AVIVA playing fast and loose with endowments!

missingtowindward

After many years as an NU/Aviva customer I have come to the conclusion that we customers are being strung along with misleading and inaccurate financial information regarding our policies. These policies represent very significant individual investments made over very long periods of time and I feel that our interests are not taken very seriously on a person by person basis.

For example: Norwich Union documentation tells us that a Regular Bonus is designed to provide a steady growth of value over time with an 'aim' to share out between half and two thirds of the annual profits. The reality is that, without fail, over the last eleven years no regular bonus has been added to any mortgage endowment 'with profits benefit' (ie the sum assured) and only a mere half percent has been added to previous regular bonus's in that time. Yet the with profits fund has reported after tax growth of over 56% during the same period!

The startling fact is that, hypothetically, an Aviva mortgage endowment policy started on 1st January 2003 would not have received any regular bonus at all, zero, nothing, nada, for over 10 years in spite of the with profits fund having grown by over 56%!!!!! So who exactly is benefiting from this growth because it's not going to policy holders.

dunstonh

The reality is that, without fail, over the last eleven years no regular bonus has been added to any mortgage endowment 'with profits benefit' (ie the sum assured) and only a mere half percent has been added to previous regular bonus's in that time. Yet the with profits fund has reported after tax growth of over 56% during the same period!

What about the final bonus?

When the FSA changed the requirements after the dot.com crash, the providers moved much of the return onto the final bonus rather than the annual bonus.

The startling fact is that, hypothetically, an Aviva mortgage endowment policy started on 1st January 2003 would not have received any regular bonus at all

Assuming Aviva were still retailing endowments in 2003 (the last mainstream provider, standard life pulled out that year), then you are wrong. By then, Aviva would have been on unitised with profits.

So who exactly is benefiting from this growth because it's not going to policy holders.

I have a number of Aviva policies on my books and not one is matching what you are saying. That leads me to think you are not reading what you have correctly.

missingtowindward

Hi Dunstonh,

I've read a number of your posts in the past and it's clear you have a considerable knowledge of the subject and the way in which endowment companies operate.

I too have a number of Aviva policies, mostly original NU conventional endowments, and my post regarding regular bonus statements holds absolutely true. Not a single bonus credit on the sum assured on all poloicies since 2002 and only half a percent on the existing bonus carried forward every year since 2002. My observation was the coincidental shift away from declaring any sort of an annual bonus just as the mortgage promise was announced.

This not only goes against the tenor of Aviva's marketing and publicity regarding the management of the with profits fund but it also leaves policyholders in a quandary as to the real value of their investment/policy. It also serves to reduce any policyholders confidence that Aviva really do have their interests at heart. You suggest that the bonus of choice is now the final bonus But this has been systematically slashed over the last 12+ years to a point where it cannot possibly reflect investment returns over that last 25 years. More importantly, the final bonus carries no guarantees and is reassessed every 6 months and as such is at considerable risk to short term market fluctuations.

My example of a policy starting in 2003 was hypothetical and was used to highlight the complete lack of distribution to NU policyholders in spite of relevant growth in the with profits fund - a fund that is a fund of policyholders money. It also goes to show that when it comes to smoothing our investments are perpetually being smoothed in one direction only.

Therefore, the two pillars of endowment management, smoothing and the bonus's, have been shot away yet the with profits fund continues to grow.