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Aviva unveils plans for guaranteed pension product

David Barral 480

Aviva aims to develop a pension that will guarantee investors get back at least the value of all contributions and tax relief.

The pensions industry has come under pressure from the Government to offer consumers products with “affordable” guarantees.

In a speech in London last week, pensions minister Steve Webb said: “With the dawn of automatic enrolment, the market is growing, so now is the time for the pensions industry to look at the market gap in relation to affordable guarantees and provide the products consumers are seeking.”

Speaking to Money Marketing, Aviva UK Life chief executive David Barral (pictured) says: “Research of our staff and customers tells us there is a gap for a simple, deposit-type fund which guarantees money back plus a little bit extra back.

“Once people start building up a more substantial pension pot they may be willing to take more of a risk to keep their spending power, but the first point is to make sure that they get at least their money back.

“There is a massive gap between where the investment industry has been and what ordinary customers are looking for, so we have to fill that gap and I am determined that we are going to do it.”

Equity Partners UK managing director Kevin Tooze says: “You can not put affordable and guarantee together.

“Pensions should be managed, give tax relief and give you a handsome nest egg to live on in retirement. That is not going to happen if the Government and providers start dangling this carrot of a guaranteed return in front of people.

“If all you are going to get back from your pension is the value of your contributions, you might as well put your money in the bank.”


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There are 14 comments at the moment, we would love to hear your opinion too.

  1. I think the best option is speak to a good IFA, found one at example and let them find the best pension type for your needs

  2. I tend to agree with Mr Tooze.

  3. Matt Worthington 12th July 2012 at 10:31 am

    “Research of our staff and customers tells us there is a gap for a simple, deposit-type fund which guarantees money back plus a little bit extra back.”

    So basically, a cash fund then.

  4. Affordable guarantees? Handsome pension pots?

    Sounds marvelous, all we need to do is make sure equities rise at a guaranteed minimum of 10% per annum and increase the average wage by around 400%. No problem there then.

  5. If it sounds too good to be true etc etc etc.

    I agree with Mr Tooze as well, how will these guarantees be paid for ? We already have low cost Stakeholder and you can choose a cash fund option with that or a cash isa without all the restrictions at retirement.

  6. The only guarantee will be aviva making a pigs ear of this…..what on earth are they thinking about?

  7. This product already exists. It’s called an ISA. With the maximum investment in cash ISAs now over £5,000 a year – far more than the average person can afford to save anyway – most of the problems could be solved if employers were allowed to contribute to cash ISAs with tax relief and the 50% restriction on cash was lifted.

  8. I’m a great believer that most things come and go in cycles.

    Guarantees ….. a bit extra ….. sounds rather like Aviva relaunching a With Profits or Deposit Admin fund!

    Let’s go round again.

  9. Unless a pensions offers a measurable and guaranteed advantage over an ISA, why would anyone lock their money away in a pension scheme? I admire Aviva’s attempt to address the market need to offer consumer confidence. However if a multi billion pound muti-national with, what should be, world class investment managers cannot guarantee to beat an ISA…. what on earth are they in business for? It seems the consumer requirment has been watered down to make it a soft target for internal stakeholders to sign off, rather than to set Aviva apart as the pension provider of choice for every man.. ‘B- could do better’ as my teacher used to say.

  10. Agree with Mr Tooze 100% but surely as big a problem to providing adequate pension pots is underfunding.

    As a nation people have expected too much you can not get something for nothing and 8% of salary from emploer and employee combined will not do it either.

  11. MetLife have been offering guarantees for 25+ years. They cost from 0.5% and guarantee either capital or income while retaining control of the fund.

  12. I take it Anon is a cheerleader for Metlife ? this would be Metlife that has an office in London for the last 5 years not 25 and operates here as Metlife Europe which is based in Dublin and has a ‘B’ rating. Mmm Oh yes, I’d buy an easy to understand Metlife guarantee because Snoopy is so darn cute.
    Damn you Red Barron.

  13. And MetLife have offices in 63 other countries across the globe! Some of which have been operating for 140+ years…

  14. MetLife also have offices in another 63 countries, some of which have been there for over 140 years…

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