I’ve received the following note from Aviva with regards the TATA group personal pension which has replaced BSPS as the corporately sponsored pension arrangement going forward.
Thanks for your note below re the query you have received from a BSPS member. In answer to your questions, the TATA Aviva GPP can accept CETVs from DB schemes so long as the member is active and has taken financial advice regarding their DB Transfer.
The TATA GPP arrangement was set up by a Financial Adviser. Aviva can though, on request, set up a separate linked policy for a member so as to be able to take a Transfer into the scheme from a different Financial Adviser to the one who set the GPP up. This separate Transfer policy facilitates a number of different “ Adviser Charging” options, all of which do allow the Adviser to deduct their Fees from the member’s policy. We would, of course, require the written consent of the member to this before we facilitated any such payment(s) to an Adviser.
As well as Adviser Charging, the TATA Aviva GPP has the over c.250+ Funds to invest in should the member or their adviser on their behalf wish to invest in options outside of the TATA default fund. This fund range covers all of the main asset classes on both passive and active bases, including all of the main geographical territories. It does not though have a self-invested option. In addition the TATA Aviva GPP has the full range of Pension Freedoms built into the policies as and when the members need them in the run up to retirement.
Without a letter of authority from an active TATA Aviva GPP member, we are not able to disclose the exact AMC on this particular scheme to you. I can tell you that the AMC is very competitive for a scheme of this size and nature and is therefore, as you would expect, well below the current charge cap.
Aviva has taken numerous calls from the members of the various BSPS schemes asking if they can transfer their CETV from the DB scheme into our GPP. Our starting point on such calls is that we always inform them that they must take financial advice on this matter. Aviva hasn’t actively promoted the fact that the TATA Aviva GPP can take CETVs as we don’t particularly want to be seen to be encouraging DB Transfers in the first place. The feedback from the member below is certainly useful and I will make sure that it reaches the relevant people who are dealing with the BSPS Trustees
and by separate mail
The AMC on the TATA Aviva GPP is the same for both Regular Contributions and any Transfers In; there is no difference in them.
Any Adviser Fee Charging deductions, if agreed by the member, is treated aside from the AMC and has no specific impact on it. We show it as a separate explicit charge so that it is clearly visible to the member.
The verified cost of the default investment strategy for TATA Aviva GPP members is 0.26% (exclusive of transaction costs).
My immediate thoughts
- The Tata GPP can accept transfers in from BSPS
- The cost of this workplace pension to members is not disclosed but we only need one BSPS member to confirm the offer.
- The offer to transfer is only available to those actively at work with Tata.
- The assumption is that the terms of the offer are available on transfers (will needs be checked by financial advisers)
- These terms are likely to be extremely competitive
- Advisers can be paid through “adviser charging” on this scheme
- Aviva’s procedures for ensuring advisers get paid from the fund do not seem onerous.
In the light of this information , I would suggest that advisers talking to BSPS members make sure the Tata Aviva GPP is discussed and the terms available disclosed. While these won’t necessarily be the terms recommended by the adviser, the adviser should provide an explanation of why this option is not preferred.
Legal and General have also stated they would accept the transfers and have provided me with a transfer pack and forecast.
Can you confirm the terms of the AVIVA/ TATA default fund Rich? Or if you have any GPP material, can you ping it my way?
Henry, I can speak for myself only – but I didn’t make any specific requests for funds etc so assume I am in the “standard” arrangement. I believe I am in the Aviva Future Focus 2 Drawdown scheme. As my “Declared Pension Age” is currently 65, and therefore > 10 years from retirement 100% of my payments got into Aviva Pensions Diversified Assets Fund II S6. I believe that is supposed to be a “balanced” fund – though it does have over 60% equities. We are in some sort of lifestyle strategy management- where there will be an automatic movement of investments into different funds as you approach retirement at key birthdays (I don’t have it in front of me now – but think when hit <10 years it started to put about 10% into the APDAF I and then as get closer to 65 there is more and more into lower risk funds (Gilts /Bonds etc).
In respect to the charges – then I cant unfortunately comment in relation to transfer in of DB CETV all I can say is that the annual admin charge is (from memory) 0.26% – the funds that are standard don't appear to have any additional charge (there are funds that are available to choose that would have an additional charge).
Thanks Rich – you wouldn’t happen to know who your advisers are (as mentioned by Aviva in their statement). Amazing how hard it is to find this out!
Henry, sorry I am NOT Rich Caddy 🙂 , and sorry I don’t know who “the advisers” were that set this up.
Hi Henry, I spoke to the firm that set up the TATA Personal Retirement Savings Plan (PRSP) with Aviva a few weeks ago as I thought they could also transfer my British Steel Pension DB Scheme into it but they only deal with companies and not individuals so they could not assist me. I will find out the name of the firm. In the meantime here’s some detailed information on the TATA Personal Retirement Savings Plan (PRSP) default fund with Aviva:
Aviva Future Focus 2 Drawdown Lifestage Approach Fund (This is a low-involvement investment option). With these options we make most of the investment decisions, so you don’t have to. Ideal if you don’t want to spend much time managing your investments.
Objectives:
This approach aims to provide growth in the early years, although the value of your pension pot could fluctuate. It is designed to prepare your pension pot for flexible access at your chosen retirement age:
taking some of the money as and when you need it, either as cash sums or as flexible income (known as drawdown) or
leaving your money where it is and making your choices later
Please note: At your chosen retirement age you will have a number of retirement options, (even if you remain invested in this lifestage approach), however this lifestage investment approach has been designed to prepare for the particular retirement options shown above.
This approach is not designed to prepare for:
withdrawing all the money in your pension pot
buying an income for your lifetime (known as an annuity) at your chosen retirement age
How it works
In the early years (up to 10 years before your chosen retirement age), the approach invests in a medium risk fund (Aviva Diversified Assets Fund II), which aims to provide growth.
From 10 years to your chosen retirement age, your money gradually moves into a low to medium risk fund (Aviva Diversified Assets Fund I), which aims to help minimise fluctuations in the value of your pension pot. From 3 years to your chosen retirement age, some of your money is gradually moved into the low risk Aviva Deposit fund which aims to help protect a small portion of your pension pot that can be taken tax free.
The exact fund split when you start investing depends on how far from your chosen retirement age you are at that time. The diagram below shows how we’ll split your investment between funds as you head towards your chosen retirement age.
Aviva Pension Diversified Assets Fund II S6
Fund status: Open
Aviva risk rating: 3
Investment fund type: Mixed asset, Specialist / Other
Additional yearly charge: 0
Fund manager expense charge (FMEC): 0
Total additional yearly charge: 0
Mixed asset: Mixed asset funds invest in a range of assets such as equities, corporate bonds, gilts, property and cash. The diversification offered by these funds helps spread the risk to your money. If one type of asset falls in value, another type may offset that reduction in value by performing well. In that way, it’s possible that the overall value of your investment may not fall. On the other hand, because the fund’s investments are spread between different asset types, if one type performs especially well you may miss out on some growth. Please remember that the value of funds can go down as well as up and you may get back less than has been invested.
Specialist/Other: This type of investment covers funds that don’t fit into the other fund types. For example, they may invest in assets such as infrastructure, commodities, derivatives and hedge funds or may be free to invest in any asset type at any time. Each fund in this group will invest differently, so you should check its fact sheet for the fund objective, risk rating and asset details. Please remember that the value of funds can go down as well as up and you may get back less than has been invested.
How my funds are invested:
55.1% Global equity
21.5% Bonds
17.2% Cash or Equivalents
4.5% UK equities
1.3% Property
0.4% Other
The annual management charge is 0.26%.
This chart shows the mix of assets within your current portfolio. Latest fund data available provided by Financial Express
Thanks so much for this information Robert, it helps me understand the option and also understand the advisory process. https://henrytapper.com/2017/12/06/commission-the-charge-that-dare-not-speak-its-name/ Infact it inspired the next blog! You’re a star.
Hi Henry, the name of the firm who set up the TATA Personal Retirement Savings Plan (PRSP) with Aviva is Thomsons Online Benefits. This is the link to their website https://www.thomsons.com/
Thanks Robert – helpful!
Hi Henry, if the Aviva scheme allows members to have a different adviser advising on the transferred funds and allows them to take both initial and ongoing fee then I can see no reason why a good IFA would not consider this as a very serious option when considering DB transfer.
of course you don’t get trail…with Aviva
then that is still a problem. I would be very wary of doing a transfer without ongoing advice, it is very rarely wise to leave most members to do their own investments, and more pertinently their own planning.
But you can continue to levy adviser charges , just not as trail commission, which addresses the issue. Obviously – were an adviser to stop advising , it would be hard to get agreement to the adviser charge. In my opinion this is in the spirit of the RDR, taking trail is questionable.
Hi Henry I think we are at cross purposes. If adviser charges can be levied then that IS what I mean by ongoing charges. What has trail commission got to do with what I said? One would only levy ongoing fees because one is giving ongoing advice! If one stopped then clearly the ongoing adviser charges would not be taken. Ergo If Aviva allow both initial and ongoing adviser charges to be paid to an adviser giving ongoing advice then this plan can be used. And the advice would be given by the transfer adviser not the big scheme adviser.
I follow the logic of what you are saying Brian, a fair day’s wage for a fair day’s work. But we are hearing that many adviser solutions are based on advisers getting paid whether they advise or not – which is dangerously close to commission. What is most frightening are stories of exit penalties if the investor withdraws within a certain time-frame, here the investor is committing to pay fees whether he gets the service or not. As far as I can see, the Aviva approach is not like that,