Aviva Personal Pension Policy Ending 431 Plan One Aviva Personal · CAS-57603-M6L4

CAS-57603-M6L4

Ombudsman’s Determination Applicant Mr N

Scheme Aviva Personal Pension Policy ending 431 (Plan One) Aviva Personal Pension Policy ending 741 (Plan Two)

Respondents Aviva Life and Pensions UK limited (Aviva)

Outcome

Complaint summary

Background information, including submissions from the parties The sequence of events is not in dispute, so I have only set out the salient points. I acknowledge there were other exchanges of information between all the parties.

On 1 April 1982, Mr N began making monthly contributions of £85 to Plan One.

On 1 July 1984, Mr N also started to contribute £85 each month to Plan Two.

On 15 November 2019, Aviva wrote to Mr N setting out his options under the Plans when he reached age 75 in May 2020.

In December 2019, Mr N responded to Aviva and asked for quotes for the values of the Plans if he took both as lump sums.

On 9 January 2020, Aviva provided two lump sum payment quotes (the January 2020 valuation):

The value for Plan One was £120,318.71(net). 1 CAS-57603-M6L4 The value for Plan Two was £90,613.71 (net).

Both quotes contained the wording “Please remember the figures shown are not guaranteed and could change before you retire. Fund values can go down as well as up”.

On 6 March 2020, Aviva wrote to Mr N to say that it had tried to contact him to ask what he wanted to do regarding the money in the Plans, but it had not heard from him.

The letter set out that if Aviva did not hear from Mr N before his 75th birthday he would lose valuable retirement options. After age 75 Mr N would only be able to take an annuity, backdated to his 75th birthday.

The letter also stated that if Mr N did not respond he would lose the right to “shop around” for an annuity, lose the right to transfer his fund to another pension company and also lose the right to take his pension as a one-off lump sum.

Mr N spoke to Aviva on the telephone to discuss the options that were available, and Aviva explained that the values that Mr N would receive had recently fallen due to the impact of Covid 19 on market conditions.

On 13 March 2020, Mr N completed the forms to indicate that he wanted to take both Plans as lump sums. He also asked whether Aviva could use “discretion” in the final calculations as he was aware of the current unfavourable market conditions.

On 18 March 2020, Aviva received Mr N’s completed retirement payment forms.

Payment was not made immediately as there was a delay in the verification of Mr N’s identity. As such, the funds were not paid out until 28 April 2020. The actual values paid out were:

The value for Plan One was £104,480.07 (net).

The value for Plan Two was £78,767.24 (net).

On 30 May 2020, Mr N complained to Aviva that the final amounts paid to him were not “fair and reasonable”. He also stated that his pension pot should have been invested in a way that reduced risk at the end of the 38-year investment.

On 15 June 2020, Aviva responded to Mr N and explained that it was only acting as administrator of the Plans and any decision on how the funds were invested was Mr N’s responsibility. Mr N had been able to switch funds at any time he wished.

Aviva stated that legislation had changed on 6 April 2011 which meant that it was no longer a legal requirement for benefits to be taken before age 75. But as this change was not mandatory Aviva had decided not to alter the end date for Mr N’s Plans to beyond age 75.

2 CAS-57603-M6L4 Aviva also explained that the calculation of the amounts to be paid were carried out on the working day following receipt of all its payment “requirements”. In Mr N’s case there had been a delay in verifying his identity which meant that Aviva’s requirements were not satisfied until late April 2020. As there had been a delay Aviva would carry out a loss assessment to check that Mr N had not been disadvantaged.

On 30 July 2020, the outcome of the loss assessment was sent to Mr N which concluded that there had been no financial detriment. Fund prices were higher when the policies were cancelled on 22 April 2020 compared to 19 March 2020 which was the day after Mr N’s completed forms had originally been received.

Adjudicator’s Opinion

Mr N did not accept the Adjudicator’s Opinion and the complaint was passed to me to consider. Mr N provided some additional comments which are summarised below:-

3 CAS-57603-M6L4 It was unfair and discriminatory not to treat investors equally pro rata to their size of holding and he had been prejudiced after investing in the Plans for 38 years.

He had been discriminated against on the grounds of age. As only those aged within a few months of 75 could suffer the loss of large sums of money in an unexpected stock market crash, without having the option of retaining their investment until markets recovered.

It was not realistic to expect that anyone would change their entire investment to an alternative one, to avoid the unlikely chance of a market crash.

Aviva should not be allowed to hide behind technicalities and at the very least it should be obliged to warn members about the specifics of this potentially disastrous end to a 40-year investment.

I have considered these points, but they do not change the outcome. I agree with the Adjudicator’s Opinion, I will respond to the points made by Mr N for completeness.

Ombudsman’s decision Mr N complained that the value of the lump sums he received from the Plans in April 2020 was lower than those quoted in previous valuations he received. Mr N also said that he had to decide what to do with the Plans before he reached age 75 or his only option was to buy an annuity and as such there was no time for him to allow the value of the Plans to recover.

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I do not uphold Mr N’s complaint.

Anthony Arter

Pensions Ombudsman 15 November 2022

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