Aviva has launched a new ‘flex first, fix later’ guided retirement solution for its workplace customers.
This is initially available to those saving through Aviva’s master trust, with a view to rolling out this new proposition to GPP customers in future.
This blended approach combines drawdown strategies in the early years of retirement before shifting to an annuity product later in life. The retirement option is designed to support savers who don’t pay for financial advice and want help with the complex decisions around taking income in retirement.
The solution aims to provide a sustainable income by dividing customers’ pension savings into three pots: a flexible income pot, a guaranteed income pot and an occasional spending pot. This model is designed to prioritise flexibility in the early years of retirement and security in the later years.
Before splitting the pension money between these pots, members have the option to take up to 25 per cent as a tax-free cash lump sum. Aviva says that while each pot designed to meet a different need, members have a practical framework in place to help them feel more confident about spending throughout retirement.
Customers opting for this guided retirement option will have access to modelling tools, designed to facilitate alterations to spending levels and saving into these different pots as and when their circumstances change.
The recently announced Pension Schemes Bill outlines key measures for those nearing retirement, including a likely requirement for pension schemes to provide clear and accessible default options for converting savings into a sustainable retirement income.
Aviva commercial director for workplace pensions Simon Ellis says: “This innovative solution demonstrates our commitment to delivering retirement products which reflect the changing needs of retirees today and in the future.
“It’s great to see the Pension Schemes Bill focusing on the full retirement journey. At Aviva, 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.”
Aviva Master Trust chair Dr. Chris Noon adds: “The launch of Aviva Guided Retirement marks a significant step forward in our 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.”
