any recent experience of AVIVA terminal bonuses?

db_york

Hi, I have a 25 year AVIVA mortgage endowment (ex-General Accident) which matures in 2018.
At present it's worth about 40% of the mortgage amount, fortunately I paid off the mortgage so that's OK.
I would have converted it to a "paid-up" policy but that wasn’t an option with this policy, so I've been continuing to pay into it just to get back as much as I can.
Does anyone know what kind of terminal bonuses AVIVA are now paying? what kind of percentage of the mortgage amount am I likely to get back in 5 years’ time?
Of course I get letters telling me how much I am likely to get back but
- they don't take the final bonus into account
- they are based on ridiculous projected growth rates ("if investments grows at 12%..." er, well, they won't)

Does anyone have any recent experience with maturing AVIVA endowments?

dunstonh

Of course I get letters telling me how much I am likely to get back but
- they don't take the final bonus into account
- they are based on ridiculous projected growth rates ("if investments grows at 12%..." er, well, they won't)

Aviva dont use ridiculous growth rates. Not sure where you got 12% from.
Some plans do include the terminal bonus accured to date to project from (indeed, most do nowadays).

The thing they do not include is any MEP (mortgage endowment promise) which applies to some Aviva endowments.

The mid rate projection given by Aviva would be a fair guide although you can use the lower rate if you are feeling more cautious.

bobzilla

Our recent payout for info if it helps:
Aviva (Norwich Union) policy from Mar 1988 to Mar 2013
Lives insured: male 43, female 36 at outset.
"Low Start" premiums: £30 rising to £60 over 5 years then level; average £56pm over term.
Maturity value: £23,100 [Sum Insured £10,320 + Bonuses £6,372 + MEP £4,500 + Terminal bonus £1,909 = £23,100].
Original target: £30,000; Shortfall £6,900.
Compensation: None -- started too early.

db_york

Thanks Bobzilla, very helpful.

The 12% rate was from my faulty memory, the rates they use are 4 / 6 / 8%. I know these are the standard rates that all insurers have to use, but 8% is still unrealistic surely? even 6%? Pensions providers are having to use projection rates of 2 / 5 / 8%, but I have no reason to believe that even 5% is realistic.

It would be helpful if AVIVA provided some indication of how well their investments are actually performing: if I could see that they are actually growing at 6% I would have more confidence in the "what you might get back" projections. Or if they are actually growing at less than 4% (which is possible or even probable) I would know that these projections are a fantasy - as I suspect they are.

dunstonh

the rates they use are 4 / 6 / 8%. I know these are the standard rates that all insurers have to use

No they are not. For some years now, the provider has had to use rates that do not exceed those but more reflect the potential of the fund. So, a low risk, low volatility fund could not use those rates.

but 8% is still unrealistic surely?

Not at all. Long term average on many funds exceeds 8% (my own investments are running at over 13% p.a. average). Avivas own mixed 40-85% exceeds the mid rate 6% in a decade that has been one of the worst in living history (6.2% p.a. average between 5-4-2003 and 5-04-2013). That is a bog standard fund with bog standard sector performance.