Aviva charges shake-up targets high-value pension clients

Aviva has created a new tier in its pricing structure for investors with more than £400,000 as it shakes up its pricing ahead of the looming implementation of the cash rebate ban.

Under the new model, investors with £400,000 or more will pay 0.15 per cent for their Isa and investment portfolios, while those with less will pay 0.25 per cent.

For pensions portfolios, those investors will pay 0.10 per cent at Aviva’s ‘core’ level - which comes with a 0.05 per cent discount - and 0.15 per cent at its ‘choice’ and ‘flex’ levels. The latter also carries an annual charge of £250, and all three levels carry an annual drawdown charge of £100.

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According to the insurer, investment fund charges will range from 0.1 to 3.5 per cent, except in its core level pensions portfolio where fund charges can reach 1.75 per cent.

Under the new structure, an investor with up to £29,999 would pay 0.40 per cent for a choice or flex level pension portfolio. This falls to 0.35 per cent for those with between £30,000 and £249,000, and to 0.25 per cent for those with between £250,000 and £399,999.

The core level pension portfolio enjoys a 0.05 per cent discount on all wealth tiers, Aviva said.

Holly Mackay, managing director at The Platforum says, “If you look at Aviva’s change from a purely platform angle, this will impact a relatively small number of portfolios. The average account size across all platforms was £142,000 as at Q3 2013.

“Where it’s more interesting is that it starts to open up a few more options for advisers reviewing clients who have been saving into a packaged product for years, accumulating substantial sums. This makes the platform more compelling as a pension vehicle, which is presumably why Aviva has applied the most competitive 0.10% tier to pension pots with more than £400,000.

“Not revolutionary. Not a price war. But a detail worth considering for some advisers reviewing packaged product solutions for wealthier savers.”

Phil Ralli, head of platform proposition at Aviva, said, “We’ve listened to our advisers and changed our pricing in line with their growing demand for more flexibility and simpler terms at the higher end of the market.

“Of course many customers have larger portfolios as they near retirement age and we want advisers to be able to offer competitive rates in order to attract this wider client base.”