Employer will be moving from Scottish Widows to Royal London Pension

katkatmachine

Hi all,

As the title suggests, my employer is moving our workplace pension from Scottish Widows (SW) to Royal London (RL). We’ve been given two options:

1. Leave our existing pension pot with SW, with all future contributions going into a new pot with RL; or

2. Transfer everything to RL, meaning our current SW investments will be sold, and the proceeds moved to RL.

If we choose option 2, the investments in SW will be sold, and any gains or losses will be realised. We’ve been told the transfer process could take up to six weeks, during which time the funds will be out of the market.

My concern is that whilst I normally contribute £624 per month (including employer contributions and tax relief), I recently added £11,235 to my pension from a bonus. If I go with option 2, I worry that I might lock in losses on that recent contribution due to the timing of the market and the time spent out of it.

Would it make more sense in my case to go with option 1 and leave the current pot with SW?

Any advice would be much appreciated.

Kind regard,

Kat

El_Torro

I wouldn't worry too much about being uninvested for 6 weeks. You might gain by being out of the market, or you might miss out. Assuming you are going to be invested for years to come (this may not be the case) then the 6 weeks won't make much difference to the end result.

In my experience transferring in cash takes a lot less than 6 weeks. This is just experience of me moving my own pensions around, if it is being done with all the employees at your company at once it's possible that it will take longer. When I've done it privately it's always taken less than 2 weeks. 

If you want only 1 pension pot I would do the transfer and not worry about the time out of the market. Of course there is the option to move the money that is currently in Scottish Widows elsewhere, not to Royal London.

flaneurs_lobster

You might want to quantify the charges for any pension left with Widows, most company schemes benefit from generous discounts WRT charges and these may not be applicable at the same level.

dunstonh

If we choose option 2, the investments in SW will be sold, and any gains or losses will be realised. We’ve been told the transfer process could take up to six weeks, during which time the funds will be out of the market.

You will be out of the market about 3-4 days.    The overall process of 6 weeks just buys them time to key in each transfer.

My concern is that whilst I normally contribute £624 per month (including employer contributions and tax relief), I recently added £11,235 to my pension from a bonus. If I go with option 2, I worry that I might lock in losses on that recent contribution due to the timing of the market and the time spent out of it.

But you are not leaving the market full stop.  You are just taking a couple of days gap.   i.e. if you had a FTSE tracker in SW and chose a FTSE tracker in RL, then you are still in the market bar those few days.

Would it make more sense in my case to go with option 1 and leave the current pot with SW?

You haven't told us anything about the existing plan or the proposed plan.   So, its not possible to answer that question.

Albermarle

Worth noting that on the forum we see more negative comments about SW than RL, regarding website ease of use, customer service etc.
Of course the actual performance of the investments depends on what you are invested in, not the pension provider.

I recently added £11,235 to my pension from a bonus. If I go with option 2, I worry that I might lock in losses on that recent contribution due to the timing of the market and the time spent out of it.

Depends on what you mean by recently, as markets have recovered to a large extent. In any case you only really lock in losses if you sell and withdraw the money. If it is being transferred and then reinvested in a similar investment, then that is different.

Albermarle

flaneurs_lobster said:

You might want to quantify the charges for any pension left with Widows, most company schemes benefit from generous discounts WRT charges and these may not be applicable at the same level.

I think nowadays they are not allowed to reduce discounts in this way,  and in the past mine never did anyway.

Of course though the OP should compare the charges between SW and RL.

katkatmachine

Based on the presentation they gave us charges with RL is lower than SW. My concern is the £11,235. It was just added to my pension last April 2025. They said that all the shares with SW will be sold so the gains/losses will be realised and the money will be used to buy new funds in RL. So I'm not sure if it's more beneficial for me to move it immediately to RL.

dunstonh

katkatmachine said:

Based on the presentation they gave us charges with RL is lower than SW. My concern is the £11,235. It was just added to my pension last April 2025. They said that all the shares with SW will be sold so the gains/losses will be realised and the money will be used to buy new funds in RL. So I'm not sure if it's more beneficial for me to move it immediately to RL.

Already answered higher up the thread.

vacheron

My employer also switched from Scottish Widows to Royal London 18 months ago!

In my case royal london were charging 0.5% (0.75% with a 0.25% company discount), and I am still recieving this discount (i believe it was changed in law that the provider can no longer remove the discount when employees change provider, but I could be wrong)?

My Royal London documentation says that their fees are 0.53% so my Scottish Widows fees are actually 0.03% lower.

I chose to keep my previous contributions with Scottish Widows for the time being and start afresh with Royal London, but to be honest I'm not a big fan of either of them. The Scottish Widows website (at least the one I have to use, i have been told on this forum that they have other more modern ones which are much better) is very outdated and clunky, I also saw many employees experience administrative errors with Scottish Widows, especially as they were arranging their affairs in preparation for retirement.

Royal London on the other hand seems a more up to date website but I'm not a fan of the way they allocate investments to your account. Rather than having a single fund and buying this fund as units, they individually buy dozens and dozens of lower level funds that go to make up the top level fund structure of the plan you have selected, which makes it very difficult to track the value and allocation at any given time.

More importantly than the provider though is the funds where your money is actually invested. As you mentioned, you will have to sell the Scottish Widows fund as Royal London probably will not offer it, but what do you intend to purchase when the money lands with Royal London? Is there an equivalent Royal London fund to the Scottish Widows fund or do you want to look for something completely different and if so, do Royal London offer it?

dunstonh

In my case royal london were charging 0.5% (0.75% with a 0.25% company discount), and I am still recieving this discount (i believe it was changed in law that the provider can no longer remove the discount when employees change provider, but I could be wrong)?

It was changed some years back that the terms could not be changed if you left the employer.

RL frequently have fund based discounts on their plans as well as employer discounts.

My Royal London documentation says that their fees are 0.53% so my Scottish Widows fees are actually 0.03% lower.

The 0.03% is probably transaction costs.    RL tend to include it on theirs but SW do not.  So, its more of a disclosure difference.   However, if this is an annual cost and charges disclosure, you should ignore the percentage as its from flawed data.  (it takes the monetary amount paid over 12 months but then applies that total as a percentage of the snapshot date of the calculation).

Royal London on the other hand seems a more up to date website but I'm not a fan of the way they allocate investments to your account. Rather than having a single fund and buying this fund as units, they individually buy dozens and dozens of lower level funds that go to make up the top level fund structure of the plan you have selected, which makes it very difficult to track the value and allocation at any given time.

The Royal London governed portfolios effectively do the same as HSBC GS and VLS, except they show the underlying funds whereas HSBC and VLS do not.     The total value should be easily tracked.

If you don't want the RL Governed portfolios, then you can always self select from their range. 

Somebody

Re charges it's worth noting that Royal London pays a Profit Share annually, which equates to 51% of my plan charges this year.