Employers love them, the government hates them and advisers are, well, willing to do them. But is Aviva the first provider to openly oppose enhanced transfer value (ETV) exercises for final salary pension schemes?
I ask is because it is not actually clear whether they do or not. Based on a letter they sent to advisers last week, I would argue they are no longer as keen as before, and other providers should be taking the same stance.
An enhanced transfer is where the member of a defined benefit (DB) pension is offered the notional cash value of their accumulated entitlement so-far, plus extra cash, so that they transfer-out of the scheme,
The letter essentially reminds advisers Aviva only transfers to a group personal pension scheme (GPP) are acceptable, except in extreme circumstances when a transfer to an individual personal pension (IPP) is permitted. It also reminds advisers that there is no commission paid on either of these transfers.
The letter tells us a ‘special team’ has been put together ‘to manage these arrangements appropriately’, though no clue as to how recently this has been done.
Speaking to Aviva they assure me it is all very much business as usual and they support adviser’s right to perform ETVs, in theory and in the right circumstances.
However they do add, in the final line, that the IPP application is being updated to ‘clarify the position’.
It seems to me that it is not as much business as usual as Aviva would like to admit.
Is the letter not a gentle note to inform advisers Aviva supports the Department for Work and Pensions’ (DWP) stance on ETVs?
Look at what pensions minister Steve Webb has said about ETVs and the DWP stance becomes clear.
Last year he told the pension industry to ‘put its house in order’ over ETVs. He has threatened legislative action, claimed that ‘throwing in cash’ made pension transfer decisions less rational and proclaimed that because of ETVs ‘every week the another group of people join the mis-selling queue’.
If you know of any other providers who have subtly updated their position to reflect the DWP’s near-complete opposition to ETVs then let us know. It would be good to know where providers stand.