Time for a viewing of the brilliant film “Margin Call”, which starts with the “letting go” of a bank’s risk officer.
Lloyds Bank axes risk staff after executives complain they are a ‘blocker’ https://t.co/HKvI7cMbKt via @ft

— Bryn Davies (@DaviesofBrixton) April 10, 2024

Lloyds bank are taking on risk, sacking their old team and putting in place a new one, more amenable to progress. In this blog I look at what Lloyds see as innovation and wonder what risk they’re taking  in providing a “ready-made” pension service.

In short, Lloyds Bank has teamed up with Scottish Widows (an insurance company they happen to own) to produce a personal pension that can combine as many as 10 other pots.

It’s Pension Bee done properly, because it’s done by a bank that we all know , not least because we can’t get away with its advertising.

The great thing about this new product is that we know very little about it except that it is a personal pension and has charges of around 0.6%. We know nothing about the potential value for money as we don’t what it invests in and so what it can be expected to return, we don’t know if it will give good or poor service.

Which makes it an interesting product for the consideration of Scottish Widow’s master trust and its vocal chair Andrew Warwick-Thompson.

Warwick-Thompson has been keen to denigrate SIPPS like the one Scottish Widow’s have launched for having higher charges and lower VFM than the master trusts from which many are migrating. Will he include Scottish Widows product on that list? With a 0.6% charge, it is certainly more expensive than the Scottish Widows master trust (also owned by Lloyds).

No doubt Scottish Widows can justify their higher charges by the high class investment service on offer. We wait to see just what is on offer by way of value for saver’s momey.

We learn that there are certain restrictions to entry

Customers can open a ready-made pension with a minimum of £5,000 or set up monthly contributions from £150 a month.

Existing pensions of £10,000 or more can be transferred in.

Jackie Leiper says

‘There is a real opportunity for Ready-Made Pensions to help self-employed people – for many of this group their business is their pension.

‘Those who are self-employed have been overlooked in the discussion of saving for retirement. Traditionally, up until now. self employed people have had to take financial advice to get started with investing in their pension.’

Deep insights here.

I am quoted approvingly. It is good to see Lloyds Bank providing a 21st century pension

Henry Tapper, founder of pension comparison service AgeWage said: ‘It seems big banks are finally arriving into the 21st century when it comes to pensions.

‘It is good to see that banks are waking up to the fact that they have have some muscle, but I’m not overwhelmed.

‘PensionBee has been doing this for some time, and doing it well but that said Lloyds Bank’s offering is good news for savers, especially if they fancy having a Scottish Widows pension with their bank.’

Let’s hope that the revolution in Lloyds Bank risk management , advertised at the top of this blog, will mean that the brakes are truly off and that savers will one day find their pension pot , magically turn into a pension.

Customers taking out this “ready made pension service” can surely expect no less.

Lloyds have recently announced they are selling their annuity book. Whether their bank or their insurer are sharing any of the risks of turning pots to pension, isn’t yet clear.