Pension Re-Attribution

zebra3

I have an AVIVA pension and recently received an offer to take part in their "reattribution" as an eligible policy holder. If I accept they have offered me a windfall/incentive payment, but if I don't I retain my interests in any future special distributions, but I don't get the incentive.
They claim that any worthwhile special distributions are at least 10 years away, but as I'm 38 and don't plan to retire that early, should I retain my interest and waive the incentive?

Bogle

By accepting you are only saying no to any future one off special distributions, so take the money or hold tight for something that may or may not happen.

The distribution is a cash payment and isnt added to your plan value as special distributions would be.

Whether you accept the re-attribution or not you will continue to recieve annual bonus's and a final bonus added to you take your retirement benefits, the levels of these bonus's will depend on the performance of the underlying assets of the with profit fund.

The incentive has come about because of Aviva formally Norwich Union having orphan assets in some of its with profits fund, they have decided to pass some of this money back to policyholders rather then just been kept for shareholders. The whole process has been overseen by an independent advocate to ensure policyholders get a fair deal.

dunstonh

I would take the money and look to switch to unit linked funds personally. Unless there is come overriding reason why you prefer or have to have with profits?

Bogle

dunstonh wrote: »

I would take the money and look to switch to unit linked funds personally. Unless there is come overriding reason why you prefer or have to have with profits?

Be aware though that if you do switch to other funds before the re-attribution goes ahead you may lose your right to it, and also at anypoint if you switch out of with profits a Market Value Reduction (MVR) may apply

EdInvestor

Will the reattribution bonus be swallowed up by the MVA if you chose to leave?

MiloH

zebra3 wrote: »

I have an AVIVA pension and recently received an offer to take part in their "reattribution" as an eligible policy holder. If I accept they have offered me a windfall/incentive payment, but if I don't I retain my interests in any future special distributions, but I don't get the incentive.
They claim that any worthwhile special distributions are at least 10 years away, but as I'm 38 and don't plan to retire that early, should I retain my interest and waive the incentive?

Hi zebra3, it's a very good question, and you've rightly picked up on the fact that you could well benefit from a future Special Distribution as you could stay in the fund for another 25+ years.

Perhaps the key questions to ask yourself relate to whether you are confident that staying in Aviva's With Profits fund is the best thing for you. Are you happy with the investment risk, the bonus rates, and are you confident that the way With Profits funds are managed is the best option for you in the long term?

If you're not sure about those things, and you're thinking you may switch into a unit linked fund as suggested elsewhere in this thread, then you firstly need to check what guarantees you'll be giving up by surrendering. If you took your plan out more than 10 years ago you may find that the guarantees are valuable and worth sticking with. But if you are thinking about switching out then obviously it would pay to make that decision before 21st August when Aviva need your voting slip back!

I've launched a website aimed at giving Aviva policyholders a way of working through the key factors that might influence their decision. Unfortunately as a new user I'm not allowed to post with a link but hopefully it's in my profile. If you can find it and you get a chance to play with it I'd really appreciate any feedback.

Milo