Smart Pension and Dalriada launch AVC consolidator solution

The first-of-its kind solution aims to address many of the issues faced by the AVC market by reducing the operating and administration costs associated with AVC schemes while minimising risk and governance burdens for trustees and employers, helping more people to save for a comfortable retirement. 

AVC policies are typically invested on legacy platforms and offer a poor customer experience with little communication or online access. Schemes often involve high annual operating costs for employers and pass on charges of 0.75% or more per annum to their members. 

Until now, there has been no alternative in the market, making it harder for trustee firms to transfer AVC assets to a more suitable solution. 

Through this off-the-shelf service, trustees will be able to transfer AVC policies to Smart Pension’s Defined Contribution (DC) master trust in a way that is simple and efficient, using a standard set of streamlined processes and documents, while benefiting from high-quality governance. 

By transferring AVCs, employers will no longer face annual operating costs, while members will pay administration charges significantly less than the typical AVC charge, regardless of the size of any individual scheme’s AVC assets.

Members will equally benefit from improved customer service and communications, including online access, a dedicated helpline, and reduced response times for member queries. This also includes a switchback option at retirement, where the AVC can be used to augment members’ tax-free cash allowance. 

Jamie Fiveash, CEO of Smart Pension, said:

“Our focus has always been to provide excellent value for our members and ensure they can enjoy a comfortable retirement. Smart Pension is delighted to partner with Dalriada on the launch of this market-leading scheme and help tackle many of the issues faced by the AVC market. By streamlining the process, we aim to minimise unnecessary costs for employers and members, reduce governance risks for trustee firms and improve customer experience for AVC members.”

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James Fitzsimmons, co-creator of the DCC and Accredited Professional Trustee at Dalriada Trustees, said:

“Trustees have struggled to improve Additional Voluntary Contributions terms and the investment platforms available to their members due to cost barriers, resource constraints, complexity and lack of a viable market, particularly for schemes that can only negotiate in isolation. We believe our new solution will be the most effective way to tackle this problem. By consolidating AVC into a DC Master Trust, it will significantly reduce member charges, improve member engagement, and reduce the administration and governance burden for Defined Benefit trustees.”

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The solution was also developed in partnership with blue chip firms Gowling and Hymans Robertson. 

About Smart Pension

Launched in 2015, Smart Pension now exceeds £10bn in Assets Under Management (AUM) and serves over 2 million members and 100,000 employers. It is powered by Keystone, Smart’s global savings and investments technology platform.

Aquiline, Barclays, Chrysalis Investments, DWS Group, Fidelity InternationalStrategic Ventures, J.P. Morgan, Legal & General Investment Management, MUFG and Natixis Investment Managers are all investors in Smart Pension.