Aviva’s IGC – a “finger of fudge” – just enough (to give members a treat).

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To fudge or not to fudge?

Aviva’s 2018 IGC  report starts well. It’s front cover declares

For members of Aviva’s workplace pension schemes

There is no ambiguity here and , by and large the Aviva report delivers as it sets out. It is a document with members in mind

Where the document is weak, is in its rigour (or lack of it). It appears that Aviva along with a number of other IGCs commissioned Redington to audit them for value for money. I am not entirely clear what the nature of the contract with Redington was, but it appears to have delivered rather too late for its findings to find their way into the Aviva report.

The upshot of the report is detailed by IGC Chair Inder Dhingra on p19

All the key areas of our VfM framework were considered as part of the exercise. At this stage quantitative rather than qualitative factors were considered (so for example the length of communications rather than the quality of the content).

The research shows that Aviva is performing well when compared to a number of its peers in some of the key areas of VfM which we monitor. It is fair to say that there is room for improvement in some other areas

So where are the results? If this research was meant for IGCs and IGCs are “For members of workplace pension schemes”, why aren’t members able to look at Redington’s work and draw their own conclusions?

This cloak and dagger stuff suggests that there were hidden agendas at play and frankly , a little more transparency is called for!

Value for money work

The slippage method for assessing hidden costs in Aviva’s workplace contracts has been used again. It shows that the impact of hidden charges on the pure passive funds being used within the default are negligible (0.01%) but that the costs incurred within Aviva’s diversified asset funds (DAF) are four to five times higher. There’s nothing odd about this , the DAF funds are actively managed and more ambitious; people investing in them are now aware that one of the risks they are taking is that the “hidden” costs aren’t recovered. What’s more concerning is that Aviva aren’t yet able to monitor what’s going on behind the scenes with external managers (other than their default manager – BlackRock).

But it sounds as if the IGC are on Aviva’s case and this is as it should be. The work that the Aviva IGC is doing on “money” continues to be good. But I am less happy with their work on “value”. The report presents us with a number of charts showing performance of key funds but only compares them with other funds within the Aviva range – sometimes the comparison is between one fund with contributions and one without. This is not at all helpful to members.

Whereas Legal and General have simply applied one fund for everyone, Aviva will have a number of default funds depending on the intentions of members. This is as confusing as the graphs, as people will have to enter into the kind of complicated risk/reward trade-offs that even “experts” cannot agree on. The “value” of choice between various default options is questionable as is the value of presenting DAF funds and the single index funds (the default funds).

Although everything is set out simply, I defy anyone reading the “Investment Choices and Returns” section of the IGC report – to establish a default course of action. I would expect Aviva’s complex approach to be challenged by the IGC. If they read Frank Field’s call for a default decumulation fund (as well as a default accumulator) then they can see the contrary argument for simplification of choice.

Is “value for money” really being questioned?

AVIVA product

This very green view of Aviva’s current workplace proposition strikes me as lacking the rigour needed from a “member champion”. The lack of comparisons with other providers (typified by the sloppy section on benchmarking) suggests to me that the IGC isn’t really pushing itself. So I’m giving it an amber for its work on value for money. I’d hope that over the next year, they will address the issues  with the  member choices I’ve outlined – they should have considerable help in this from external pressures, not least from Government.


At no point in the reading of this report, did I lose a sense that this was being written for me (the member). Though I got lost in the investment section, that was down to the deficiencies of the product offering rather than the Chair’s explanation.

I was impressed by the presentation of the Environmental, Social and Governance (ESG) section of the report. It tackled head on some of the big issues – screening of tobaccos stocks – as an example. Aviva have a good track record on voting on ESG, but there remains a problem, that most of the workplace pension investments are outsourced to Black Rock. Perhaps next time, the IGC can look at how Aviva ensure that BlackRock are using ESG in its work. Passive managers have particular responsibility for ESG, they have no other leverage on the companies they invest into , than through governance.

This is the third report from Inder Dhingra and I am getting used to his style, it is friendly and engaging and I feel he is on my side – for a consistently good read, I give the Aviva IGC a green for engagement.


As mentioned above, I consider the IGC ineffective in holding Aviva to account on the value aspects of Value for Money, but this is in my VFM score.

Elsewhere, the IGC are unrelenting on legacy pensions which they continue to pester Aviva about. There is here some evidence of benchmarking with other providers. The report points out that other providers are doing away with the capital units and exit charges within workplace contacts – even for members who are under 55.

The report notes that Aviva, unlike some of its rivals, is still paying commission to advisers out of legacy charges, despite some providers abolishing such payments (even for pre 2013 contracts. I support the sentiment in the Chair’s opening comments

We will continue to challenge Aviva in areas where we believe that improvements to the member experience can be made. This is not just limited to charges – it means we want to see improvements in member communication and engagement, service and new product features which work for everybody, and not just those members who benefit from modern products.

I suspect that there is a lot less timidity in the IGCs approach than might be suggested in the mildness of the Chair’s style. Aviva’s is an effective IGC but I should remind it that Aviva is not (always) as progressive an insurer as it should be.

But in maintaining its presence in the workplace pension market, offering its APIs to the vast majority of payrolls and managing the differing needs of IFAs and employers, Aviva has been market leading. While I’m not for giving undue pats on the back, I think the IGC could do more to commend Aviva for its good work as an auto-enrolment provider – effective in the workplace.

But – and you knew there would be a but – I see nothing in this report about the use of workplace pensions as an option for transferring members of DB plans. Perhaps someone could put Port Talbot on the IGCs “investigation list” for 2018. Why did the Aviva run Tata Steel workplace pension scheme become the forgotten product and just how is Aviva managing the conflicts between having a non-advised workplace product and a fully advised SIPP platform.

As with the question of a default at retirement, I’d like to see the Aviva IGC being a little more proactive next year.

Despite these cavils, I’ll give the IGC a green for effectiveness this year – but I’ve put a squiggle against its performance – I want to see Aviva taking action over the year and I want it to be on the front foot.

Next year, a finger of fudge may fall foul of the plowman’s sugar tax!


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About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to Aviva’s IGC – a “finger of fudge” – just enough (to give members a treat).

  1. Robert says:

    Your review of Aviva’s 2018 IGC report gives me a sense that my TATA Steel UK Personal Retirement Savings Plan (run by Aviva) is in good hands, although there is room for improvement.

    On social media websites which help BSPS members there have been differences of opinion about the way in which the TATA default ‘Aviva Diversified Assets Funds’ (DAF) are managed. Some have been put off by the thought that they are passive funds which have minimal management so it is reassuring to see you confirm that these DAF funds are actively managed and more ambitious than the pure passive funds used within the default.

    As a TATA Steel employee I feel that Aviva should promote our workplace pension and it would have helped those members who have decided or are considering to transfer out of the British Steel Pension Scheme. There were many other firms/companies quick enough to offer their services for BSPS transfers and yet very few of them can provide the value that Aviva can.

    At the moment Aviva do not advise on the workplace product but I understand that this will be changing in the near future which will be helpful to those considering moving into different funds etc. I wonder if their charges will be competitive?

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