Pensions giant Scottish Widows, owned by Lloyds Banking Group, is planning to significantly reduce its asset allocation to UK-listed shares, according to a report in London newspaper The Financial Times.

The plan comes at a time when the UK government is asking UK retirement funds to invest more in British shares and support the UK stock market.

UK pension funds on average have slashed their investments in UK domestic stocks from almost 50% of assets in 2000 to around 4% in 2024, according to research by think-tank New Financial.

The newspaper said Widows, which manages about £72 billion of workplace pension assets in its default funds, is planning to cut the allocation to UK equities in its highest growth portfolio from 12% to 3%.

It said Widows plans to adopt a “more globally-diversified approach” with the aim of “enhancing risk-adjusted returns by capturing more growth opportunities in high performing international markets.”

Scottish Widows plans to cut the allocation to UK equities in its most conservative portfolio from 4% to 1%, according to the newspaper.

The pension provider has said its changes would be gradual and completed in December or January 2026.

The planned allocation changes are described as “indicative” and could still change.

Scottish Widows told the newspaper that its “new and enhanced pension proposition — Scottish Widows Lifetime Investment — takes a market weight allocation to global equities by default, in line with similar propositions from other pension providers.”.

It added it would review these weightings on an annual basis and “where appropriate may include a home bias”.