Britain's workers should be auto-enrolled into modern, simple, low cost pension schemes offering good value for money if they are to maximise their chance of a decent income in retirement, Aviva has said.
Commentary from government, politicians, the regulator and recent independent reports have all reinforced the need to avoid high charging schemes, and for advisers, employers and their employees to carefully consider their choice of pension provider, particularly for auto-enrolment.
Aviva is committed to providing modern, simple, low cost pensions for all employees who auto-enrol with Aviva, and it has set out five key principles that will ensure advisers, employers and their employees get the reassurance they need about their schemes.
1. Only modern contracts with transparent, low cost charging structures will be used for auto-enrolling employees. These schemes have an average total product charge of less than 1% per annum for all administration, investment and dealing fees.
2. Where an existing corporate customer has an older-style scheme, Aviva will offer a new category in a modern scheme for auto-enrolment. It will NOT allow auto-enrolment into any older-style schemes.
3. Aviva would welcome the development of a nationally recognised quality standard or 'Kite Mark' to provide instantly recognisable high standards of simplicity, transparency, low cost, value for money and good governance.
4. Aviva is committed to developing clear, simple, transparent statements that make it easy for employees to understand all aspects of what they are paying for and allow them to make an informed judgement on value for money. This will require collaboration from government, regulators and the industry to overcome the unintended complexity that has been built up over many years.
5. As employees reach retirement it is crucial that customers do not default into poor value annuity arrangements through their existing provider which currently costs consumers up to £750m in lost income. Aviva has championed the need for customers to shop around to get the best deal and will continue to do so.
David Barral, Chief Executive of Aviva UK and Ireland Life said:
"Employees being auto-enrolled into pension schemes need to be confident that their employer and their adviser are choosing a modern, simple, low-cost scheme offering good value for money. Aviva will only allow modern contracts with low cost charging structures to be used for auto-enrolment. The average total charge is well under 1% per annum, providing great value from a name they can trust."
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