In our last report, we set out a number of priority areas where we expected to see progress in 2020. Many of these areas have progressed well but, for a variety of reasons, a number of initiatives have been difficult to deliver.
We have had substantial engagement with Aviva in relation to their recently published policies on ESG and Stewardship. They have set ambitious targets for both their policyholder and shareholder investments and for their operations to be net zero carbon by 2040. We are satisfied that Aviva has made significant progress to integrate ESG considerations within their default investments and that they have demonstrated active engagement with investment managers to influence their decision making. This is a continual process given rapid developments in investment management ESG integration.
We wanted to see an increased pace in moving customers from older products to new contracts with lower charges and potentially improved facilities. As we have highlighted in our report, investigations by Aviva into both the legal and practical issues surrounding the changes have concluded that the transfer programme cannot go ahead. While disappointing, further reductions in charges for members in older products alleviate some of our concerns. Aviva is now looking at other initiatives.
We are pleased to see that the exercise to remove higher charging units has now been completed. This has the added benefit of removing exit charges leaving members the option to find alternative without reducing the value of their pension pot. We encourage members to consolidate their pension pots should they be able to do this without giving up valuable benefits. We are grateful to Aviva’s Conduct Committee for agreeing these changes and appreciate that this has come at a considerable financial cost.
We have seen an increase in the functionality provided to workplace pension members and a significant increase in those of you registered with MyAviva allowing you to better manage your pension online. We will continue to encourage you to register with MyAviva, either online or via the app, allowing greater engagement with your pension.
We told you last year that Aviva had committed to a piece of member research to get the views of savers as to what they feel represents value for money. The planning for the survey was completed at the start of 2020 with an intention to mail c150,000 members. When the pandemic hit, it was decided, rightly in our view, to postpone the mailing. We will be engaging again with Aviva this year with a view to undertaking this important research in the near future. This is very much a postponement and not a cancellation.
We have seen an increase in engagement activity in the last year. More of you have attended webinars run by Aviva’s Financial Education team, and there has been a significant increase in the number of you registered for online services. Aviva has engaged with over a million of you during the pandemic to keep you updated and informed, particularly on how to spot and avoid pension scams during the pandemic. We continue to believe that engagement is vital to improve your retirement experience and are encouraging Aviva to do more.
Under new FCA rules, we have given greater scrutiny to Aviva’s communications, both at the outset of your relationship with them and pre- and post-retirement. We are satisfied that their communications are well written and aim to engage with you at critical stages during your retirement journey.
We have assessed the value for money of Aviva’s recently launched Investment Pathways. This includes a review of the investments themselves, the costs you will pay and the communication material. We are satisfied that the Investment Pathways offer good value but will look more closely at this area in 2021/2022 when we have a better idea of how Aviva’s Pathways compare with other providers and when we know more about how members access the Pathways to ensure they remain suitable.
To improve the transparency of the costs you pay for your pension, the FCA has asked us to disclose costs and charges relating to all of the schemes within our remit. This year we are required to disclose only those costs related to default investment funds, so if you have chosen to invest your pension savings in your own choice of funds you will not be able to see the specific charges relating to you – non-default investment costs don’t need to be reported until next year. Aviva has shared all default investment charges with us this year, including transaction costs, and you can find further details within this report.
We noted last year that the FCA had conducted a review into the effectiveness of IGCs. They issued a report on their findings last year which you can read on their website. They also wrote to all IGC Chairs and providers with specific feedback related to their findings. We are pleased to note that the specific and limited areas raised were noted and acted upon. More widely, the FCA raised concerns over the independence of some IGCs which does not apply to your IGC as we are the only fully independent IGC in the market. We feel that our effectiveness can be better judged by you. If you have any observations, feedback or comments, you can get in touch via our dedicated email at IGC@aviva.com.