Aviva has launched a “flex first, fix later” retirement offering to allow members of its £13.4bn defined contribution (DC) master trust access to drawdown in retirement blended with income from an annuity.
The Aviva Guided Retirement solution is designed to provide members with “a sustainable income for life”, the financial services giant said in a press release. It is particularly aimed at those who do not or cannot access financial advice at retirement.
The launch follows a similar development from TPT Retirement Solutions, which launched its own “income for life” product last month. Nest is also developing its own post-retirement solution, as Pensions Expert reported in June.
Aviva’s offering is available to members of its master trust, and the company plans to make it more widely available in the future.
The Pension Schemes Bill contains a requirement for pension providers to ensure they offer default decumulation products to their members at the point of retirement, to help them convert their DC savings into a sustainable pension income.
Simon Ellis, commercial director for workplace pensions at Aviva, said: “We want to help savers get ready for better retirements by ensuring their pension savings last a lifetime – and the Aviva Guided Retirement solution is built around that principle. This means we’ll be able to offer a solution that not only meets regulatory requirements but also reflects what members have told us they want: a retirement journey that offers both flexibility and security.”
How it works
Aviva Guided Retirement uses a “three-pot model” to split savings into flexible, guaranteed and “occasional” sections, once members have chosen whether or not to take their tax-free cash lump sum.
The flexible income pot is used in the earlier years of retirement to allow variable drawdown. Aviva said it will provide customers with a modelling tool to help them use their pension without it running out.
The guaranteed pot brings in an annuity-based income designed to provide security in the later years of retirement, although customers will be able to choose when this element kicks in.
The third, “occasional spending” pot is an optional addition to help retirees put aside money for “unforeseen expenses”.
Chris Noon, chair of the Aviva Master Trust, said: “The launch of Aviva Guided Retirement marks a significant step forward in our ongoing commitment to supporting Aviva Master Trust members with innovative and practical solutions that adapt to their evolving needs.
“By blending flexibility with long-term security, this solution empowers members to approach retirement with greater confidence. It also endorses the Aviva Master Trust’s leadership in defined contribution provision across the UK – setting a new benchmark for how pension schemes can deliver lasting value and guidance throughout the retirement journey.”