Scottish Widows Ready-Made Pension: how it works and what it costs

A Scottish Widows Ready-Made Pension is a personal pension where the investing is done for you. Rather than choosing funds yourself, you pay in and Scottish Widows decides where the money goes, shifting the mix towards lower-risk investments as your chosen retirement age gets closer. The provider states the pension is provided by Embark and invests in assets managed by Scottish Widows Unit Trust Managers¹.

The charging comes in layers. The provider states you pay an administration account fee, taken monthly, with a minimum each month, plus fund manager ongoing charges and transaction costs¹. There is no charge for transfers or to access your pension savings, and no charge to open a pension¹. If you want to move other pensions in, the provider asks for at least £10,000 in combined transferred pension value¹.

This page covers what the pension is, how the investments behave, how the charges work, who can open one, how to apply or transfer in, and what happens if something goes wrong. It does not carry current rates or fund prices: the provider's own site has today's figures.

What it is and who it is for

A Ready-Made Pension sits in the personal pension family: you hold it in your own name, pay in what you choose, and the provider invests it. The difference from a self-invested arrangement is who makes the investment decisions. Scottish Widows describes the approach as its experts investing your pension for you so you do not have to⁵.

The design suits someone who wants a pension they do not have to manage day to day, and who is comfortable with the provider choosing the funds. The provider states that if you take out a Ready-Made Pension more than 10 years from your retirement age, your Retirement Portfolio is fully invested in the higher risk Managed Growth Fund 6¹. From then on, most of your pension is invested in the Managed Growth Fund 2, within a five-year range of your chosen retirement age¹. That is the "ready-made" part: the risk level changes on a set path rather than by your decisions.

It is a long-term product. Scottish Widows says that when it talks about long-term investing it usually means anything over 10 years, that medium-term investing is normally for 5 to 10 years, and that short-term investing is less than 5 years⁶. It adds that investing in the stock market should be for the longer term, usually 5 to 10 years minimum, so you are more likely to get back more than you put in⁶. Money you might need sooner does not belong in it.

The same provider also runs a Self-Invested Personal Pension for people who want to pick their own investments, and Ready-Made Investments outside a pension wrapper¹. The Ready-Made Pension is the middle path: a pension with the investment work done for you.

How it works

You open the pension, pay in, and the provider invests the money in a portfolio that changes with your retirement date. Scottish Widows states that its Ready-Made Pensions are provided by Embark and invest in assets managed by Scottish Widows Unit Trust Managers¹. In practice that means the firm you hold the pension with and the firm managing the underlying assets are not the same company, which matters if you ever need to complain or claim.

Tax relief is added to what you pay in. The provider gives the example that if you pay £120, you get a £30 top up, a total of £150 for you¹. That is relief at source: the pension provider claims basic rate relief from HMRC and adds it to your pot. Higher and additional rate taxpayers may be able to claim more through self assessment, and Scottish taxpayers have their own rates and bands, so the relief added can differ from the rest of the UK. There is more on this in pension tax relief and pension tax relief for Scottish taxpayers.

You can also pay in a lump sum or increase your regular contributions to boost the pension, and if you are paying into a workplace pension you speak to your employer to make changes⁹. If you hold a Scottish Widows workplace pension, you can transfer other pensions in by logging in to the Scottish Widows app, tapping your pension account and tapping "Transfer in" in the pop-up¹⁰.

How the fees and charges work

The charges come in layers, and it helps to know which layer each one sits in.

The administration account fee is what you pay the provider for running the pension. It is a percentage of your pot, taken monthly, and the provider applies a monthly minimum, so a small pot still pays at least that floor even when the percentage would come to less¹. Because the main part is a percentage, the amount rises as the pot grows, which means the charge is largest in the years when the pot is largest.

The investment charges are what the fund managers take: ongoing charges and transaction costs¹. Ongoing charges cover the running of the fund itself. Transaction costs are the dealing costs of buying and selling within the fund, and the provider gives them as a range up to a maximum rather than a single figure, so the amount you actually pay depends on how much trading the fund does¹.

Around the edges, the provider states there is no charge for transfers or to access your pension savings, no charge to open a pension, and no charge for combining pensions with Scottish Widows¹. It also states that Scottish Widows does not charge to transfer into its pensions, but your old pension providers may do⁸. That last point is the one people miss: the cost of moving a pension is usually charged by the scheme you are leaving, not the one you are joining, so it is worth checking whether your old provider charges an exit fee before you move¹².

For comparison, other providers in this market publish their own ready-made pension charges, and the shape of the charging differs between them¹⁴. The provider's own site carries today's figures for this pension.

Who can apply and how to apply

The Ready-Made Pension is a UK personal pension. The provider's terms for the Ready-Made Pension state that applicants must not be a US Person¹. Beyond that, the practical eligibility question is whether the pension you want to move in is one the provider will accept.

Scottish Widows publishes a list of pensions it cannot accept: pensions with guarantees, Guaranteed Minimum Pension or Section 9(2B) rights, a Guaranteed Conversion Option, defined benefits, active workplace pensions, overseas providers, pension sharing or earmarking orders, and disqualifying pension credits¹. If your old pension has any of those features, it is not a candidate for this pension, and in the case of a defined benefit or final salary scheme there are separate rules and, often, a requirement to take advice before transferring at all. See transferring out of a final salary pension and when advice is required to transfer.

To apply, the provider sets out three routes:

1. Apply for a new pension and request a transfer during the application¹⁰.
2. If you set up a pension where only you pay into it, call Scottish Widows to request the transfer; lines are open Monday to Friday, 9am to 5pm¹⁰.
3. If you have a Retirement Account personal pension, request the transfer using the online form¹⁰.

You can usually move defined contribution pensions yourself using the provider's transfer service¹¹. You cannot transfer a final salary or defined benefit pension online, and you cannot transfer online if an employer or someone other than you is still paying into the pension¹². You can transfer online if the pension relates to a pension credit awarded under a pension sharing order, originated from a pension credit, or has already been reduced by a sharing order¹².

Before you start, gather the details: the name of your provider, the member or policy or plan number, the pension scheme name if it was set up by an employer, and a recent transfer value for each pension you are moving¹⁵. You need an up-to-date transfer value when you apply¹².

What you give up when you transfer in

Moving a pension is not neutral. Scottish Widows lists the benefits and features that may be given up on transfer: a protected tax-free cash lump sum, a protected pension age, a guaranteed growth or bonus rate, a loyalty bonus, a fund bonus, with-profit fund holdings, life cover, critical illness cover or waiver of premium¹². Any of those can be worth more than the convenience of having one pot, and once given up they are usually gone.

There is also a timing rule. If you plan to take money from your pension soon after transferring to Scottish Widows, the provider will ask whether you have had financial advice or Pension Wise guidance, or would like some, before it proceeds¹⁶. That is a check built into the process, not a barrier, but it means a transfer intended to be followed quickly by a withdrawal will take longer.

The provider states that when you transfer other pensions to it, it invests them in the same way as the pension you already have with it, which may be a default option, and you can change that online afterwards¹⁵. So a transferred pot does not get its own investment strategy unless you set one.

If you are weighing up whether to combine pots at all, combining pension pots or keeping them separate sets out the trade-offs, and transferring pensions and investments to another provider covers the mechanics.

How your money is protected

The provider states that the Financial Services Compensation Scheme protects the eligible money you hold with it⁴. That protection applies to eligible money held with the firm, and it is the same statement the provider makes across its pension and investment products⁴. It does not protect you against investment performance: the value of a pension can fall as well as rise, and the provider's own guidance is that investing in the stock market should be for the longer term, usually 5 to 10 years minimum⁶.

Scottish Widows is part of a large group that also includes Lloyds Bank, Halifax and Bank of Scotland¹⁵. That matters for two practical reasons. First, if you hold other products in the same group, the protection limits and the way records are linked can be affected. Second, the group's banking arm is authorised by the Financial Conduct Authority and appears on the Bank of England's list of UK banks authorised to accept deposits¹⁸. You can check a firm's status on the FCA Register yourself.

Pension scams often arrive as an unexpected call, text or email about a "free pension review" or an early release offer. Scottish Widows states it would never withhold its number when calling, and would never call from a number with an area code like the one for Edinburgh, where it is based²³. If you want to be certain a communication is genuine, the provider's advice is to check with a friend or call it on a number you trust, or one from its website, not one given to you on an email, text or over the phone²³. There is more in pension scams.

Problems, complaints and getting help

If something goes wrong with the pension itself, the first step is the provider. Scottish Widows runs a Pension Helpdesk, and it is explicit that what you get from its website or its helpdesk is guidance, not advice¹⁶. Guidance explains your options; it does not recommend a course of action for your circumstances.

For free, impartial guidance on what to do with a pension, Pension Wise is the government service, delivered through partners including Citizens Advice and Citizens Advice Scotland²⁴. It is free and it does not sell anything. If you are in Scotland and want wider help, advice.scot covers benefits checking, employment-related issues, housing-related issues and neighbourhood issues²⁵.

If you cannot resolve a complaint with the provider, the Pensions Ombudsman can look at complaints about pension schemes, and the Financial Ombudsman Service covers many investment complaints. The Pensions Ombudsman and complaining about a pension and complaining about a pension provider, platform or fund manager set out how each works.

If you have lost track of an old Scottish Widows policy, the provider has a tracing service, and its app includes a feature to find lost pensions and track them in the app²⁶. The wider Pension Tracing Service covers schemes from any employer.

One more thing worth knowing before you commit: the Ready-Made Pension does not offer an annuity option, and neither does the Scottish Widows SIPP¹. If you want to buy a guaranteed income at retirement, you would shop around for a provider that offers one, or speak to a financial adviser³. The provider has a contact number for annuity enquiries on policies starting with EH, EL, EB or ES³. Annuities explained and annuity providers and shopping around cover how that market works.