Insurer Aviva has praised the retirement industry for its continued efforts to innovate, saying providers need to take more pride in what they have achieved.
Speaking at the Association of British Insurers (ABI) conference in London today (26 April) Aviva's head of savings and retirement, Alistair McQueen, said there have been a number of big innovations in the marketplace, such as automatic enrolment and pension freedoms so the industry had no reason to be apologetic about not innovating enough.
Despite this, he said Aviva was acutely aware of pressure from the outside from the likes of big tech firms and start ups, and was gearing up for its next innovation drive as a means of 'self preservation'.
The retirement industry has been criticised by the regulator for not innovating enough following the pension reforms and earlier today, Guy Opperman, parliamentary under-secretary of state at the Department for Work & Pensions, reiterated a call for more new products to be developed.
But Mr McQueen said: "I have a clear conscience about my company and our industry in terms of innovation.
"It has been six years since the idea of automatic enrolment was born. Our industry has brought it to nine million people - that is innovation.
"Before we talk about where the next innovation is coming from as an industry we need to change our mindset.
"We are not apologetic, we are not slow, we are demonstrating innovation despite Brexit, governance committees, charge caps, Solvency II, Mifid, the Financial Advice Market Review and the General Data Protection Regulation (GDPR).
"Despite all of that we have done magnificent amounts of change."
Aviva has set up an innovation hub called digital garage, which is working with technology firms, philosophers and others to bring a "fresh perspective" to the market.
Mr McQueen said the reality was there were more people retiring in the next 10 years with more money than there have ever been before.
At the same time he said the industry largely fails to engage with them.
He said: "We believe, and to some extent we fear, this industry is ripe for that word disruption.
"If you are a disrupter with some big pockets this is a market that is incredibly rich for disruption.
"Aviva feels that fear and and therefore we are challenging ourselves to disrupt ourselves first before somebody else comes along and does it.
"It is our mode of self-preservation and simplification - thinking outside the box is a key part there."
Aviva will be piloting a midlife MOT next month in Norwich to judge whether there is any value in the proposition.
The idea of a midlife MOT was called for by the ABI in its report out today and this concept was also backed by Mr Opperman.
Aviva launched its project on Tuesday (24 April) and within 24 hours 50 per cent of the seats available had been taken, Mr McQueen said.
He said: "There is a demand to get support and get service because people understand the importance of this and there is a huge price for the provider who can come into this market and do that."
But he acknowledged regulation was still hampering innovation and efforts to create better consumer engagement.
He said customers want simplicity and transparency and the regulator was more on the transparency side.
"It is very difficult to deliver simple communications at the same time as delivering transparent communications because transparency brings with it caveats, footnotes, qualification and sub-clauses.
"I fear we have gone too much into the detail of transparency to the detriment of simplicity."
Craig Fazzini-Jones, chief executive of Retirement Advantage, shared this view.
He also said innovation was not spurred by consumer demand but by regulatory change.
Mr Fazzini-Jones said: "If we had sat in the room before (former chancellor George) Osborne announced the (pension freedom) changes we probably wouldn't have launched the [retirement account] because we wouldn't have thought the market was ready for it."
Before the Retail Distribution Review (RDR) the market was black and white, people either went for annuities or drawdown, he said.
But the rules that came after the pension reforms meant people could actually house an annuity inside drawdown and that gave them a lot of benefits in terms of tax planning and control, he said.
Mr Fazzini-Jones said: "Strangely enough the advent of the reforms in a way is what drove the innovation because we had to respond to a market that didn't want to buy annuities anymore and to think more about customer needs.
"By offering the retirement account we gave the advisers something to talk about to their customers to the effect of what they were hoping to get: have a guarantee, more flexibility, more control."
carmen.reichman@ft.com
