Firing line 

‘Providers need to help move money between generations’

‘Providers need to help move money between generations’

LV, like many other companies, has seen plenty of growth from defined benefit transfers over the past two years. 

But while they may have “peaked” in the first half of last year, according to Clive Bolton, managing director of life and pensions, they are still coming through.

Ultimately he says, it is up to the adviser to get it right. “Technically the responsibility of the quality of the advice is with the adviser, but if they are a regulated adviser, that’s where the consumer protection is.

“Our products are at the lower end of the risk spectrum – the products that LV manufactures often come with guarantees of smoothing.”

He is quite relaxed about not being the target of some dubious practices, where advisers may be steering clients to unsuitable products. “I’m not saying that doesn’t go on, but we don’t offer those types of [high risk illiquid] things.

“I think it’s dreadful what’s happened to some people’s pensions. I genuinely think transfers make economic sense in some circumstances and in some circumstances they don’t make sense.

“I think the simple answer is [it is suitable] where the transfer value offered is high enough to provide a similar level of benefits on a low-yield assumption.

Mr Bolton joined last month following the departure of John Perks to head up the Police Mutual later this year, and he held a similar position at Aviva – a much bigger and publicly quoted company.

They are similar in a number of respects, but the focus for LV, a mutual insurer, is on the “low risk mass affluent”.

LV likes to think of itself as a “pension consolidation” company, and offers a number of retirement options, including a retirement account that allows people to have a blended solution of drawdown and fixed-term annuity, depending on their circumstances.

But Mr Bolton says he plans to develop new products in the protection area, and to fulfil the developing desire for people to pass their wealth down the generations.

“Providers need to do more to help advisers and clients in this space, to move money between different generations, particularly if it is tied up in a house.

“We’re trying to respond to that intergenerational desire.”

Now that pension freedoms have settled down, Mr Bolton is clear that the demographic that needs most help is this “mass affluent” group, which has a substantial amount of money by most standards, but an array of decisions to make as their situation is not as easy as if they were super rich.

“They don’t have as much money as a million pound pension; they need to manage the downside: a 10 per cent reduction may mean the difference between leading the life they live [or not].”