Aviva says they don't know how to implement the new pension rules???

jamesd

So they don't actually make you aware of all of the other options based on current legislation and they appear to be breaching the ABI's Code of conduct on Retirement choice, one of which is that annuity vendors must "Explain the range of ways in which a customer can receive their retirement income". Skipping the highest-paying guaranteed income is hardly complying with that requirement but since it is the type of retirement income that most strongly competes with an annuity it is unsurprising that an annuity vendor wouldn't want to mention it.

dunstonh wrote: »

They do not and it would be wrong for them to do so. Their remit is to provide information about their product.

It would be wrong of them and a breach of the ABI's Code of conduct on retirement Choices not to have done so at some point, since one requirement is that providers must ensure that their Shipping around Guide "Actively encourages customers to look beyond the provider’s own products".

Of course its clear that the ABI's Code has failed to protect consumers and the FCA has decided that regulation must be used instead.

And of course in its own page on the state pension the ABI fails to mention that it can be increased through deferral, even though it has an "increasing your pension" section that would be the obvious place to put and find that information.

I wonder whether the ABI will accept a complaint that the ABI breaches its own code? I just may give it a try.

dunstonh

So they don't actually make you aware of all of the other options based on current legislation

They do but you are talking a couple of stages further and a more specific advice event. Taking the Aviva pension or not does not impact on ability to defer the state pension.

they appear to be breaching the ABI's Code of conduct on Retirement choice, one of which is that annuity vendors must "Explain the range of ways in which a customer can receive their retirement income". Skipping the highest-paying guaranteed income is hardly complying with that requirement but since it is the type of retirement income that most strongly competes with an annuity it is unsurprising that an annuity vendor wouldn't want to mention it.

There is no breach. As Aviva do not issue the state pension. its not their product. it is a potential efficiency scenario but the two things are not linked. under the old rules, you had to fall under a specific set of circumstances as well which is too specific for the generic information they have to supply.

sandsy

Surely "Explain the range of ways in which a customer can receive their retirement income" is in relation to the underlying pension pot with that provider only. It really can't be expected that Aviva take account of other potential income streams and explain the options in relation to those - not only is it unreasonable to expect Aviva's customer service staff to do that, but it would be getting perilously close to giving regulated advice.

jamesd

One of the uses of the Aviva pot is to provide substitute income while deferring the state pension. Buying an annuity from Avaiva directly affects whether that money can be used to defer with.

Naturally some at Aviva could prefer to make the annuity sale and cost their customer three times the inflation-protected guaranteed income that they could get from deferring instead. For their chief executive it's a pretty straightforward morale choice: do they want to reduce their customer's income by two thirds by making their own sale or not?

dunroving

sandsy wrote: »

Surely "Explain the range of ways in which a customer can receive their retirement income" is in relation to the underlying pension pot with that provider only. It really can't be expected that Aviva take account of other potential income streams and explain the options in relation to those - not only is it unreasonable to expect Aviva's customer service staff to do that, but it would be getting perilously close to giving regulated advice.

But surely they at least have an ethical responsibility to give an idea how things will work from April 6th rather than say they have no idea? They were definitely pushing the annuity, not just providing information. They didn't even advise her that the situation would be different soon. To me, if she had taken out an annuity that would have been mis-selling as that is definitely not her best option.

dunstonh

They were definitely pushing the annuity, not just providing information.

Can you explain how they were doing this as I cannot see anything in the documentation that "pushes" annuity.

To me, if she had taken out an annuity that would have been mis-selling as that is definitely not her best option.

It isnt for them to say what the best option is. They are the product provider and they state the options their product has. Reading the pack I have in front of me it says:

"there may be other options for your retirement including income drawdown. These options may also let the member have a tax free cash sum before they geta regular income. We've included some information about these in the "your retirement booklet".

But surely they at least have an ethical responsibility to give an idea how things will work from April 6th rather than say they have no idea?

The pack also has two pages on the 2014 budget changes which states the key changes and gives two website addresses for those looking for more info online.
You can see the webpage here: http://www.aviva.co.uk/savings-and-retirement/approaching-retirement/how-do-i-take-money-from-my-pension-fund/

The booklet has sections on "if you retire from April 2015 onwards", "I want to delay retirement", "I want to take some of my pension benefits now and leave the rest" and "other retirement options" and a final section on what happens next.

And for the benefit of James, there is a section on the ability to defer the state pension. It says it is possible to defer taking it. It quite rightly does not give advice on that though. Just presents it as an option.

They didn't even advise her that the situation would be different soon. To me, if she had taken out an annuity that would have been mis-selling as that is definitely not her best option.

So, with all that information supplied, how did they not tell her?

For reference I have got three Aviva pensions on the go to commence benefits and the same packs came with all three. One is a group PPP, one is an individual PPP and the other is a section 32 buy out bond with GMP. The booklet is AN16003 and published 07/2014.

Loughton_Monkey

jamesd wrote: »

So they don't actually make you aware of all of the other options based on current legislation and they appear to be breaching the ABI's Code of conduct on Retirement choice, one of which is that annuity vendors must "Explain the range of ways in which a customer can receive their retirement income". Skipping the highest-paying guaranteed income is hardly complying with that requirement ......

Can't see this holding up 'in court' (as it were).

It can only be pertinent to make customers aware of options directly concerning the pension at issue which is clearly the specific product with that provider.

No pension company can (or should) make any comments on the State Pension, or indeed a pension from any different provider.

It's OK on these boards to throw into the argument suggestions about, say, deferring state pensions, since we are clearly not regulated or offering 'advice' in the official sense. But for (say) Scottish Widows to start mentioning State Pension options in the context of one of their policyholders' own funds, without knowing anything whatsoever about their other pension entitlements or financial position could get them into very deep water.

dunroving

dunstonh wrote: »

Can you explain how they were doing this as I cannot see anything in the documentation that "pushes" annuity.



It isnt for them to say what the best option is. They are the product provider and they state the options their product has. Reading the pack I have in front of me it says:

"there may be other options for your retirement including income drawdown. These options may also let the member have a tax free cash sum before they geta regular income. We've included some information about these in the "your retirement booklet".



The pack also has two pages on the 2014 budget changes which states the key changes and gives two website addresses for those looking for more info online.
You can see the webpage here: http://www.aviva.co.uk/savings-and-retirement/approaching-retirement/how-do-i-take-money-from-my-pension-fund/

The booklet has sections on "if you retire from April 2015 onwards", "I want to delay retirement", "I want to take some of my pension benefits now and leave the rest" and "other retirement options" and a final section on what happens next.

And for the benefit of James, there is a section on the ability to defer the state pension. It says it is possible to defer taking it. It quite rightly does not give advice on that though. Just presents it as an option.



So, with all that information supplied, how did they not tell her?

For reference I have got three Aviva pensions on the go to commence benefits and the same packs came with all three. One is a group PPP, one is an individual PPP and the other is a section 32 buy out bond with GMP. The booklet is AN16003 and published 07/2014.

I have no idea what their documentation says.

Imagine a phone conversation something along the lines of:

Customer wants to start drawing on her pension at some point in the near future. How can she do this? She would like to take a relatively small sum initially, with the plan being to make gradual withdrawals of varying amounts at varying time intervals over several years, as needed.

Aviva rep says she can take 25% of her pension value tax free but she would (quote) *have to* use the rest to purchase an annuity at the same time.

No mention at all that new legislation would be in effect in the near future that might provide other options. When pressed about "Aren't there some changes happening soon?" the Aviva rep said, Well yes, but at the moment the government hasn't told the financial companies how to implement the new rules.

... to me that is a disingenuous reply to a very specific request, regardless of what documentation might exist on some person's desk hundreds of miles away. First off presenting a single option and not mentioning the new changes. Second off saying that Aviva doesn't know how this will work because the government hasn't told them what to do.

dunstonh

Aviva rep says she can take 25% of her pension value tax free but she would (quote) *have to* use the rest to purchase an annuity at the same time.

Did she phone the aviva annuity sales service they offer? That only deals with annuities. Rather than asking Aviva to send a retirement options pack?

No mention at all that new legislation would be in effect in the near future that might provide other options. When pressed about "Aren't there some changes happening soon?" the Aviva rep said, Well yes, but at the moment the government hasn't told the financial companies how to implement the new rules.

That is rubbish as we know. Perhaps she should complain about that person.

regardless of what documentation might exist on some person's desk hundreds of miles away.

It should be sitting in front of her as its part of the retirement options pack that Aviva send the policyholder.

dunroving

dunstonh wrote: »

Did she phone the aviva annuity sales service they offer? That only deals with annuities. Rather than asking Aviva to send a retirement options pack?



That is rubbish as we know. Perhaps she should complain about that person.


It should be sitting in front of her as its part of the retirement options pack that Aviva send the policyholder.

Presumably the retirement pack is something they send people when they say they are ready to retire ...(?) If so, she won't have one. The pension is one she was paying into until about a year ago, and so it is currently sitting there waiting for her to decide what her plans are for retirement, with a 1-2 year window to make a plan and then implement it.

As per the information I gave in the OP, this was an initial call to Aviva's generic current customer number because she was looking into her options for getting hold of a relatively small sum in order to replace her damaged car, so it was an unexpected situation. The plan was to buy a new car in the following month or two (she has a loaner in the meantime).

I know there is a certain responsibility for people to inform themselves about finances, but in this case, I think the person on the phone really not only gave bad advice, but IMO misleading advice.