How is Royal London developing its workplace pension proposition?
LD: We are in a good position for the next phase of workplace pensions reform, as we have been evolving our proposition over the past 10 years. Our main scale default, part of the group’s wider £84bn Governed Range, already meets the new scale test, and has multi-asset capability, including actively managed strategies that invest in property, commodities and asset-backed securities, alongside equities and bonds. This means we are well placed to meet the ever changing regulatory and market environment.
GT: More recently, we have also changed the risk level of the fund to improve member outcomes, so the evolution seen to date doesn’t just include portfolio design and asset allocation, but also the overall default structure. This means we can remain fully focused on member outcomes and evolving our solutions, rather than structural reshuffling in order to meet new regulatory goals. Our approach is to build a premium default that ensures the best ideas are available to the vast majority of members, and evolve our products in response to wider market changes. We want to take existing members with us, rather than launch newer defaults that risk leaving some members behind.
Will a shift towards a more value-orientated approach deliver better member outcomes?
GT: In the past the industry has been focused on cost, but there is a greater awareness of the need to look at value in order to drive better member outcomes across the market. The new Value for Money regulations will support this. While this transition might be more difficult for some providers, we are in a strong position because we have not primarily relied on ultra-low-cost passive investments, so we already offer a more diversified and higher-value investment strategy.
LD: For us there isn’t really a debate between cost versus value because value means delivering quality solutions for members. Recent market conditions certainly highlight the benefit of more diversified investment strategies, rather than relying solely on vanilla equity and bond portfolios. Even without the recent conflict in the Middle East, the concentration risk in large US stocks has exposed potential limitations in passive portfolios. Our view remains that investment portfolios within defaults should be designed around member outcomes, not just the headline cost. Ultimately this will deliver value for savers.
Are there concerns around the value-for-money framework?
LD: We support the move towards a broader assessment of value, but there are concerns about how some forward-looking metrics, might work in practice. These can offer important insights for advisers but it is important they are treated as forecasts, not concrete facts. There is the danger that reducing ‘value’ to a single metric risks distorting behaviour, and may encourage providers to manage strategies to this metric, rather than looking at the broader issue of member outcomes.
GT: We’d also like to see this assessment include more metrics relating to engagement. Investment design is hugely important but so is the way members interact with their pension, and whether this encourages them to contribute more, or stay invested during periods of market turbulence, for example. If the government is looking to deliver better long-term outcomes, communication and engagement need to be part of this assessment.
What difference does mutuality make for pension savers?
GT: Mutuality makes a huge difference and goes to the heart of how we think about member outcomes. We are the UK’s largest mutual life, pensions and investment company1 and this is a key differentiator between ourselves and other providers. If the business does well, profits are reinvested or shared with customers. We recently shared £199m of our profits from 2025 with eligible customers, sharing over £1.5bn since 2017. ProfitShare isn’t guaranteed.
LD: This mutual structure changes the way the organisation makes decisions. The executive team does not need to manage quarterly shareholder expectations so its primary focus remains on customers and members. This also enables them to take a longer-term view, rather than chasing the flavour of the month. This is better aligned with pension savers’ needs, who are also investing over decades, not the short term.
How is Royal London navigating the raft of incoming pension regulations?
GT: Our recent evolution is not the end of this process. As part of our future roadmap, we are investing £100m into our workplace pension proposition over the next three years. This will cover portfolios for the accumulation phase, as well as the £10bn retirement income proposition, our standalone multi-asset decumulation proposition. We are also looking to include new post-retirement solutions and will be increasing exposure to infrastructure and real assets, supported by our recent acquisition of Dalmore. The DC pensions sector is facing significant regulatory change, through Value for Money regulations, the Pension Schemes Bill and introduction of pension dashboards. But the changes implemented in recent years anticipate this direction of travel, meaning we can ensure members continue to see good retirement outcomes in this new pensions world.
