Aviva will remove indemnity commission from all auto-enrolment schemes by the end of this year ahead of a forthcoming Government-imposed ban on all adviser commission payments.
The insurer has today confirmed how it will implement a series of reforms announced by pensions minister Steve Webb earlier this year.
The reforms include the introduction of a 0.75 per cent charge cap for auto-enrolment default funds from April 2015 and a ban on active member discounts and in-built adviser commission from April 2016.
Aviva says it will ensure charges for all auto-enrolment qualifying workplace pension schemes are capped at 0.75 per cent by the end of this year. The provider could charge employers directly if their scheme is currently priced above the cap, although this will be decided on a case-by-case basis.
Aviva will also remove active member discounts by the end of 2014, with deferred member fees reduced to the same price as active member fees provided the charge is over 0.35 per cent. Adjustments to schemes where the active member charge is 0.35 per cent or below will be made on a case-by-case basis.
Finally, the company will stop paying initial commission on all schemes by the end of the year. However, trail commission will continue to be paid until it is banned in April 2016.
Aviva managing director of workplace savings Brian Gabriel says: “Aviva is committed to supporting advisers and employers with the incredible amount of change they are going through when it comes to workplace pensions.
“The changes we’re making mean that employers, employees and advisers have clarity on how Aviva is managing these changes on their behalf, and we know the SME market is looking for this direction from us.
“We are being clear about how and when we plan to implement the DWP changes so that advisers can have the right conversations with their employer clients and make informed decisions, particularly around their automatic enrolment preparations.”