Defined Contribution 

Aviva benefits from surge in ‘one-stop-shop’ pensions

Aviva benefits from surge in ‘one-stop-shop’ pensions

Aviva has seen a surge in enquiries from trustees looking for a ‘one-stop-shop’ solution, instead of having separate third parties for administration and investment.

Since the beginning of the year, the provider has taken on board close to 10 defined contribution schemes, Dominic Fryer, head of workplace strategy at Aviva, told FTAdviser, while enquiries for so-called bundled schemes was up 50 per cent year-on-year.

One of the reasons for the rise in enquiries from trustees of unbundled schemes - in which investments are handled on a dedicated platform and administration is carried out by a third-party provider – was cost, Aviva stated.

Administration charges in unbundled schemes are commonly paid on a per member basis, and with the abolition of short service refunds – before 2015, members of occupational pension schemes with fewer than two years qualifying service could get a refund on their contributions - some employers have seen administration costs rise far quicker than before. 

In a bundled product administration charges are included in the member’s annual management charge, rather than as an additional fee for the employer to pay.

Mr Fryer said: "For a long time, the received wisdom was that once a DC pension scheme had sufficient assets, the way to ensure the best member outcomes was to switch to an unbundled model. Times have changed however - bundled propositions have improved and traffic is no longer one way.

"The gap between unbundled and bundled member charges has been closing. Efficiency savings and a competitive market have driven down charges for bundled schemes. The differential is smaller than it has ever been."

He noted that the majority of schemes contacting Aviva had more than 5,000 members.

"Single trust schemes are deciding they are better served in a master trust," he said, and 90 per cent of Aviva’s new business is in this area.

FTAdviser reported in February that the provider was seeing an 80 per cent surge in enquiries from companies and advisers interested in changing auto-enrolment providers.

At the time Aviva stated the level of service and having a point of contact at their provider were two of the main reasons advisers were looking to switch, as was price.

maria.espadinha@ft.com

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