UK chief operating officer David Barral says the firm is working to counter the threat of Nest on private pension provision.
He says: “We will have all the requirements in place to enable us to compete head-on and avoid Nest dumbing down the private pension market, which is what the threat is.
“In terms of making auto-enrolment work and having an appropriate default-type fund, which will probably be target date funds, we are working on all that now. Nest will have a very simple default fund and if we are competing effectively alongside it, we have to have the same.
“The worry is that Nest will seep into the existing market. We are lobbying extremely hard to make sure that does not happen and that our product design and benefits mean we can defend ourselves very vigorously.”
Barral says providers with a focus on investments rather than risk-based products could struggle the most in adapting to the changes.
He says: “If you only focus on the GPP market or Sipp and wrap, your internal rate of returns are wafer-thin, so you will have a hell of a job adjusting.”
But Barral says Aviva plans to “dominate” the group pension market despite the thin margins.
He says pricing in the fourth quarter was “incredibly aggressive”, adding that Aviva, which is the third-biggest player, lost market share to other commission-paying rivals.
He says: “Pricing in the GPP market is incredibly tight. We lost a bit of market share in the fourth quarter, which is absolutely down to aggressive pricing. We chose to keep our discipline in managing the margin.
“We are reasonably comfortable at the moment. We make sure that each scheme is right and assess the adviser as much as the scheme.”
Aviva is bringing in customer agreed remuneration on individual pensions from April and could accelerate an RDR-ready version of its GPP.
He says: “We are looking at accelerating an RDR-ready version of a GPP because the rules are now clear on consultancy charging. Clearlycommission is banned on GPPs from 2012 so we need to have that in position.”
Aviva is also looking at launching a corporate wrap and is planning to bring its fixed-term annuity to the market by the end of the year.