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. Since the report’s launch, the industry has taken note and made great strides forward through new developments such as the Association of British Insurers’ Code of Conduct.
Rethinking Retirement 2013 sets out new initiatives that Aviva believes will help consumers to manage their increasingly complex finances and make the retirement market fit for purpose. Clear evidence of its commitment to these ideals comes with are the following two innovative product changes announced today:
- Annuity Value Protection - Aviva is introducing an ‘Annuity Value Protection’ promise for all annuity customers. If a customer should pass away within 90 days of the start date of their annuity, we 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, we 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 any customer with dependents, to choose when they purchase their annuity.
Alongside these product changes, Aviva is calling for the industry to automatically underwrite all annuities. This would build upon the ABI Code of Conduct and common quote forms to deliver personally underwritten annuities to all customers so that every retiree receives the income they deserve.
Aviva also 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. This level of clarity would mean customers can then understand if they are paying competitive costs for the appropriate level of advice according to their individual needs.
Finally, Rethinking Retirement 2013 endorses The Equity Release Council’s call for the Government to define departmental ownership of equity release as an overarching issue. Aviva’s own Real Retirement Report series has shown a widening income gap at retirement, and housing wealth is increasingly seen as a potential solution to help individuals bridge a range of financial or social challenges.
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.
“This approach rests on the desire to ensure that people receive an appropriate level of advice to suit their individual circumstances and they fully understand the type of help they are getting. Therefore, we call on the industry to ensure non-advised annuity sales meet the same cost transparency standards as advised sales.
“We have also enhanced consumer protection on our annuity products by increasing guarantees to reassure customers and further increase their confidence in this sector. We hope that this is just the first step and that the rest of the annuity industry will follow our lead by making such guarantees a standard feature of their annuity offering.”
