Article date: 18 February 2013
- Aviva improves its annuity guarantees and calls upon the rest of the industry to follow suit
Aviva is improving its annuity offering as part of its calls to industry within the Rethinking Retirement Report 2013, by extending its guarantees and offering an increased value protection period.
Aviva first published Rethinking Retirement in the UK in 2011 to highlight the financial challenges facing retirees and set out a series of changes it believed were vital to help them. These included a call for the industry to publish annuity rates. Since the report’s launch, the industry has taken note and we have seen it take great strides forward through new developments such as the Association of British Insurers’ (ABI) Code of Conduct.
Rethinking Retirement 2013 sets out the following four new initiatives that Aviva believes will help make the retirement market fit for purpose and help consumers to manage their increasingly complex finances:
- Increased customer protection – Aviva calls on other annuity providers to offer enhanced annuity guarantees such as the Annuity Value Protection and Default One Year Guarantee it is introducing (see below). It also wants the industry to focus on presenting annuity rates in a way that consumers can easily compare their options.
- Personal underwritten annuities for all – Aviva urges the industry to move to individually underwritten quotes for all policies and move away from the confusion caused by the terms standard, enhanced and lifestyled. This will enable all customers to benefit from having an annuity product tailored to their specific needs.
- Choosing the right advice, guidance and support at retirement – Aviva calls on the industry to ensure non-advised annuity sales meet the same cost transparency standards as advised sales. All providers and advisers should give customers a clear menu of their services and associated costs across all forms of annuity sales to allow ‘like for like’ comparisons.
- Meeting a social need for more retirement income sources – Aviva endorses the Equity Release Council’s call for the Government to define departmental ownership of equity release.
Aviva underlines its commitment to these ideals by announcing the following two enhancements to its annuity offering:
- Annuity Value Protection - Aviva is introducing an ‘Annuity Value Protection’ promise for all its annuity customers. If a customer passes away within 90 days of the start date of their annuity, Aviva will return their original pension fund to their estate (less any payments already made from the fund).
- Default One Year Guarantee - Aviva is introducing a one year guarantee for all annuity customers. Should a customer pass away after 90 days of taking out an annuity, but within the first year of the policy, Aviva will continue to make annuity payments to their estate for the remainder of the first year. Optional longer guarantees will continue to be available for a customer with dependents, to choose when they purchase their annuity.
Clive Bolton, Managing Director of Aviva’s At Retirement business, commented: “Aviva is committed to leading by example and we believe everyone – retirement providers, government, regulators, advisers and individuals alike – should take responsibility to act on these ideas and help to provide financial security and peace of mind for current and future retirees.
“Evidence of our commitment to customers is the launch of our annuity value protection and default one year guarantee. Not only will this ensure that everyone sees at least some benefit from their annuity but it will also seek to reassure customers and increase their confidence in these products.
“We also firmly believe that anyone looking to take out an annuity should have the full support of providers and advisers to understand the options available to them. As such, we believe a new approach is required to personally underwrite annuities across the board, and a commitment to ask whether services and costs are being presented as well as they could be to assist consumers.
“These steps would go a long way to cutting through any confusion and bringing a key decision on later life finances into sharper focus. We now call upon the rest of the annuity industry to follow our lead and introduce changes such as our annuity guarantees to highlight their commitment to ensuring people have their best retirement possible.”
Download the full Rethinking Retiremnet report PDF (504KB)
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Notes to editors:
Aviva provides insurance, savings and investment products to 43 million customers worldwide.
We are the UK’s largest insurer with over 14 million customers and one of Europe’s leading providers of life and general insurance. We combine strong life insurance, general insurance and asset management businesses under one powerful brand. We are committed to serving our customers well in order to build a stronger, sustainable business, which makes a positive contribution to society, and for which our people are proud to work.
We are ranked as one of the UK’s top ten most valuable brands and Aviva Plc is in the top 10% of socially responsible companies globally in the Dow Jones Sustainability World Index. In 2011 we invested £5.3m into our UK communities. One in three of our employees were involved in community investment activities which included giving nearly 33,000 hours.
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