Who Are Aviva?
Aviva is one of the longest standing providers, with over 320 years of experience. Not only is it the UK’s largest insurance company, it’s also the world’s sixth-biggest insurer with around 33 million customers across the globe.
Aviva offer workplace pensions for different sizes and types of businesses and currently support over 4 millions pension scheme members, in more than 26,000 schemes.
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Aviva Workplace Pension Overview
The Aviva workplace pension is a flexible, defined contribution scheme. It enables employers to enrol their eligible employees and fulfil their legal duties. Both the employer and employee will then pay contributions monthly into a pension pot.
Who Might Need An Aviva Workplace Pension?
An employer’s auto-enrolment duties begin as soon as an employee starts work. This means as soon as you hire someone, you must enrol them in a workplace pension scheme.
Different pension schemes will be suitable for different businesses. That said, Aviva’s workplace pension is aimed at medium-to-large-sized employers from any sector.
Eligible employees for auto-enrolment must be:
- Aged between 22 and State Pension Age
- Usually work in the UK
- Earn over £10,000
- Not already be enrolled in a workplace scheme elsewhere.
How Does An Aviva Workplace Pension Scheme Work?
The Aviva workplace pension is a multi-employer, master trust scheme. This means more than one employer can use the scheme at the same time.
Like most company pensions, it’s a defined contribution scheme. The employer and employee make contributions to build a pension fund for retirement.
The money paid into Aviva’s workplace pension is based on a percentage of an employee’s qualifying earnings. These savings are then invested on behalf of the employee by the scheme trustees. This allows the pot to increase in value over time, depending on the investment strategy.
Who Can Contribute To An Aviva Workplace Pension?
Most people join an Aviva workplace pension scheme after being enrolled by their employer. The employee, their employer, and the government make contributions.
What Are Aviva’s Workplace Pension Charges?
Aviva doesn’t charge employers a set-up fee. But there is a monthly cost for running the workplace pension scheme. Aviva will inform you of this charge when you receive your initial quote.
How Much Can Be Paid Into An Aviva Workplace Pension?
The government set minimum contribution rates for both the employee and employer. They must pay this at least. Both parties can contribute more if they wish, but neither can pay less.
Employee Pension Contributions
The minimum amount an employee must pay into their pension is 5% of their qualifying earnings. This includes:
- Bonuses and commission.
The contribution is deducted from their gross salary each month. They will also receive tax relief from the government, which is 1% of their 5%.
Employer Pension Contributions
All employers must contribute a minimum of 3% of their employees’ qualifying income. They can, of course, choose to contribute more than this, though. Many offer higher pension contributions as part of their employee benefit package.
Here’s a visual representation of how the total pension contributions break down.
Does Aviva Allow Employees To Transfer Other Pension Pots Into The Scheme?
Employees can transfer other pension pots into an Aviva workplace scheme. They can do this at no cost, as long as they’ve not already started drawing an income from it.
Employees should be aware that their existing scheme provider may charge for transfers. Staff can also transfer their savings out of an Aviva pension if their new scheme accepts transfers.
When Can Employees Access Their Aviva Workplace Pension Fund?
As with most workplace pensions, staff can start drawing from their Aviva pension at the age of 55. But there are some important things to consider beforehand:
- Taking a lump sum reduces the value of the pension
- The employee will still pay annual charges on their remaining invested savings
- When money is taken, the employee’s annual allowance for future payments drops from £40,000 to £4,000
- Taking a lump sum counts towards the total amount of pension cash an employee can use for retirement before tax.
What Happens If An Employee Leaves?
If an employee leaves, the employer will stop making contributions to their pension. The employee can continue to contribute privately or transfer to another provider.
Where Are Contributions To An Aviva Workplace Pension Invested?
Like with most pension providers, Aviva offers a choice of funds that employee’s savings can be invested into.
Some of these funds are designed to give employees more control, whereas others are more suited to those without the time or know-how to make choices about their investments.
Aviva’s Corporate Pension Funds
Pension contributions go into Aviva’s default fund, unless the worker picks a different fund.
All of Aviva’s investment options have varying levels of risk and adhere to auto-enrolment regulations.
- Default funds
Designed to meet the needs of most workers
- Investment funds
Over 200 external funds that allow staff to invest according to their preferences
- Ethical and Sharia funds
Specialist ethical funds and Sharia options that meet Islamic values.
Default Investment Fund
Aviva’s ‘My Future Focus’ is the scheme’s default investment fund. It is designed to offer a balance between risk and return.
It is agile enough to respond to changes in market conditions. But also takes into account environmental, social, and governance (ESG) considerations.
The default funds reflect the employee’s journey to retirement. In the early stages, it aims to grow capital, then the focus is switched to preserving it as they near retirement.
Employees can take a cash lump sum, draw on their savings as an income, or use their pension pot to buy an annuity.
For more control over their investments, employees can choose from over 200 funds. This gives them the opportunity to invest how they want.
These options can be chosen from 30 fund management houses, including:
- Aberdeen Standard Investments
- Funds managed by Aviva’s group of Aviva fund management investors.
Ethical And Sharia Funds
Aviva offers a variety of funds for those that invest according to their beliefs and values. They can choose from ethical, Fair Trade, and Sharia-compliant funds, for example.
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Employees can manage and change their investments for no charge with Aviva.
Who Manages Aviva’s Workplace Pension Investment Funds?
Mercer (an independent board of trustees) and an in-house governance team manage the funds.
They will regularly check the funds to ensure performance meets expectations. If a fund starts performing poorly, the governance team will remove it from Aviva’s fund range. Aviva’s in-house investment fund governance team will also:
- Check the investment approach is still suitable for employees and meets regulatory requirements
- Evaluate the funds every three years to make sure they are still appropriate and performing in line with their sector
- Replace underperforming funds.
Is Aviva's Workplace Pension The Same As A State Pension?
Contributions to an Aviva workplace pension are separate from the State Pension. One does not affect the other.
Can Employees Opt Out Of An Aviva Workplace pension?
Once an employer automatically enrols an employee, they have the option to opt-out. They must give their employer a valid opt-out notice, which can be found in the Aviva welcome pack.
As soon as they ask to opt-out, the employer must stop paying contributions. If they opt out within 1 month of enrolling, employers have to refund contributions so far. Employees can opt back into the scheme at a later date if they are still eligible.
What Happens To An Aviva Pension If An Employee Dies?
Employees nominate a beneficiary who will get their pension if they die before retirement. Aviva’s scheme trustees will then consider this request when the employee has passed away.
Is An Aviva Workplace Pension Worth It?
Like with most providers, there are a few pros and cons to the Aviva scheme to consider first.
Advantages Of The Aviva Workplace Pension
Aviva is a well-known global brand that operates across 16 countries with approx. 33 million customers.
It is one of the largest insurers in the world, offering many investment options. Aviva supports over 4 million UK pension members from more than 26,000 companies.
No Setup Charges
Unlike other providers, Aviva doesn’t charge employers for setting up a pension.
UK-Based Support Team
If you or your team need extra support, Aviva has a UK-based support team available 7 days a week.
Choice Of Investments
For those wanting more control over their savings, Aviva has over 200 fund options to choose from.
Suitable For All Businesses
Aviva offers workplace pensions to businesses of any size in any sector. So Aviva should be able to provide you with a suitable pension scheme.
Easy-To-Use Online Account
‘MyAvivaBusiness’ is a simple, online management system that staff can use to manage their pension.
Disadvantages Of Aviva Workplace Pensions
Monthly And Annual Management Charge
Although there is no setup fee for employers, there is a monthly fee to cover the costs of managing the scheme. This is between £30 and £50 per month.
Employees will also face an annual management charge, which is capped at 0.75%. But this may be higher if an employee chooses investment funds outside of the default option.
Large Scale Business
Aviva is a global company that provides workplace pensions to businesses of any size and sector. As a result, smaller businesses and start-ups may feel lost among Aviva’s large customer base.
When selecting a workplace pension, it is important to compare providers as the options available and fees will differ.
Best Alternatives To The Aviva Workplace Pension Scheme
Regardless of your business size or industry, choosing a workplace scheme is a big decision. You’ll need to consider a range of factors, such as, eligibility criteria, tax relief models and compatibility.
It’s a good idea to compare pension providers to help you find the best one for your business and employees.
Alternative Workplace Pension Providers
- NOW: Pensions
- Royal London
- People’s Pension
- Scottish Widows.
Our expert in-depth review of each of the UK's leading corporate pension providers
Compare Workplace Pension Providers & Get Expert Advice
We know that finding the right workplace pension scheme isn’t a quick and simple task. It’s also a huge responsibility. Fortunately, we are experts at helping to take the stress out of setting up a workplace pension.
Our team of pension experts can help you find the right pension scheme. They can guide you through the setup process and answer any questions you may have.
You can carry on running your business knowing that your employee’s pension savings are in safe hands!
If you’d like support from one of our employee benefits consultants, please don’t hesitate to get in touch by calling 02074425880 or via email at email@example.com.
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