Aviva Pension rip-off

Stewart_S

I have a fairly substantial Pension pot with Aviva. A few years ago, I felt they were badly mismanaging my pension fund when it lost several thousand pounds in a few short weeks. I decided to try to minimise those losses by:-
1) taking my 25% tax-free lump sum.
2) Moving the balance to a Cash fund, where it would be “safe” from the vagaries of the stock market and fund managers.
However, I soon realised that not only was the interest rate pitiful, they still insisted that I was obligated to pay a Monthly “management” fee, which swallowed up all but £10 per month of the interest. 

Today, I have been informed that this already derisory interest rate could become negative, and presumably, I will still be obligated to pay their management fee.
I feel I am being ripped off, but also I’m trapped. I can’t take all my money away (I would incur 40% tax on a large chunk of it) and, because it’s (in their terms) crystallised, i.e. I’ve taken my lump sum, I don’t believe I can transfer it to a different (better) fund.
Does anyone have any advice as to what I should do? Right now, taking as much as I can within the 20% income tax threshold, and stuffing it in my mattress, seems the most financially prudent option.

eskbanker

A bit of a long shot but were you advised by a regulated adviser, or are you going to have to accept sole responsibility for some pretty poor decisions yourself?

Linton

A fall of several thousand pounds over a few weeks in a portfolio of say £50K plus is fairly normal as is a similar rise. You have to accept that Investments are volatile as without the occasional falls you would never get the above inflation rises that are essential for ensuring your pension retains its value in the long term.
Unless because of age or health you had a low life expectancy your decision to move into cash was probably foolish as you turned a temporary fall into a permanent one. Given current rates just taking the interest is unlikely to be an efficient use of your pension pot.
As you have provided no information about yourself and your circumstances it is impossible to make specific suggestions as to what you should do be with your pension. Your best option could be to pay an IFA (Independent Financial Advisor, and the I is very important) to review your financial situation. You should be able to get a free half hour for a preliminary discussIon of your situation with the IFA who would explain how they could help and the likely costs.

AnotherJoe

Stewart_S said:

I have a fairly substantial Pension pot with Aviva. A few years ago, I felt they were badly mismanaging my pension fund when it lost several thousand pounds in a few short weeks. I decided to try to minimise those losses by:-
1) taking my 25% tax-free lump sum.
2) Moving the balance to a Cash fund, where it would be “safe” from the vagaries of the stock market and fund managers.
However, I soon realised that not only was the interest rate pitiful, they still insisted that I was obligated to pay a Monthly “management” fee, which swallowed up all but £10 per month of the interest. 

Today, I have been informed that this already derisory interest rate could become negative, and presumably, I will still be obligated to pay their management fee.
I feel I am being ripped off, but also I’m trapped. I can’t take all my money away (I would incur 40% tax on a large chunk of it) and, because it’s (in their terms) crystallised, i.e. I’ve taken my lump sum, I don’t believe I can transfer it to a different (better) fund.
Does anyone have any advice as to what I should do? Right now, taking as much as I can within the 20% income tax threshold, and stuffing it in my mattress, seems the most financially prudent option.

I very much doubt that's the case. Unless Aviva have some particular rules.  

I have two pensions, one fully crystallised one part, with different providers (HL and SL) in both I have been selling and buying investments, ie changing them.
Have you actually checked with them?  If it is the case you can transfer it to a scheme where you can either with Aviva or someone else. 

As for what you should do, without knowing your circumstances hard to make an informed comment. 

It's likely that selling it all wasn't the right decision but there might be times when it is. But if you are talking about going into cash several years ago, well that was a terrible decision, "they" didn't lose thousands of your money, the funds did, and it's almost certain that since then they would have grown a fair bit even including the recent drops. Depends what the funds were .
You probably would be best to have an IFA guiding you but they will want payment as well. 

wjr4

& this is why people should either have an adviser or learn about their investments. 

dunstonh

, I felt they were badly mismanaging my pension fund when it lost several thousand pounds in a few short weeks.

Aviva offer investments from across the market place and do not manage the vast majority of these. 

A loss of several thousand pounds in a few short weeks does not sound like mismanagement.  Changing administrator of the pension does not change the outcome.

I decided to try to minimise those losses by:-
1) taking my 25% tax-free lump sum.
2) Moving the balance to a Cash fund, where it would be “safe” from the vagaries of the stock market and fund managers.

Actually, what you mean is that you tried to crystallise those losses rather than let them recover.  Markets fell between around 24th Feb to 23rd March.  Since then they have been zig zagging back up again.       The market crash was typical of other market crashes that have gone before many many times.  The reasons always differ but a crash is part and parcel of investing.  

What did you do in 2018 when markets fell in Q4?

What did you do in 2015/16 when there was the last crash?

What did you do in 2008/9 when there was a bigger crash?

What did you do over 2001/3 when there was a bigger decline?

2018 recovered within months.   2015/16 was barely noticed by most as it recovered within months.  2008/9 recovered within several years. The year that followed was the best growth year on record.

The five years that followed the 2001/3 decline saw people double their money.

I feel I am being ripped off, but also I’m trapped. I can’t take all my money away (I would incur 40% tax on a large chunk of it) and, because it’s (in their terms) crystallised, i.e. I’ve taken my lump sum, I don’t believe I can transfer it to a different (better) fund.

You are not being ripped off.  You are making bad assumptions which is leading to poor decision making and poor outcomes.

Does anyone have any advice as to what I should do?

The choice we normally say on here is to either see an IFA or DIY.   However, the mess you are making under DIY really does suggest you should see an IFA.

AnotherJoe

dunstonh said:

, I felt they were badly mismanaging my pension fund when it lost several thousand pounds in a few short weeks.

Aviva offer investments from across the market place and do not manage the vast majority of these. 

A loss of several thousand pounds in a few short weeks does not sound like mismanagement.  Changing administrator of the pension does not change the outcome.

I decided to try to minimise those losses by:-
1) taking my 25% tax-free lump sum.
2) Moving the balance to a Cash fund, where it would be “safe” from the vagaries of the stock market and fund managers.

Actually, what you mean is that you tried to crystallise those losses rather than let them recover.  Markets fell between around 24th Feb to 23rd March.  Since then they have been zig zagging back up again.       The market crash was typical of other market crashes that have gone before many many times.  The reasons always differ but a crash is part and parcel of investing.  

What did you do in 2018 when markets fell in Q4?

What did you do in 2015/16 when there was the last crash?

I suspect one of those times is when they went to cash Dunston. They said "a few years ago".

Fully in cash since 2016 is painful. Probably lost out 50% gain including the recent crash.

Since 2018 they lost out on 10% gain including the recent crash.

Assuming 100% equities.

jonnygee2

A few years ago, I felt they were badly mismanaging my pension fund when it lost several thousand pounds in a few short weeks. I decided to try to minimise those losses by:-
1) taking my 25% tax-free lump sum.
2) Moving the balance to a Cash fund, where it would be “safe” from the vagaries of the stock market and fund managers.
However, I soon realised that not only was the interest rate pitiful,

It sounds like your pension has been poorly managed, but not by Aviva, by you.

It sounds like you have large sums and you are moving them around almost arbitrarily, with little or no understanding of financial markets, and putting your future at risk. 

Get independent financial advice before you dig yourself a deeper hole. Absolutely do not try to 'put it under the mattress' - just because you've made some mistakes up until now doesn't mean you should give up entirely.