Article date: 20 May 2014
- The first complete stance taken by a provider on the DWP’s charge cap changes.
- Early implementation of the charge cap and removal of active member discount (AMD) and initial commission.
- Aviva is focusing its workplace savings efforts on its small and medium enterprise (SME) heartland.
- A comprehensive range of auto-enrolment and employee benefits solutions.
Aviva has demonstrated its commitment to SMEs with measures to ensure corporate customers and advisers can effectively manage their automatic enrolment obligations alongside the DWP’s charge cap changes.
More than 600 employers have completed their automatic enrolment staging with Aviva to date, the majority of them being SMEs. Aviva will implement the DWP price cap changes early to help SMEs, and those larger employers it works with, better manage automatic enrolment.
By the end of the year, Aviva will introduce the new 0.75% charge cap, remove AMDs and end initial commission in its modern workplace pension schemes. This is well ahead of the new government rules formally coming into force from April 2015 and is the first complete stance taken by a provider on the DWP’s changes.
Aviva will implement the following changes by the end of 2014:
- Cap pension charges in our modern workplace pension default funds at 0.75%.
- Charge leavers from AMD schemes the same price as the current active member charge, with the possible exception of schemes with already very low charges of 0.35% or below. These will be treated on a case by case basis. There will not be any extended tie-in deals with employers.
- Introduce an employer charge if necessary in a small number of schemes - for example, where the active charge on AMD is above 0.75%.
- Stop paying initial commission. But continue trail commission until its ban in April 2016 to allow enough transition time to lift the strain on advisers moving to a fee-based structure.
- Reduce the charges for non-AMD schemes where ongoing commission will stop in 2016.
Aviva has already taken clear steps in advance of regulatory changes in the group pensions market. The average annual management charge (AMC) for Aviva’s new schemes in the last two years has been 0.5%, well within the price cap. Aviva stopped writing schemes with consultancy charges in June 2013 and also unwound the handful that had been written.
In response to the recommendations made in September 2013 by the Office of Fair Trading (OFT), following its market study, Aviva immediately stopped offering new AMD schemes. And when the DWP announced plans to cap charges in October 2013, Aviva stopped offering new schemes above 0.75%, six months before most of the market.
Aviva has developed robust and proven tools to help employers and advisers, particularly those in the SME market, with their pension and employee benefits provision. These include:
- A group personal pension plan, already used by thousands of UK employers.
- Auto-enrolment Planner, an interactive, on-line tool designed to support advisers and employers through every step of the automatic enrolment staging process by providing rich planning and communications capabilities.
- Automatic Enrolment Manager for Employers (AME), a market-leading automatic enrolment compliance tool, which enables employers and their advisers to manage enrolment responsibilities, contribution levels and ongoing monitoring.
- Work:Life, an employee benefits platform ideally suited to SME employers, which offers a range of solutions such as voluntary and flexible benefits, and total reward statements.
- A range of additional employee benefits such as group life insurance, private medical insurance and income protection.
- A range of commercial insurances such as property, liability and motor, for businesses of all sizes.
Aviva’s managing director of workplace savings, Brian Gabriel, said:
“Aviva is committed to supporting advisers and employers with the incredible amount of change they are going through when it comes to workplace pensions. The changes we’re making mean that employers, employees and advisers have clarity on how Aviva is managing these changes on their behalf, and we know the SME market is looking for this direction from us.
“We are being clear about how and when we plan to implement the DWP changes so that advisers can have the right conversations with their employer clients and make informed decisions, particularly around their automatic enrolment preparations.
“The SME market in particular, which represents the majority of our corporate pensions business, is looking for value for money solutions that includes pensions and broader employee benefits, as well as guidance and tools to help with implementation. Aviva has developed an end-to-end range of solutions to meet these needs.”
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If you are a journalist and would like further information, please contact:
Diane Mangan : Aviva Press Office : 01904 684164 : mobile number 07800 691714 firstname.lastname@example.org
Notes to editors:
- Aviva provides 31 million customers with insurance, savings and investment products.
- We are one of the UK’s leading insurers and one of Europe’s leading providers of life and general insurance.
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- 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.
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