In our report last year, we set out a number of priorities for 2019 for Aviva. Here we set out our views on how well we believe they have performed in these areas.
Following a change in rules capping charges at 1% of funds, for members aged 55 or over, who exit their pension earlier than their selected retirement age, the IGC has continued to challenge Aviva to extend this cap to all members, regardless of age. When the exercise to remove higher charging units for members aged under 55 is complete, it will also remove the exit charge for these younger customers (subject to the 1% cap). We are pleased with this result, albeit that the work is still to be completed.
We are very pleased to see that Aviva has addressed the removal of higher charging units to members aged over 55 who have now had charges on these units effectively reduced to 1%. This addresses the inequality between members who exit and transfer their funds and members who stay, and we see this as a positive outcome.
As we said earlier, for members aged under 55, Aviva has committed to remove these higher charging units and we have asked them to move quickly to complete this work.
Aviva has delivered on their commitment to improve the retirement outcomes for members who were targeting an annuity at retirement. By changing the underlying funds, or by launching new funds, around 84,000 members in older products are now targeting a drawdown profile at retirement or have access to drawdown targeting funds. We are satisfied with this outcome.
In older products not used for auto-enrolment, there is no ban on paying commission to advisers. When members contact Aviva’s call centres, if commission is still being paid, they are asked if they still have an active relationship with their adviser. If they do not, then Aviva will stop paying the commission. To date, around 1,000 members have had commission removed and we are pleased with this outcome.
The benefit of this cost saving to Aviva, albeit small, needs to be passed back to the member. Aviva has committed to finding the most appropriate way to achieve this.
We wanted to see a strong start to the programme Aviva committed to, moving members from older products to more modern products with lower charges and improved features. We understand that this is not straightforward in terms of the different types of product and that Aviva will need to ensure that some members are not disadvantaged by losing loyalty bonuses which could outweigh the advantages. However, we believe that most members will benefit, and this programme is the best way for members to receive better value. The IGC would like to see a major acceleration in the programme.
We wanted to see that employers were receiving information about their employees. This key information may include details around how many of them invest in their default solution, who was approaching retirement, investment performance and the number of joiners and leavers. Aviva has developed new employer management information reports which we have seen, and we understand that these have been well received. The IGC see this as an improved format. It is currently available for around a quarter of employers but will be made available to all employers throughout 2020.
Aviva successfully launched their new default funds in 2019. Further details can be found in the investments section of this report.
Further details of how Aviva has integrated ESG principles into their investment range can be found in the ESG section of this report.
In addition to the significant increase in face to face member engagement, Aviva continues to improve their online and digital offering to members. We have seen the launch of new forecasting and modelling tools, improved member access via various routes (including Alexa), and the ability to make payments online.
The functionality is available to the majority of customers, but Aviva remain committed to delivering for all. They have plans in place to deliver additional improved online tools throughout 2020 including additional forecasting tools, the ability to update beneficiaries online and additional payment tools such as automated transfers in for less than £30,000. We have asked Aviva to keep us updated throughout the year on progress. The IGC would like to see all policyholders benefit from these developments, however some members will have to progress through the Customer Transfer Programme to gain access to these improvements.
The new rules requiring us to assess the suitability of investment pathways and the associated communications do not come into effect until after this reporting year. We have, however, continued to work with Aviva on their design of the investment solution and the member communications related to pathways. We have updated our business plan for 2020 to ensure we have a focus on the activity required to assess the value for money of Aviva’s investment pathways, and we will report on our assessment in our 2021 report.
