Living Time welcomes Aviva product openness

However, advisers have raised fears that if enough providers were to follow this up it would take business away from intermediaries.

Dave Harris, managing director of sales and marketing for Living Time, said: "It is very positive to see Aviva accepting the need to offer internal clients the most appropriate source of retirement income and it will be interesting to see if other large pension companies also publicly start to prioritise their responsibilities in this area."

Mr Harris said the move tallied with Living Time's Offer More Options campaign which focuses on increasing choice in order to ensure the client gets the best solution at the right time.

He said: "Arguably this is most important to clients with smaller pots who need to make the best use of every penny they have.

"The key is for pension companies to focus on helping clients select the right plan for their individual circumstances, with no prior assumption that a lifetime annuity is always the best solution. One of the outcomes we would like to see come out of the retail distribution review are methods to enable the industry to accelerate this change."

John Stewart, director of Essex-based IFA PMI IFAs Ltd, said a lot of people were apathetic as to what their choices were and would not appreciate the benefits that could be gained on the open market.

However, he thought providers could be more distinct about the benefits of an enhanced annuity for those who smoke or have a health condition.

He said: "That is where we do quite a lot of business and it seems that traditional providers do not make much of a play about it and I think they should."

Mr Stewart said he was not surprised that Aviva and perhaps other pension companies were looking into the possibility of offering other providers' annuity solutions, but had concerns about this.

He said: "A provider is a provider of their own product so how blurred is this going to get? Should we see this as a threat? I guess it is a threat to us.

"If it is our clients and they are going to offer other annuities that is potentially taking business away from us because that is our job.

"They could end up offending a few IFAs because it is down to us to recommend others not them."