Aviva ESG exclusions : Fund change

BankerInTheBlack

Hi folks, 

Looking for a wee bit of sense check. I'm not particularly knowledgeable in the field and read a lot of helpful advice before choosing my pension fund a few years back. 

Aviva have now advised that they may be charging me if I chose to remain in the fund when they process the ESG exclusions. 

https://www.ipe.com/aviva-slammed-over-charges-for-adding-esg-exclusions-to-pension-funds/10068639.article

With that in mind, I'm looking to change fund. I'm 38, have circa 150k invested and I'm comfortable with fluctuations in the markets. I was invested in blackrock equity index trackers (balance of World and UK).

To avoid the 0.4% charge I'm looking to switch to Aviva's Global Equity fund. It's not an index tracker but performance looks similar (risk rating is less for some reason??). 

https://www.fundslibrary.co.uk/fundslibrary.dataretrieval/documents.aspx?user=bVsjGMgjrW0FlvHk6axJunBMWaAm/izkvsDOjGm4K+0=&type=packet_lp_fund_unit_doc_factsheet&citicode=OQ39


Any reason this is a bad idea? 

Notepad_Phil

You may have just made a typo, but that page says it's estimated at 0.04% not 0.4% so £60 on a £150k pot.

I guess you have to decide whether an estimated £60 hit is enough to move you off to an active fund which could make more or make less than the general market minus whatever funds are being excluded.

Also does the global equity fund have the same charges as the indexed one?

BankerInTheBlack

Notepad_Phil said:

You may have just made a typo, but that page says it's estimated at 0.04% not 0.4% so £60 on a £150k pot.

I guess you have to decide whether an estimated £60 hit is enough to move you off to an active fund which could make more or make less than the general market minus whatever funds are being excluded.

Also does the global equity fund have the same charges as the indexed one?

Thanks @Notepad_Phil

Apologies yeah, significant typo there! 

Yeah both have the same charges (the lowest available of all funds at 0.73). 

I realise it's pennies but it's more of a principle issue. Not that I want to cut my nose off to spite my face! 

I'm theory, what would stop me moving to the equity fund and then back to the index fund after the changes have been made this avoiding the charge? 

There doesn't appear to be any fees associated with changing fund. 

Notepad_Phil

AlistairMSEnew said: 

I realise it's pennies but it's more of a principle issue. Not that I want to cut my nose off to spite my face! 

I can understand the principle thing. I'm not in favour of companies unilaterally changing a passive tracker to some hybrid form and from what I've read it seems that Aviva are not informing you of which specific companies they're going to remove so it's impossible to decide whether their version of a suitable company matches your own.

 I'm theory, what would stop me moving to the equity fund and then back to the index fund after the changes have been made this avoiding the charge? 

There doesn't appear to be any fees associated with changing fund.

You could certainly do this if you're certain that the equity fund isn't going to undergo the same ESG trimming with associated costs and there are no charges for changing - but if it were me I'd be certain that as soon as I'd changed fund for that reason that it would suddenly drop several percent behind the original one and the 0.04% cost was just a drop in the ocean.

I think in your shoes I'd submit a complaint to Aviva so that they're aware of your unhappiness but then just continue with the tracker fund. You never know, if enough people complain then they may revisit their plans.

rockers

I'm in a similar situation.
Aviva informed me that  they will be changing their Blackrock tracker funds to a custom screened benchmark.

FTSE All Share Index to FTSE Custom Screen All Share Index

The reason is that they will no longer invest in companies in Aviva's  "exclusion policy including coal. weapons/arms and tobacco producers..... Aviva believes these companies will face pressure from consumers, investors & regulators which may impact their share prices and performance of the funds."

If that DID happen then the index would correct itself without interference. 

Without getting into the rank hypocrisy/arrogance of the above statement, basically they are turning a passive fund into an active fund. I have asked if there is an alternative but this would seem NOT to be the case. And who decides what gets "screened" next?

I have asked for a complaint form to be sent to me -but fully expecting that this will go the pensions ombudsman.

londonadviser

There's another thread on this here: https://forums.moneysavingexpert.com/discussion/6468194/aviva-pension-index-fund-changes-esg-applied/p3 and I've pasted a long comment about what I know so far.