Scottish Widows has announced the launch of a new default fund, Lifetime Investment, as part of its work to evolve its pension investment approaches (PIA).

The new default will be available immediately for new employers and all customers on a self-select basis, while existing customers invested in the current PIA default offering will also transition to the new default.

The new fund will offer members a choice between two risk options: the growth path, where 100 per cent of savings will be invested into growth assets initially, and the balanced growth path, where 85 per cent of savings will be invested in growth assets.

The remaining 15 per cent will be invested into more defensive assets.

Regardless of the chosen glide path, both options will begin to de-risk from 12 years out from a customer's selected retirement age (SRA).

The default de-risking path will target drawdown, but members wishing to purchase an annuity or withdraw their savings as cash can access glide paths targeting these outcomes.

Scottish Widows said the new approach had been developed to maximise customers' pension growth potential and help them meet their retirement goals.

The firm added that the default would be highly exposed to equities in its growth phase and have a shorter de-risking phase, leaving customers' pension savings invested in higher-growth assets for longer to boost potential returns.

Scottish Widows also worked exclusively with Robeco to ensure the new default delivered on its responsible investing commitments.

Scottish Widows managing director of workplace and intermediary wealth, Graeme Bold, said the introduction of lifetime investment comes at a time when more and more savers are at risk of a poor standard of living in retirement or having to work longer to supplement their income.

"Our research shows that nearly half (47 per cent) of over 55s fear that they will run out of money during retirement," he continued.

"The new default has been developed as a direct response to these issues, as we aim to give savers the best chance of maximising the growth of their retirement pots.

"PIA has constantly evolved over the nearly two decades since launch and has performed for members. We are excited to evolve this into Lifetime Investment to take account of changes, such as longer life expectancies and phasing of retirement."

"Whilst today's announcement is an exciting milestone for us, there's more to come as Lifetime Investment evolves and we continue to work towards better retirement outcomes for our customers," added Bold.

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