Important amends to my Aviva IGC report.

This report has two important amends from that originally published.

In their 2022 report, the Aviva  IGC did indeed conclude that members not protected by the AE charge cap, and paying in excess of 0.75% a year in charges, were not receiving value for money. It was that conclusion which led the IGC to challenge Aviva to cap these higher charges, which they have started to do.

Second, and more fundamentally, in my section on Investment Pathways,my entire summary of Aviva’s Investment Pathways is based on an assertion that Aviva customers enter a Pathway designed by Mercer:

The IGC assesses the value for money for Investment Pathways for both Aviva customers (designed and managed solely by Aviva Investors), and for Mercer, who provide Pathway solutions to Mercer customers as part of their Mercer Workplace Savings proposition. The Mercer Pathways, which are not available to Aviva customers, are designed and managed solely by Mercer. I acknowledge that my assertion that Aviva’s Pathways are designed by Mercer is completely incorrect, and my section on Pathways could therefore be misleading to the reader. I have removed it! Sometimes you just get it wrong – sorry Aviva IGC.

Aviva’s the third IGC report I’ve read and commented on this year. So far I have criticised L&G for a weak report and praised Royal London for a strong one. Aviva’s IGC report is dependably thorough and written to the saver. Colin Richardson has been chair for some years now and is confident in his style. Aviva are a strong provider with a history of caring about ESG. Like L&G , their master trust is increasingly their flagship workplace pension product but Aviva has a huge legacy of workplace GPPs and the IGC performs an important role in ensuring that savers in personal pension contracts do not get left behind.

Aviva has its own view of what makes for good member outcomes and it’s rather more complex than the DWP’s VFM test.

It’s fair to assess the value people will get from their workplace pension based on all of these things and this is what Aviva’s value assessment sets out to do.

The IGC has focussed on what it can directly influence and has got Aviva to impose a voluntary charge cap on much legacy business which is not subject to the AE charge maximum.


How Aviva invested saver’s money

Aviva’s default fund performed in line with its peers, this is nothing to write home about as the report accepts.

Actually , some of the falls were more severe than others and worryingly the investors who fared worst were those in the final stage of their lifestyle. Which makes the Chair’s conclusion a little worrying. At the time of writing, there is a renewed run on Government and Corporate Bonds. Since the workplace pension funds are principally invested in passive funds (managed by BlackRock) it is hard to see what protection from diversification or active management, Aviva can give.

The reality is that savers pay very little for investment management and consequently get market returns. The differentiators in 2022 were the extent to which lifestyling moved savers into cash and the currency hedging on overseas assets. Very few workplace defaults could afford to invest into more expensive asset classes that might have given diversification and some protection from market falls and Aviva’s defaults, at least in their GPPs can best be described as “cheap and not very cheerful”.

The IGC should promote the use of the more expensive but more diversified My Future Focus fund in future. However, here they are up against the economics of workplace pension. If Aviva’s GPPs are not flagship products, will they get the investment upgrade or will the upgrades be confined to the master trust, which is attracting new business. We will wait and see.

While I can see arguments that Aviva leads the way in its ESG work, can this really feed through to funds that are managed by BlackRock?

As regards benchmarking, Aviva’s IGC has benchmarked its default performance against People’s Pension and Nest (as suggested by the FCA). The comparison is (as the IGC admits) meaningless. These are not experienced returns but the output of quant departments in investment teams. What savers should be getting is a clear idea about the outcomes they’d be getting had their employer’s chosen different workplace pension providers.

The most interesting of these comparators would be with the Aviva Master Trust.

So long as we report selectively (as opposed to the CAPA approach) then providers will always find charts that show themselves well positioned. The assessment of investment for VFM tells us little but that the IGC has complied with the guidance given them by the FCA.

Quality of service

The report devotes 6 pages to cost and charges, 7 pages to investment and 11 pages to service and communications. This looks like the wrong balance to me. By far and away the biggest driver of good outcomes is net performance. The service analysis in the report is exhaustive (and largely positive). We would expect good service from Aviva but is the IGC really here to endorse it (and the ESG credentials)?

I read the service section and arrived at the conclusion which was as inevitable as it was boring.



I’d expect a good quality report from Aviva and we get it. The report is well written (and feels like it is written by the Chair). There is too much on service and communication, not enough on investment and there is good news in the charges section that justifies the focus. For all that , this is a good report and it gets a green.

The IGC has been effective where it needed to be, on legacy charges – though less so on investments. It’s examination of service standards was exhaustive.  It too gets a green.

I can’t in honesty give Aviva a green for its VFM assessment, if only because it fails to get under the bonnet on investments and ask the hard questions about “what went wrong” and “what Aviva can learn for the future”. My worry is that the IGC, like the GPPP products it represents, will become marginalised. It needs to become more relevant to its stakeholders and that means making some statements that do not excuse Aviva of being a victim of the markets. I give the VFM assessment an amber.



About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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2 Responses to Important amends to my Aviva IGC report.

  1. John Mather says:

    Trying to get an improvement for all measured against the average is not possible rather like the current U.K. economic strategy which was once described as:-

    “We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle”
    Winston Churchill

  2. Peter Beattie says:

    Henry. So, am I right in assuming that Aviva is the best of what we can find to invest in as a regular elderly saver?

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