AVIVA International With-Profit Bond

RESCUE

A few days ago we noticed a large drop in the value of our bond. We called Aviva and after some time were told that the final bonus had been practically halved! Why? Why had we not been told? No answers so far except to say that customers would be informed on 03 February of this reduction.Why inform us after the event? Still no answers although expecting to hear from the complaints department within a week. Is this the way to treat customers even if you can? Is it ethical? Any recourse? Anybody else experienced this?

dunstonh

We called Aviva and after some time were told that the final bonus had been practically halved! Why? Why had we not been told?

Aviva tend to look at their final bonus levels more closely at this time of the year. The reason there would be a drop would be pretty obvious as there is nearly always a drop after a major stockmarket crash.

.Why inform us after the event?

To stop you from drawing the money out before it happens.

Is this the way to treat customers even if you can? Is it ethical?

It is ethical and correct. It would be grossly unfair on those remaining invested if you were given advance warning in the drop of the final bonus rate. Investments carry a daily value and you cannot be told in advance if something is going to go up or down. That is not how investments work.

You can have an opinion on what may happen. As said, the fact there was a recent stockmarket crash and the outlook for the early part of the year is expected to be volatile means that it was possible to predict that the final bonus would drop this year. Much in the same way you expect it to bounce after a strong growth period. However, predictions are not always correct.

Any recourse?

No. Your best bet at this stage is to try and understand investments more. If you understand how things work and why then it will help you going forward.

Ifts

Saw this article on ThisisMoney.co.uk about with-profits policies:

A tense with-profits wait: How did your fund perform in the market mayhem of the last year?

Read more: http://www.thisismoney.co.uk/money/investing/article-2083637/A-tense-profits-wait-How-did-fund-perform-market-mayhem-year.html#ixzz1j6gvRqJY

2010

Ifts wrote: »

Saw this article on ThisisMoney.co.uk about with-profits policies:

A tense with-profits wait: How did your fund perform in the market mayhem of the last year?

Read more: http://www.thisismoney.co.uk/money/investing/article-2083637/A-tense-profits-wait-How-did-fund-perform-market-mayhem-year.html#ixzz1j6gvRqJY

I read the article but more interesting were the comments from readers/policyholders at the end of it.

Anyone with this type of investment should check it to see if there`s an escape clause and get out at the earliest opportunity.
Very often at a certain anniversary (usually 10 year) you can cash in the policy and there is no MVR applied, otherwise you are stuck with a losing "investment".
Losing for you but not for the provider and the IFA who talked you into, they`ll still get their cut of YOUR money.

dunstonh

Anyone with this type of investment should check it to see if there`s an escape clause and get out at the earliest opportunity.

Its funny because one of my colleagues had someone last week desperate to top theirs up as it has been so good (that was an Aviva one and to be honest, i couldnt blame them). To assume they are all bad indicate the people responding dont have a clue what they are on about.

There are some really dire examples out there and on average, most are well past their sell by date. However, there are also some gems that are worth keeping.

Losing for you but not for the provider and the IFA who talked you into, they`ll still get their cut of YOUR money.

Can you let me know more about these legacy WP products that pay a cut to the IFA each year? The vast majority do not pay any amounts ongoing. Those that do, did so with a sacrifice of the amount at the start and cost no more to the consumer than those that took the money fully upfront.

Ifts

2010 wrote: »

I read the article but more interesting were the comments from readers/policyholders at the end of it.

Yes I was hoping the OP would read the comments too. As with a lot of articles like this one, the comments section provides some interesting information from customers with their own experiences.

Ive got a with-profits maturing in August this year after paying in to it for 20 years, fortunately with the fixed annual bonuses I will be getting more back than i paid in to it (according to last years bonus certificate), but I don't hold much hope in the level of the final bonus at maturity this year.

Old_Slaphead

dunstonh wrote: »

Aviva tend to look at their final bonus levels more closely at this time of the year. The reason there would be a drop would be pretty obvious as there is nearly always a drop after a major stockmarket crash.

Major stockmarket crash ? I was told by Aviva that the last time they calculated FBs the UK stockmarket was around 5400. Now it's about the same so a can't see the reason for slashing final bonuses.

I've a pension which reaches selected retirement age soon and have effectively been locked in by MVA. Why should someone who's WP policy mature on a specific day be effectively much better/worse off than someone who's plan matures a day later? Where's the smoothing effect there ?

2010

I had a with-profits bond with (in the end) Aviva which didn`t pay a final bonus when I cashed it in on the 10th anniversary.
Luckily I had a clause in mine with no MVR penalty at the ten year mark, so I could escape penalty free.
Bear in mind sometimes the MVR is as high as 20% plus.

I would have been better off just putting the lump sum into an ordinary fixed bond for five years and repeating the same again, with any of the banks or building societies, with no risk attached whatsoever.
Also the IFA who originally sold me the WP bond would not have got his cut every year and I would not have had annual management charges either.
I would advise anyone thinking about taking out such products

---

NOT TO.

Dunstonh can huff and puff as much as he wants but he does have a vested interest to pretend these products are the best thing since sliced bread and seems to ignore real life policyholders opinions such as those expressed in the linked article, where basically they say they are crap.
I have given you my real experience of these products but at the end of the day "a fool and his money are easily parted" by a persuasive, commissioned tongue.

I must also add that at the time I took my bond out in 2000, the MVR was mentioned but they said at the time "the MVR has NEVER EVER been used".
Oh, how times have changed, it`s now a permanent feature.

dunstonh

Dunstonh can huff and puff as much as he wants but he does have a vested interest to pretend these products are the best thing since sliced bread

What vested interest do I have? I must be missing out on something here and would appreciate you telling me what it is.

to pretend these products are the best thing since sliced bread

And where does it say that?

to ignore real life policyholders opinions such as those expressed in the linked article,

Of course you should ignore them. They dont state what type of WP fund it is, what guarantees are in place with (often the returns are naff but have strong guarantees that make up for it like guaranteed minimum maturity values or guaranteed annuity rates more than double open market rates). They dont state what version, what terms it was set up on etc. Just assuming that they are all bad is very silly. It should put you on guard to look at your own if you have it but not to automatically assume yours is bad.

at the end of the day "a fool and his money are easily parted" by a persuasive, commissioned tongue.

No-one on this thread is earning a commission from them. Unless you have found a way.

Major stockmarket crash ? I was told by Aviva that the last time they calculated FBs the UK stockmarket was around 5400. Now it's about the same so a can't see the reason for slashing final bonuses.

The FTSE is 5.71% lower than 12 months ago. So, you have a loss there and you have had the annual bonus paid as well. So, close to around 10% lost overall. Looking forward over the next 6 months and you have some significant concerns.

2010

Pension dreams shattered as payouts plunge 45% in 5 years for loyal with-profits savers

Read more: http://www.thisismoney.co.uk/money/pensions/article-2056307/With-profits-savers-pension-payouts-plunge-45-5-years.html#ixzz1jEDrjgIA


Enough said, all you have to do is Google "WP Bonds are rubbish" to find plenty of disgruntled policyholders

Old_Slaphead

dunstonh wrote: »

The FTSE is 5.71% lower than 12 months ago. So, you have a loss there and you have had the annual bonus paid as well. So, close to around 10% lost overall. Looking forward over the next 6 months and you have some significant concerns.

FTSE may be down 5.7% but there's a 3-4% yield to offset.

WP Policies are supposed to smooth the ups and downs not mirror/exaggerate them. Policies maturing on consecutive days shouldn't be subject huge differences.

Aviva Balanced Managed is down around 4% Y-O-Y so I would have expected, with smoothing, the reduction in return on WP to be less.