The UK-based insurer has been offering defined benefit (DB) transfer advice to those approaching retirement since last July, when it launched an in-house team of face-to-face advisers to service would-be pensioners.
However, according to the FT, Aviva is now looking at whether it should extend the offering to the wider market amid rising demand for such advice.
Aviva UK chief executive Andy Briggs told the publication that customers are asking the provider for more help in understanding pension transfers, which involves exchanging a guaranteed income for life in return for a cash lump sum.
“Currently we refer customers looking for this type of advice to whole of market advisers who provide advice in this area. As this is an area of increased customer demand we will continue to review our position but we are not currently offering advice on DB to DC transfers,” an Aviva spokesperson told International Adviser.
Record pay outs
Figures from the Pensions Regulator revealed that up to 80,000 defined-benefit pension transfers were made in the year ending 31 March.
In recent years, low interest rates mean that the amount people are getting when exchanging their final salary schemes has reached record levels.
In some cases, people are being offered cash lump sums up to 40 times the annual income they would have got if they stuck with their DB scheme as employers seek to offload their liabilities.
Briggs told the FT that any advice would be based on a mathematical calculation of how much money the customer could make by investing the lump sum, and then comparing that with the income that the final-salary — or defined-benefit — scheme would provide.
“We are exploring whether or not it makes sense,” he said, adding the insurer has not made a firm decision.
Controversial area
Earlier this year, UK insurance giant Prudential said it will begin offering clients advice in the increasingly contentious area of DB pension transfers.
DB transfers are under scrutiny amid reports that some clients are being scammed or their funds transferred into unsuitable investments.
International advisory firms deVere UK and Holborn Assets Ltd being have been ordered by the UK’s Financial Conduct Authority (FCA) to halt their pension transfer businesses pending further investigation by the regulator.
