Scottish Widows

Bob2021

Afternoon all,

I'm looking for some basic advice please, I appreciate none of which will be Regulated but I'm looking to confirm my understanding and by association want to understand what Scottish Widows (SW) has done recently to determine the risk based on that knowledge.

Apoligies in advance for a long winded initial post, but I need to set the scene.

I've just turned 55 and am planning to retire at 60 and currently have ~£500k in my SW works pension which until recently used only their "Scottish Widows Pension Portfolio Two Series 2" (ISIN GB00B09CD637) portfolio of investments.

Note to add that SW haven't been 'lifestying' my pension despite changing my retirement age to 60 (in 2023), so up until January 2026 my pension contributions were going into the portfolio mentioned above.

Here's my knowledge so far - please correct me where needed, as that would be very much appreciated. I want to avoid speaking to an IFA if possible for what hopefully should be a simple point of clarification which I'll come onto later.

It's my understanding that Pension Portfolio Two Series 2 has an asset allocation of ~63% non-UK stock and ~19% UK stock, and I understand stock to be company shares (equities). The remainder opf this portfolio comprises ~15% in bonds and a marginal (1%) amount in cash.

So as it stands my understanding is my pension is largely holding stocks which of course can go up in value and equally down in terms of gains/losses.

It's also my understanding that bonds are more favourable when choosing to reduce risk of loss due to their nature, but have the drawback of potential limited or even negative returns if interest rates aren't particularly high or flatline, since bonds thrive only when interest rates remain high.

I often look to the Financial Times website as a measure of returns vs risk for this portfolio, and accoring to how they measure risk Portfolio Two is showing as low risk whilst being performant. I also of course appreciate that other comparison tools exist, e.g., Trustnet, and will have their own measures by which risk is determined. I also appreciate they will all differ of course to SW's own risk intepretation, as they are more likely not to base risk on observed behaviour. Anyway, I digress.

As mentioned please correct me if I've misunderstood anything to this point.

The clarification I am seeking is SW have started investing my contributions into "Scottish Widows Pension Portfolio Three Series 2" (ISIN GB00B09CD306), which I guess is the start of the lifestyling process, albeit when I called to query this and after a long call (~50 minutes) I'm still down on their system to retire at 70!

According to the FT website however this new portfolio is significantly higher risk than Portfolio Two, despite having less allocations to stock (~52% non-UK stock / 16% UK stock) and slightly more in bonds (20% non-UK bonds / 9% UK bonds), with ~1% in cash.

So to my quesion: is Portfolio Three really that bad??

Looking at the growth profiles of both since 2000 to today (cbonds.com) they're very closely matched in terms of performance, so what gap(s) exist in my knowledge to intepret FT high risk as being accurate and more importantly is Portfolio Three really something to worry about and by association are bonds something to avoid currently?

I've read up on Portfolio Four also, which derisks by further moving further into bonds. Portfolio Five however is heavily weighted into bonds (~57% non-UK) and then cash (~32%) with slow but steady returns over time.

Bonus question: Would jumping entirely into Portfolio Five suit instead for the remaining 5 years prior to my retirement?

I am actively learning this stuff as I go along, to at least have some wider understanding of the concepts such that when I do actually consult an IFA it's not all over my head.

Thanks for hopefully reading this far ☺️

Brie

I don't know about SW specifically but I know with other pension administrators that sometimes using their online option (assuming one is available) might be much easier and straight forward for simple things like updating your retirement age.

retiringin26

Up to July last year one of my occupational pots was in the same SW Series. I chose to move it all to a SIPP in 2025, but that's not the main story here.

Up to that point It was being auto- lifestyled from Portfolio 3 into P4 but I asked to have that stopped back in late 2022. I gave a telephone instruction for that. The pot remained invested mostly in P4 with some in P3.

In the period from early 2023 to mid 2025, P3 performed a bit better than P4 but not as much as you'd imagine. Not sure how that equates to risk factors especially over a relatively short period, but it felt OK at the time. P4 I guess was also less exposed to Trump-tariff induced market swings in April 2025.

Incidentally I had another SW pot and found the ability to switch funds via a telephone instruction very straightforward. You might consider the same as you approach retirement.

There is a 100% cash fund too, in that Series. I switched my SW fund to that prior to taking it into a SIPP.

Aylesbury_Duck

I have a similar set-up, albeit my SW pension pot is smaller as it's only one part of my portfolio. My retirement age was set to 65 and so lifestyling from Two to Three started a couple of years ago. Having reviewed my pensions recently and knowing I have good DB pensions as well, I stopped further lifestyling by emailing them and setting my retirement age to 70. I'm happy with the lifestyle mix as it stands so that's remained.

I plan to move this to a SIPP to save on some fees, but the plan has an accidental death benefit attached for another 18 months, so I'll stay put until that expires and then consider moving it.

I'm puzzled by the risk description you mention, because Three is what Two lifestyles towards as one nears retirement. What is interesting is that I used AI to do some testing of my assumptions, planning and general mix of investments, and when it came to SW it also seemed to mix up the relative risk levels of Two and Three. I caught it, asked it to check and it recognised its error, but I wonder if it went to the same source you did to come up with its first, incorrect assumption?

Bob2021

Thank you, and like you I did some research via AI as ideally I would have a split between an annuity for guaranteed income and drawdown for growth on the remainder which suggested a far more comprehensive stepped down strategy to risk approaching retirement, although it didn't suggest using any SW portfolios in particular but used general terms that weren't product specific.

I'm waiting for a set of illustrations from SW for retirement at 70 and 60, notwithstanding I've already confirmed to them my intention to retire at 60, but they claimed 60 showing on my account was a guldeline only (!?) and I'm still in their system as retiring at 70! I really do dispair, especially given the 1% annual charge. The lady I spoke to said that they can 'realign' to 60 but I said I need as much info as possible to understand what that means along with illustrations.

So, I'm waiting for the post to arrive in the next week or so then will try and get more of an understanding by calling yet again.

Bob2021

It'll be interesting to see other's thoughts on portfolio Three and possible interpretations why the FT puts it as high risk. Thanks.

techno12

RE: The 100% cash fund mentioned a few posts back..

I wish I'd moved mine to it before requesting a partial transfer of my SW workplace pension to Freetrade.

After hearing nothing from SW for 10 days I called them and they said nothing had happened as they needed to know how much of each of my 4 funds to sell. They never bothered asking me and couldn't understand that I wanted them to liquidate the £200k from the funds in the proportion that they are allocated, leaving £20k or so in those 4 funds as the pot was/is around £220k.

The call handler didn't understand this and the call took ages (to me it's the obvious way "sell £200k worth and leave the rest").

10 days later and I found out they have sold all of my funds and put them in the cash one, so I'll have to call them tomorrow. They were only meant to sell the £200k worth I had requested. Knowing SW they'll probably transfer everything which may well end up closing my workplace pension!

Lesson learned. Next time I'll move the amount I want into the cash fund then initiate the partial transfer.

bolwin1

A colleague of mine asked me this exact same question a couple of days ago. Some of her funds had started to be invested into portfolio 3. After a bit of digging around, we found a notification that she'd received from Scottish Widows where they said that Scottish Widows had come to the conclusion that the balanced portfolio 2 was too conservative & were moving their default position to balanced portfolio 3. If you have a look at your documents in the online SW site, you'll probably find something similar from them.

Bob2021

That's the thing, I've had absolutely zero communication from SW other than a bizarre statement in December which was also asking to confirm that I still want to retire at 70, despite sorting out the mess they created in 2023 and confirming at the time of retirement at 60.

The staff try their best but honestly there's been a catalogue of errors over recent years (including many significant contributions having gone missing).

I'm targeting balanced annuity so Portfolio Two was just fine and I understand lifestyling but am still concerned about the risk Portfolio Three reports on the FT website, which I'm inclined to trust more than what SW publicise as FT seems to determine risk based on observed behaviour - so possibly the high risk is because bonds haven't performed well historically in recent low interest rate years (perhaps).

LHW99

I'm targeting balanced annuity so Portfolio Two was just fine and I understand lifestyling but am still concerned about the risk Portfolio Three reports on the FT website, which I'm inclined to trust more than what SW publicise as FT seems to determine risk based on observed behaviour - so possibly the high risk is because bonds haven't performed well historically in recent low interest rate years (perhaps).

I don't know the criteria used by the FT / SW, but if these are different, then it would explain the different "risk measures".

Perhaps one is purely on volatility, whereas another takes account of a number of measures (alpha, Ratio of stock to bonds, %EM….??)