Understanding your pension scheme's investments

Good morning, everyone, and welcome to our second webinar of 2026. I'm Lee Hanson from Royal London, and I'm delighted to be hosting today's session. These quarterly webinars are designed with you in mind to give you real practical insight, clear guidance, and real actions that you can take to support your workforce.

And today's session is shaped directly by your feedback. We've heard from you that investments can often feel really complex or difficult to understand. So that's why today's webinar is titled Understanding Your Pension Scheme's Investments. And we'll weave in at a couple of more topics along the way too.

If you're anything like me and can't concentrate on two things at once, then don't worry about scribbling everything down. After the session, we'll send you a follow-up e-mail with all the materials that we cover, including the slides and a link to the recording of this webinar, so you can revisit any of the information whenever you need to.

Now don't forget, you can also watch our previous webinars back as well. And our last one in March was all about tax year end and salary exchange. But let's start by introducing the team who will be guiding you through today's discussion. You already know, I'm Lee Hanson and I work as an employee engagement consultant at Royal London. Now my role is all about bringing pensions to life for our members, helping them understand how their scheme works, why it matters, and most importantly, what actions that they can take to improve their future outcomes. I spend the majority of my time speaking directly with employees through virtual presentations, webinars, and coming on site at your workplaces too.

So I hear firsthand the questions and challenges that people have, particularly when it comes to investments. So that insight will really shape what we're sharing with you today. I'm also joined by two of my brilliant colleagues today. First up, Gareth Trainor, our Director of Investment Propositions, who will bring the expertise on how our investment strategies are designed and managed. And secondly, Sarah Yellowlees, our Chief Product Officer, who specialises in financial advice technology and how we make support more accessible for our members. And we've got a busy agenda lined up for you. So first up, I will start by sharing some key insights with you, which should really set the scene for today's session. Then I'll bring in Gareth to talk through our investment options, and he'll focus mainly on the default investment option, what it does, who it's designed for, and the key benefit it offers for employees who don't want to make an active investment decision, but still want confidence that their pension is in safe hands.

We'll look at the performance of our investment, sharing a clear balanced view of how things are going and what that also means in practice. After that, we'll touch on what we've been working on recently, including an enhancement to that investment approach and our propositions too. Sarah will then help us move on to the new FCA initiative called Targeted Support to share what it is, what it means for you as employers and how at Royal London, we're helping your employees make better, more confident investment choices.

This will be initially within our ISA application journey and Sarah will talk us through our progress to this point and how we've used behavioural economics to really drive a connected member experience. We'll then finish up with time for questions, including some of the great ones that you sent in beforehand. And as always, we'll share the slides and relevant resources. After the session, you can revisit or share them with your colleagues. So hopefully that sounds like a fun-filled agenda, but let's get started. And I wanted to kick off today by sharing some of the key insights that we have from our research, as well as some of the feedback from speaking directly to our members. So we know that pensions investments can be confusing to some pension savers. In fact, our research shows that one in five employees with a workplace pension don't know what happens to their pension contributions, with some even thinking that they're basically saved in a bank account. However, overall, the vast majority knew that their pension money was invested and it's important for employees to check where their workplace pension is invested because it can have a significant impact on the growth of their retirement savings. As some investments grow faster than others and understanding where their pension savings are invested can also help employees assess whether these align with their financial goals and also their personal values such as support and sustainable or responsible companies, for example.

Now our research shows that almost half of the nearly 2000 UK employees that we surveyed with a workplace defined contribution pension have never looked into where their pension funds were invested. However, 32% have done so in the last year and 18% more than 12 months ago, with younger employees and men more likely to check where their pension is invested than older workers and women. Now, increased stock market volatility in early 2025 might have prompted more people to take a closer look at their pension investments. However, our research also shows that encouragingly, most employees with a pension were not unduly worried by that stock market volatility. Almost half, so 46%, said that volatility hadn't changed how they think about their pension, with 22% saying that volatility had made them less worried about their pension. This compares to 22% who said it had made them more worried. Naturally, there are other factors that impact engagement. So employees who use a financial advisor to check their workplace pension savings are more likely to know about their investments. Also, those that use their pension provider's mobile app are more likely to know about their investments. Now, this could be because pension providers' apps often make it easy for a pension saver to see where their contributions are invested, but it also could be because people who use a pension app are more engaged in the first place.

And some of the questions that I often get asked when engaging with employees include, is my money invested? How is it performing? Can I change my investments? And if so, how much risk should I take? Which are all, you know, perfectly valid questions. So when I'm speaking to the employees, as well as answering those questions, I do recommend the mobile app as a great place to start engaging as they can see their value of their pension, they can see investment performance, charges and much, much more as well.

What's really interesting and I suppose reassuring is that this isn't just something that your employees care about. It's a real key priority for you as employers too. Last year, we partnered with YouGov to understand what really matters when employers choose a workplace pension provider. We surveyed over 900 organisations of all different shapes and sizes. And the results were really, really clear in that investment performance came out as the number one priority. Now employers also told us that sustainable investment options are increasingly important and the use of technology to support members is becoming a real key differentiator too.

So investment really isn't just a nice to have topic these days. It is really central as to how you assess value in your workplace pension scheme. And that's exactly why we wanted to focus on that today. Now with that, I'm going to hand over to Gareth, who will be bringing this to life by walking you through our investments and our investment approach.

Brilliant, thanks very much Lee. So hi there, my name is Gareth Trainor and I'm going to talk to you about the investment options that we've got available through our workplace pension.

And before we get into the detail, though, please indulge me as I kind of zoom out to a 30,000 feet view, if you like. Because as a mutual, we do things slightly differently because of our structure. Being the largest mutual life and pensions and investments company in the UK, it kind of affords us the luxury of doing things in a different way.

For instance, with no shareholders, our primary purpose is to help our customers achieve financial resilience as they go through their lives and into retirement. And that purpose washes through pretty much all parts of our business, including how we think about investing.

Our mutual mindset is to take a long-term view, and that view translates into how we develop our investment options captured in these beliefs. And these apply regardless of which investment proposition we're developing. The first belief is that if we document and focus on the customer outcome first, then you get a much better design than if you focus on things like investment benchmarks or commercial outcomes. This applies not just when they are first developed, but also when you're updating them or changing them indeed throughout their entire lifecycle.

The second belief is that good governance forms a critical part of our development process, and it's the lifeblood of how things improved. We don't see governance as a tick box exercise. We value it as a feedback loop, more as a positive part of our continual improvement, identifying opportunities to improve, and the areas of weakness to address. And we'll come on to show some of the developments and improvements made across our key investment options later.

From a responsible investment point of view, we believe that investing responsibly helps to manage financial risks and allows us to play our part in positively shaping the future. Bringing that to life a bit, some companies can have poor practices in terms of impact from or on the environment on issues like staff welfare. These companies can be subject to greater financial risks. So as a result, we consider those risks when we invest and in how we use our leverage as an investor to improve their practices. I should also stress we never lose sight of why customers have entrusted their money with us in the first instance.

The fourth belief is future proofing. Now, some say the only constant in life is change. And some of our investment options are designed to be invested in for 30, 40 year type periods. Now, as such, there will be future changes in things like regulations, customer behaviours, and some of these we can foresee, but some of them we can't. What we can do, though, is recognise we can't just build for where we see now. We've got to build for the future. And where circumstances do change, rather than launch a new solution, we can evolve the current one and take our customers on that journey. And we've got a very long history of doing just that.

And then the last one, of course, is mutuality, which we believe really does drive a very different mindset. Culturally, our primary focus is on the customer. We can think long term, and if we're successful, then so are our members. And we believe this model really does drive better outcomes for our members.

So if that's the 30,000 feet, this slide gives us a bit more of a description of the overall investment options that employees have within their pensions. In essence, what we have is 3 straightforward tiers of various different investment options. The first layer is the ‘do it for me’ tier, which is our balanced lifestyle strategy, which is our default. And this is where the majority of members will invest.

As they move into retirement, then the pathways investment options are the simple, easy choices, and they align to different ways of accessing your money in retirement.

The second layer, called ‘Guide Me’, is a smaller range of easy options, but allowing a little bit more personalisation into things like risk level. Members still don't have to make difficult investment choices, but it can allow a member to pick something that's a little bit more tailored to their circumstances.

And then the third layer, the ‘leave it with me’ layer, is a wider range of funds for more confident investors to pick from, allowing a section from different geographies and asset classes.

So if that's the higher level kind of landscape of investment options, the next slide focuses a little bit more on that default. And as I said a moment ago, our default is called the balanced lifestyle strategy. It's typically where most of our members invest. With Royal London, that means we've probably got greater than 90% of members invest in this while they're working.

Now, starting with the outcomes that we're trying to achieve, given this is a 30, 40 year investment, in the early years, we really focus on growth, taking enough risk to get the benefit of long-term growth. And at the other end, we need to make sure that members are invested appropriately for how the typical member takes their money out of their pension. And this is where you need to balance stability against the continued need for growth in retirement. And the de-risking piece in the middle tries to avoid any kind of cliff edge by slowly moving members from that growth phase over into that access phase. Now this all happens automatically.

Changing a member's investments on the run-up to retirement, there is no input or investment decisions by the member are needed at all.

Our investment experts ensure that the underlying investments are suitable for these outcomes. There's a mix of investment types and there is a lot of governance and oversight in place to make sure that they remain suitable.
The default endpoint assumes customers are likely going to take a regular income from their investments called drawdown. There are other endpoints available in the ‘Guide Me’ tier of options, so there are nice easy options, and members will be engaged on the run up to a retirement to ensure they are in the right solutions for their circumstances.

This workplace default is one part of our wider governed range and has approximately 85 billion pounds invested. We spoke earlier about our future proofing belief. And as a direct example of this, in 2025, our ongoing governance identified that customers could get a better outcome by increasing exposure to growth assets in that early years, part of their retirement journey. And as a result, we've increased the amount of growth assets and the default to improve outcomes.

And our aim is to improve the size of a customer's pot at retirement.

Now this was applied to all existing customers in the existing default. So when we talk about our beliefs, they aren't just words, they are tangible actions that we follow through on.

Now, if we talk a little bit about how we manage the assets underneath those growth funds. Now, there's lots of technical jargon here, which don't worry about, I don't need you to understand. But in simple terms, the bottom boxes show the type of assets we invest in through the default. Company shares, bonds, property and other types of investments.

Royal London provide access to some asset types that aren't commonly found across the market. And we also actively manage when to go in and out of the various asset types. This is called tactical asset allocation. Now this is managed by our investment experts using a long established methodology represented by our investment shown on the right hand side. And this helps us understand where we are in the economic cycle and at which point which assets perform best. Simply, we use this to make sure on your behalf that we're buying and selling the right assets at the right time.

Given the breadth and depth of assets and investment approaches, you can have confidence that your members benefit from a premium investment strategy.

Now, the ability to invest across different assets and to be nimble in when to buy and when to sell is essential. And this slide tries to bring to life the different types of investments and how they have performed across different years. Now, I'm not intending to spend much time here, but if we look at a quick example, the top left asset is the top performing asset in 2017. And that's something called emerging market equity. The bottom performing one in that year is an asset called commodities. However, jumping to 2018, the next year, emerging markets are now second bottom. But it is then third and top again in 2019 and 2020, with commodities moving from towards the bottom in 2017 to the very best in 2021 and 2022. Given this kind of variability, the importance of being able to access a variety of investment types and having investment experts look after it for you cannot be underplayed.

Now, that's all great in theory, but how has the default therefore actually performed? On the left hand side, this is the fund that members will be invested in up until 15 years to return. This is the growth phase. And this fund over the last five years has achieved a return of about 48% and over the last 10 years, about 116%. That means any money invested in that fund for that period of time will have doubled in value over that ten-year period.

Now that directly leads to an increase in pot values for members as they go through and up to retirement. On the right hand side, these are the performance of the funds as we start to de-risk. Still a good level of growth to try and find that balance as people enter into retirement. But you can see a broad trend that as we reduce risk, towards retirement, potential returns reduce slightly as well, and that's absolutely understandable. The next slide provides the same funds, but actually over the last five rolling 12 month periods.

Now, moving on to the next slide. We talked earlier about strong governance, and that means we are constantly looking at what we do and the wider environment to see if further improvements are necessary. And at the moment, there are three key themes at play.

A changing regulatory landscape being a first. The pensions bill is bringing new requirements for scale, investment types, as well as value for money tests. Now, happily, we are already meeting the requirements, both in terms of scale, which requires 25 billion pounds in the main default by 2030, and in terms of the mansion house requirements to invest in Real assets.

Wider than the regulator, the investment markets are dominated with the Iran war and the impact on oil prices and inflation, as well as the underlying dominance of the US market and tech stocks in particular.

In addition, there is a wider desire for members to benefit from the ability to invest in private assets. We already invest in a liquid asset type, so with our purchase of Dalmar, who provide access to infrastructure investments, I'd expect this to continue. But again, as we already meet the requirements of Mansion House, we can take our time to ensure we invest wisely over the long term. We have no need to run towards the wrong type of assets. We can walk very calmly to our version of the right ones.

We've already mentioned governance a few times, and that takes a few forms with Royal London. A very visible version, I should say, is our Investment Advisory Committee. Now, they are there to provide challenge and external insights to our thinking and our propositions. However, there are also further layers of internal governance, across proposition teams, our investment management arm, and our investment office, who provide our primary oversight of all investment components.

I've already talked at length about future proofing, governance and our focus on customers. I'm not intending to do a walkthrough here, but we have a very strong track record of continual improvement. In 2025, we've already mentioned the increase in growth assets in the workplace default to improve outcomes. We also include a new asset types like asset-backed securities on our portfolios. We've removed underperforming investment components. We've launched an ISA and launched new funds to complete our range of self-select sustainability options. But this isn't an exceptional year. This arguably is relatively normal.

As we go through 2026, we've got a number of priorities going forward. Key points to pull out would include a further in-depth review of the workplace default, particularly in light of regulation, regulation changes and customer outcomes monitoring. We're also looking at new asset classes. In particular, I'd expect to see more on infrastructure investment.

And finally, we're focusing on what happens at retirement, how we support members of the transition into drawing an income. We're reviewing our pathway solutions later in the year, but also the wider landscape of options available.

And excitingly, we are one of the first in the UK to have been approved and launched a Targeted Support journey on our ISA, which feels like the perfect opportunity to pass over to Sarah.

Thank you, Gareth. So over the next 10 to 15 minutes, I'd like to share with you what targeted support is, why we at Royal London believe targeted support should fundamentally change your expectations of what meaningful financial help can be for your employees. Meaning when you think about the value you offer to your employee benefit propositions, your message can be a genuinely new and reassuring story.

Right now in the UK workplace, we know employees face a significant gap in financial support, especially around pensions and retirement planning, though also with other financial challenges too. Many employees lack the confidence and understanding needed to make financial decisions to improve their outcomes. Research shows that over half of adults haven't considered how much they'll need in retirement, and a lack of knowledge is cited as a key barrier for investing. Consumers looking for help have faced a choice of whether to pay for advice or not. The Financial Conduct Authority, the FCA, found that in the last year, 91% of adults didn't seek professional financial advice, and they found that younger investors are actually using social media to research investing.

It's been really frustrating for providers such as us up until the last month when we've been restricted in the support that we can offer to customers, due to the advice boundary. As you know, it's the lack of accessible, meaningful support that can result in poor financial choices and the real risks for employee outcomes. Royal London have had early engagement with the FCA and industry bodies to help shape change in this area for years and we're really excited that we now have it.

So, the FCA's advice guidance boundary review was mobilised to look at what change was needed to enable the industry to provide meaningful and accessible help to consumers. Royal London has been engaging with them to help shape the changes and in December 2025, the FCA published their final rules for a new form of advice, called Targeted Support. Launched in April this year, Targeted Support is a new form of advice designed to address the advice gap. It sits between generic information and fully individualised paid for financial advice, allowing approved providers to give a new form of tailored help. It's not a substitute for individualised advice, but a bridge to it. It empowers people to make better decisions at critical life stages. So, how does it work? Well, targeted support is a new regulated activity and firms must gain approval to offer this service. Once approved, authorised firms can offer targeted support when there is a good reason to believe it will deliver better outcomes for customers. It's a limited group-based form of advice, providing free, actionable recommendations for people in similar circumstances. So the key steps in each targeted support service are, first of all, we identify situations where additional help can improve outcomes for groups of customers. Then using data, either that we have already or that we ask the customer, we group customers based on common characteristics. And then we then deliver free, actionable suggestions based on limited information for each group. To encourage take up, the FCA expects firms to offer targeted support free of charge in most cases. So removing that key barrier and helping customer engage in this new form of help. As a mutual, we think that this is the right thing to do.

So on April the 20th, we launched our first target support service. And actually this is the first target support service in the whole market. It's designed to help customers identify if investing in an ISA is right for them. And if it is, where to invest their money. It's a digital service available through the Royal London app and combines engaging educational support that delivers improved customer understanding, simple questions that match a customer to their investment style, and then clear recommendations provided to that investment style that help build confidence for customers.

As mentioned previously, we've built this as an early adopter of Targeted Support. We're one of the first providers authorised by the FCA. We've been led by customer outcomes and by keeping them at the heart of our journey, we've been able to be confident in our solution and forging new paths in our proposition. The service is customer first by design, with plain English throughout, accessibility and behavioural psychology built into its foundation, not bolted on as an afterthought. It was designed using a multi-phase research programme which shaped every section of the journey with customer feedback confirming user trust and understand the recommendations and feel confident in taking action as a result. This slide shows a couple of screens from the journey to help bring it to life about what this actually looks. And we're now a couple of months since launch, and we're seeing target support have a real impact on customer outcomes. Our target support framework includes a robust set of controls and outcome monitoring, and we're fine-tuning the experience where we see improvements that could benefit customers. Some key stats we're seeing from the journey includes that 85% of customers have increased their confidence in investing post targeted support and 94% of customers understood the recommendation well, which is a really nice stat to see and we're really pleased with this. As part of the journey, we also identify where a different action versus investing in an ISA will drive a better outcome. And we then help customers with information about how they can take that action before investing, for example, paying off high interest debt. Another encouraging sign is that 84% of those exited via these guardrails thought that the help they received enabled them to understand how they can be in a position to invest in the future. We're really excited to see these insights coming through and it having a real impact on customers.

As well as shaping this with customers and the FCA, we've explored all of this with employers and advisors and consultants along the way. And to any advisors or consultants on the call today, I'm keen to acknowledge the positive discussions you've had with us so far. In particular, the profound addition Royal London's target support can make on the benefit strategies you design and direct for the corporates you serve. It is clearly a great story for employee benefit provision as a whole. This slide shows the main benefits Target Support can offer you and your employees. Whilst I won't go into them all, I'll pick out a few key benefits. So benefits for employers. This really demonstrates value. Employers can enhance the support they offer while also showcasing the value of their pension benefits in a way that resonate with diverse employee groups. This should increase employee appreciation and engagement, but also action. Improve retention and management of workforce. By supporting your employees and building financial security, this can lead to improved retention and more effective workforce management and planning.

And it's an opportunity to really enhance the support you provide to your employees without incurring any additional costs. Benefits for employees. We've got the full continuum of help here, enabling employees to get accessible support. Employees can make better informed decisions. Targeted support provides clear, Tailored suggestions based on employees' real life circumstances, helping them navigate complex pension decisions with confidence. And then ongoing support. Employees should receive help throughout their savings and investment journey, supporting financial resilience and preventing harm, bridging the gap for those who may not seek or afford traditional financial advice. This is a whole new chapter about actionable financial help, that builds financial resilience. We're really excited about it and seeing the impact that it will have. I look forward to sharing more with you through sessions like these as we build out the proposition further. That's it from me today and over to Lee.

Thank you, Sarah. That's all really interesting. And, you know, I'm excited to see how that moves forward in the next year or so. But now I wanted to move the focus back on to you as employers and the resources that we have at Royal London to help you run your scheme and engage with your employees on certain topics. If you've joined any of the webinars previously, you'll be fully aware that our communications toolkit is your go-to space. Now, that's because it's packed with everything that you need to talk confidently about pensions basics, tax, our mobile app, financial wellbeing support, and lots, lots more as well.

If you'd like to support and speak to your employees about the specific topics that we've covered today, we have a new investment section with an e-mail to explain investing for beginners. We’ll be adding more content to this over the year, so keep an eye out for that. There's also the Stocks and Shares ISA section with posters and emails to explain how employees can get a recommendation using that free targeted support service via the app that Sarah has just brilliantly explained. Now if that's something that you think could help them make financial decisions and build their resilience, then you could think about sharing those. It might also be helpful to let your employees know about the app directly itself. As I said, a great way to start getting them engaged with their pension, as you can see their investments and find out more about the targeted support journey in the app as well.

Now, the investment e-mail has direct links to plenty of helpful guides that we have available online to really introduce topics like getting started with investing, a risk profiler tool, the difference between saving and investing, and an explanation on market volatility as well.

Now, I mentioned right at the start when I was explaining my role that I spend the majority of my time speaking directly with employees through presentations, webinars. Now, one of the most rewarding versions of these webinars for myself comes in the form of our monthly employee webinar, which anybody can sign up for.

Now they're delivered on different days at different times each month with 20 minutes covering things like Royal London and pensions basics and then a 10 minute live Q&A at the end too. Now these are particularly informative to new employees who've just joined the Royal London pension scheme so maybe have a think about signposting these webinars in your onboarding process for new employees to your companies.

We have a leave no member behind mentality to these webinars and that's maybe because we are a mutual. So we do have an additional webinar each quarter that is after work hours so that people who can't join during the working day can still get access to these webinars.

Now, in the follow-up e-mail, we'll provide a link to where people can sign up for these webinars.

And don't forget, for you managing the scheme, that we do have our help centre on our employer website as well. If you have any questions on the auto enrolment dashboard, the help centre is a great place to start and you can see our videos there, which specifically walk through key tasks and how to complete them.

There's loads of information around making contributions, updating payroll and managing your workforce as well. So always remember to use that where needed.

And finally, what we're going to do is finish up with some questions on the topics that we've covered today, including some of the great ones that you've submitted beforehand. So Gareth, I'm actually going to pick on you first. And how would somebody know if the default investment that he taught so eloquently about is still right for their employees.

Yeah, good question. A well-designed default should actually work for the majority of employees, but it's good practise to review it regularly. I'd keep an eye on what the default is trying to do, and importantly, why it's trying to do it, and then seeing if there's any reason why this wouldn't work for your employees.

Things like workplace demographics, contribution levels and how close employees are to retirement can all change over time. We support employers by providing insight into their scheme and helping advisors review whether the default remains aligned to member needs.

Thank you. And a follow up on that, always a hot topic, but when there is market volatility, should employers be worried about that and the impact that that would have on their employees' pensions?

Not really. I mean, short term market ups and downs are a normal part of investing, especially over long pension timescales. Pension investments are designed with long term in mind, and for most employees, the focus should be on staying invested rather than reacting to short term movements. Providing reassurance and clear communications can really help employees understand that.

Yeah, thanks, Gareth. And yeah, I totally agree that certainly on the reassurance piece. And now, Sarah, I think one that I'll send your way and certainly I've seen asked a few times today. So does targeted support aim to support replace advisors?

Thanks Lee. No, absolutely not. So I think about it as another layer of support. So target support helps bridge the gap for employees who may not seek advice but still need more than general guidance to help them make better decisions. Getting financial advice is still the gold standard.

Hundred percent. And do any of our lovely employers need to do anything off the back of today's call to sort of qualify for targeted support?

Well, the good news is that there's nothing that you need to do, but interest in target support is growing as employers look for better ways to support financial wellbeing. So understanding the benefits can help you plan ahead and be ready to share with your employees when new solutions become available. So keep an eye on our monthly newsletters for developments and other insights.

And there is a question here about how we can help our employees really understand investments and engage with the pension. So I suppose I best take a question in today's session. So yeah, I'm happy to answer that. So try to make it as easy as we possibly can. As I've shown, our employer communications toolkit includes ready-made e-mail, and guides that you can plug straight into your existing communication channels. The focus there is on clear, supportive messaging that encourages employees to take the next step, crucially when it's right for them. Also a reminder that my team run those monthly webinars, which all your employees are more than welcome to join.

It will explain the basics of their pension and they have the opportunity to ask live questions. So that's a great starting point in my opinion. And just a signpost, our next webinar is on Tuesday, the 30th of June at 11am. And again, if you'd like to share the details of that, it's in the communications toolkit as well.

So that's us for today, folks. So thanks so much for joining and thank you to Gareth and thank you to Sarah for joining me. We hope that you've enjoyed the session and have an increased understanding of our investment approach and some of the exciting developments to come as well. As promised, we'll follow up with an e-mail containing all the resources mentioned during the webinar.