We assess the value for money you receive from your workplace pension by looking at a number of key areas. Each of these is covered in more detail on the following pages.
Although of vital importance, we do not believe that the charges you pay for your workplace pension are the only factor in driving value for money.
Other areas we consider are:
This year the policies and implementation of Environmental, Social and Governance factors (“ESG”) within your investments is required by regulation to be part of our assessment – although we have included an assessment of this in previous reports. Now, a specific section is included.
Nonetheless, the charges you pay have an impact on your retirement income. The higher the charge, the more it erodes the value of your pension pot. The IGC has challenged Aviva on charges and you can read more about the challenges we have made in the “Costs and Charges” section of our report. We are pleased to see that more progress has been made over the year, particularly for those of you where your employer pension scheme commenced prior to 2000.
In what has been a very difficult year for everyone, we were impressed by the way Aviva mobilised their customer services teams and maintained support to all policyholders, across all platforms and via all communication channels including telephony. This support was maintained without interruption throughout the Covid-19 pandemic. This involved immediate provision of laptops for hundreds of staff, and prioritising network access for customer support teams while increasing server capacity to enable all staff to work from home safely. While there was undoubtedly a deterioration in service levels at certain times, in the context of the pandemic these were minor. The support teams in India found it harder at times with many staff unable to work from home but these issues were overcome. You can read more about how Aviva have supported staff and customers in the “Service & Administration” section of this report.
2020 saw turbulent investment market conditions, particularly for UK Equity markets, with significant market value falls in the first part of the year although a strong recovery took place in the second half of the year. We have seen positive returns for Aviva’s flagship default funds overall for 2020. Ultimately, the investments you hold and how they perform will determine the size of your pension pot. More detail on the returns achieved by the larger investments in Aviva’s portfolio can be found in the “Investment Choices & Returns” section.
Despite the pandemic, Aviva have been able to engage directly with more of you. Their Financial Education Team has held numerous sessions with large numbers of members able to join webinars – far more than could have attended an on-site presentation. They have also issued Covid-19 specific communications to members and employers. We see engagement as vital to keep you in touch with your pension and to learn more about the actions you can take during the build-up of your pension, but also to help you consider the options open to you at retirement.
The FCA is currently considering changes to the way IGCs are required to assess value for money in future years. They believe that there should be three primary considerations:
the charges you pay
the performance of your investments
the service you receive, including the quality of communications you are sent
While final rules have not yet been published, it is likely that IGCs will still be able to consider other areas in their assessment of value which we already do.
Considering the various components of “value for money” we believe that nearly all of you are receiving good value for money and for many of you very good value for money.
While some of you in older products pay slightly higher charges value has been improved again this year by the removal of some charging features. We’ll tell you more about this later in the report.