members.

First up, we are plugging Moneyhub’s award winning Open Finance capability right into the Scottish Widows pension app.  So, without ever leaving the app, members will be able to see all their pensions alongside mortgage, savings, credit cards, loans, investments and bank accounts – no matter who they bank with.

We know that when people engage with their pensions they have a better chance of a comfortable retirement, and as the government’s dashboard moves further out, we must give people the financial insights they need now.

We’ll also be launching more features into our SW app in 2024 and enhance the experience across our digital web front ends.

Delivering employer insights

Something you’ve been asking us for a while is access to up-to-the minute data and analysis on schemes, and our new self-serve employer insight tool Navigate will show how members are engaging with their pension, using metrics such as demographics. 

Those insights will show, for example, whether there’s a need to nudge particular groups to consider saving more, as well as tailoring communications. 

We start rolling this out from Spring and want to put this at the heart of good scheme management in governance committees.

Shaping the Value for Money framework 

In July last year we heard a lot more about the new Value for Money framework being developed jointly by the FCA and DWP (Department for Work and Pensions). 

However, much of the detail still needed to be worked through, and since then the Government has established a number of industry working groups and we’ve been amongst those helping work through that detail. 

Our work will inform the consultation due to be issued by the FCA in the Spring when the wider pensions community will be invited to comment on the proposals.  

The Pensions Regulator has written to the Trustees of occupational DC (Defined Contribution) schemes to respond, as the new framework will apply across both contract and trust-based schemes when it’s introduced. 

Pete Glancy, Scottish Widows’ Head of Policy, says; “If the new framework allows Value for Money to be compared on a like-for-like basis across all types of pension schemes, focusing on member outcomes rather than just the headline price in isolation, this could be a considerable win for pension savers in the UK”.   

Investment innovation and the Mansion House reforms 

Mansion House reforms certainly grabbed the headlines last year, with the government looking to increase returns and boost the UK economy via illiquid assets in pensions.  

However, our investment innovation will go beyond just Mansion House. We’re evolving our PIA (personal investment account) default offerings as well as delivering some exciting new ones as part of our Mansion House commitments.  

We have a great new investment hire too. Kevin Doran is taking up the new role of LBG’s Chief Investment Officer to bring added focus to our investment strategy and it’s a real bonus to have him join us and bring his wealth of industry experience. A renewed focus on ESG (Environmental, Social and Governance) investing is also high on his to-do list. 

Pension tax allowances boost  

The Chancellor announced some big tax changes for high earners in his Spring budget 2023 – and as we start 2024 high earners have an opportunity to pay more into their pension even if they had stopped contributing due to Lifetime Allowance issues. 

We want more people saving into pensions and with the welcome thaw in frozen pension allowances this should boost saving. It may also have the side benefit of senior decision makers re-enrolling or engaging more in their pension scheme which can help with prioritising pension discussions in the boardroom. 

There is though the potential change of government in the next 12 months which could well reverse this.  

Ready for AE 2.0 

The ‘AE 2.0’ auto-enrolment consultation is expected to give the detail of how we bring lower earners and younger people into auto-enrolment.  

We’ll be helping employers get ready in advance of implementation – when it’s confirmed – with the new AE duties likely to bring complexity, costs and changes to IT and payroll systems.   

Ahead of that, employers in eligible schemes will be able to make use of our new Navigate tool to get useful member insights. 

In 2023 we tested out comms on Tik Tok – the channel of choice for many younger people and we were blown away by the response. Expect to see more of this in 2024 as we get closer to enrolling teenagers into pension schemes. 

Making pensions more inclusive 

This is the 20th year of our Women in Retirement report. For two decades now we’ve been revealing the particular pension challenges women face. The pension gender gap may be narrowing but it’s still with us and certain groups of women face very poor retirement outcomes. We won’t be letting up on our work around this and we believe the ‘AE 2.0’ auto-enrolment reforms will help to make a real difference. 

As our latest Master Trust insight survey showed, women are not the only group at risk of a precarious future. With 14% of members surveyed sharing that they have disabilities, and nearly a third (31%) of this cohort admitting their disability affects how they manage their finances, it’s something that needs to be addressed. 

The more we, and industry, can bring on board and include diverse and vulnerable groups such as single and divorced women, younger people, and those with additional needs such as a disability, the more likely it is that more of us will benefit from a comfortable retirement.  

That’s why we’re working closely with our Master Trust to create a new Diversity, Equality and Inclusion framework which goes above and beyond what the regulator has suggested. 

With so much going on, we’re certainly going to be busy supporting employers, members and advisers, with more events, webinars and Pension Engagement Season activity than ever before.  

It’s incredibly exciting – and we’re ready for it.  

And if you’d like to keep up to date with all the latest from Scottish Widows Workplace Pensions, then please give our podcast channel a listen. There are four episodes there already with more to come in 2024 to keep you posted on the exciting changes in Workplace Pensions and beyond. Just scan the QR code.