Aviva’s decision not to allow commercial property to be included in drawdown or when clients want to access tax free cash through their Sipp has come under fire.
Money Marketing has seen correspondence between an adviser writing on behalf of their client and an administrator from Aviva’s commercial property investment team.
The correspondence concerns Lowland Financial managing director Graeme Mitchell making enquiries on behalf of their client about the “extraordinary restriction” Aviva has in place towards commercial Sipps.
It says the decision to not allow clients to crystallise against the whole fund value was made and communicated to clients towards the end of 2017.
This is when Aviva made changes to the terms and conditions of the Aviva Pension Portfolio.
Speaking to Money Marketing Mitchell says: “I am flabbergasted as to why anyone would limit assets in any pension fund to take the benefits. It is like someone saying you cannot have anything from a with-profit fund to count towards your retirement benefits.
“So you are losing out 25 per cent tax free cash on the value of the property and any income you get from the property in the form of rent.
“One of the main advantages of a Sipp is to invest in commercial property and I was just so surprised to encounter this. Aviva has closed the door and stopped giving people access to their own money.”
In response to the complaint an Aviva spokesman says: “We do not currently offer the option for commercial property to be held in a post-retirement (drawdown) account.
“This has been the case since January 2018, and we communicated with all impacted customers and their advisers in November 2017 to make them aware of this.
“We are planning to introduce this functionality in due course, but past demand has been very low.
“This impacts a very small number of customers – on our previous platform, only 12 customers had taken a part crystallisation.
“In the interim, customers are able to invest in other funds on our platform, or to move commercial property assets to an alternative platform.
“We received queries following the November 2017 mailing, and a handful of complaints.”