Scottish Widows IGC report – a most interesting read.

scottish widows

The Scottish Widows 2019 IGC report has been published and is available here

In the past few years, Scottish Widows has moved from a quiet backwater in the tidal flow of Lloyds Banking Group to very much centre stream. I have heard anecdotally that Scottish Widows is expected to bring in £50bn of new business in the short term and that the banking group now considers the management of pension and other wealth core to the growth of the group as a whole.

This is the context in which LBG bought Zurich’s DC business (effectively the  Eagle Star /Zurich Assurance corporate book) from Zurich and outsourced the administration of its legacy book to Diligentia.  Scottish Widows is now competitive in most areas of corporate pensions and supported by a wide range of advisers as a workplace pension provider. This is a very different proposition to the one that Babloo Ramamurthy and the remarkably stable Scottish Widows IGC, reported on in 2015.

Sensibly, the IGC has approached its 2019 reporting by looking at the new Zurich Book, the outsourced legacy book and the core workplace business book as separate, How fair it is to have three classes of customer is the elephant in the room. Making this assessment is a challenge that the IGC faces going forward and one it is clearly gearing itself up for. The 2019 report is an interim statement of intent, I sense there is plenty for the IGC to do going forward.

Tone of the report

As I have come to expect, this report is measured, accurate and consistent. If it errs , it is a little boring, it does not purposefully engage the reader as it could, it talks to the reader , but from some distance.

Take this example of reporting on the customer experience.

In general, service performance times continue to see a downward trend since the beginning of 2018, with an average reduction of 20% in customer journey times.

What a customer journey time amounts too and what is meant by service performance times is unclear. These do not sound the words of an IGC but of a Scottish Widows internal report.

I’d urge the writers of the detailed areas of the IGC report (and it does feel as if there are more than one), to focus more on the reader as a lay person and not a pension professional!

Similarly, the report could do with being de-cluttered of wordy titles like this

The experience customers have when interacting with Scottish Widows about their workplace pensions.

Ordinary people don’t interact , they deal or ask. Nobody interacts “about” and “experience” is a rather grim word to describe “what it’s like”.

The stiff formal tone of language is at odds with one of the key aims of the IGC, to get better engagement.

So  I am giving this report an amber for tone, it’s very well written but written for the wrong people, I’d urge the IGC to spend some time with a professional communication team , considering how the tone could better engage ordinary members.

Value for money

The report uses a conventional value for money assessment, described in this picture

Screenshot 2019-04-02 at 06.18.34

This has the virtue of simplicity, but it doesn’t quite tell members the value they are getting for their money, so there is a lot of general comment about fund performance , administration levels and capacity to administer for employers and engage members , but not a lot about individual outcomes.

The IGC clearly haven’t drunk the Kool-Aid on digital engagement.

Scottish Widows has also developed a digital site for employees. Uptake here, however, has been slower, with only 72,000 employees from a potential population of 1,400,000 having registered for the service so far

likewise, they are pressing to know why IFAs don’t like Scottish Widows.

Adviser net promoter scores remain stable, but at a lower level than we would like to see. Scottish Widows is constructing a survey to understand what is causing this and will share its findings with the IGC.

I’d urge the IGC to talk to advisers first-hand , and to do so outside the Corporate Adviser Conference it attended. The damage poor administration and support levels delivered to workplace pensions and their advisers between 2012 and 2016 will take time to repair.

The overall picture, the IGC paints of the three books of business is demonstrated like this

Screenshot 2019-04-02 at 06.17.43

The report is critical of the administration standards in its (formerly Zurich’s) Cheltenham office

I suspect the scoring of the Zurich UK book has yet to be developed and that these scores will be marked up in next year’s report,

The positive picture reflects the research I receive from my company on Scottish Widows performance, it has picked up and the poor returns for Scottish Widows funds in 2018 reflect the aggressive exposure to UK equities rather than mis-management of the funds. This approach has served investors well in the medium term but it is not consistent with the default strategy of the Zurich workplace book and there’s clearly a job of work ahead.

Similarly, there’s a job of work to get the engagement projects initiated in Edinburgh, rolled out for the Zurich customers. My understanding was that the long term aim of Scottish Widows was to use the fund platform offered by Zurich as its principal new business offering. Reading the IGC report , this doesn’t seem to be ready to roll just yet.

I am impressed by the value for money assessment from the IGC, it offers people a meaningful insight into the respective books and is helpful to advisers and indeed to Scottish Widows, in working out what should be done both with legacy and the choices between “modern Scottish Widows” and “Zurich UK”. In the context of what is going on strategically at LBG, the IGC is proving itself very relevant. I give the report a green for its value for money assessment, I hope that next year it will be able to focus more on member outcomes.


Scottish Widows have gone a long way to clean up the mess it had created in its legacy book and its “modern” workplace pensions. I suspect that the IGC had a good deal to do with that . I have praised the IGC in the past for urging Scottish Widows to play an effective part in getting people engaged with pensions, this report highlights initiatives it has encouraged such as the Pensions Bus. Scottish Widows are a force for good in many areas of pension development and again, I think this partly down to the IGC.

I’m also pleased to see that the research Scottish Widows co-commissioned on responsible investment is prominently positioned in the report and discussed at length. This is the one thing that younger members seem really interested in.

I’m not sure about the research itself and I suspect neither is the IGC. The framing of the questions asked to the 2000 people questioned ( a proportion of which were Scottish Widows policyholders) suggests that people were confused by what they were asked.

For example, the IGC reports

“When customers were asked if there was appetite to take ‘some’ investment risk to pursue ESG principles, a majority of customers were resistant”.

I would be resistant to having to take more risk from my investments to have them managed responsibly, My understanding is that responsible investment reduces rather than increases risk. The question could have been asked better.

I hope that the IGC do not take the research to Scottish Widows, without thinking hard about the quality of the research. I fear that if they follow the conclusions of the research, they may be repeating established prejudices inherent in the research questions.

This is not to negate the value of what the IGC has done. I continue to give the IGC a green for its (overall) effective lobbying of Scottish Widows on behalf of members.


This is a good report, it could be bettered with a little re-writing and it could have done without quite so many charts in the appendix. But I welcome proper reporting on transaction costs which is comprehensive, well laid out and useful.

The IGC is clearly effective and working well, it is a success story and deserves wider promotion. I hope that in 2019 , Scottish Widows finds ways to promote the IGC report to all its members, especially to the 72,000 who have signed up to its online service.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to Scottish Widows IGC report – a most interesting read.

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