This is the story of one of my readers who has suffered such financial loss from following her trustee’s glidepath to retirement that she is making a complaint.
I have been writing this week about the Bank of England’s comments on QE and what has happened since. Comments from Andrew Bailey , a former FCA CEO who will understand how ordinary people found their DC funds suffered when QE came to an end in 2022.
What follows is an extract (anonymised) to explain how it is that Quantitative Easing created a disastrous result for someone looking to save close to retirement.
This is not about LDI in the DB sense of the concept, it is Liability Driven Investment for those who were assumed to be buying annuities (the liability being the retirement income that the annuity would provide).
Her complaint includes two blogs of mine from which she quotes as showing that there was someone in 2012 and again at 2022 warning against using the concept of LDI to promote an insurance annuity protection fund.
Read on…
The Claim
I am pursuing a claim against AVIVA and the scheme trustees on the basis of:
- Detrimental Reliance (on Trustees and Fund Managers)
- Professional Negligence (of Trustees and Fund Managers)
- Compensation according to The Pensions Act 1997 (dishonesty)
Background
- My initial retirement date was 21 March 2021 and my investment programme ended. The fund was still invested in line with my retirement plans.
- After the gilt crisis 28 September 2022, despite losing one third of the funds I retained my fund in the hope that the government bail out would flow through to my investment fund. The fund continued to fall and Aviva took no action despite the Bank of England giving the pension funds a significant window in which to raise liquidity and fulfil the dynamic obligations of their leveraged assets.
Fund Fact Sheet: This fund is designed for customers who are approaching retirement and intend to buy a fixed (or level) annuity. It aims to track changes in the cost of buying an annuity. The fund invests mainly in UK government (including index-linked) and corporate bonds.
The fund experienced a major loss of 32.03% of the fund value between 30/09/21-30/09/22. (Fig.1).
- On 10 November 2025 I asked Aviva about my funds and this was the response.
“I’ve found that on 14th July 2020, you changed your selected retirement date to 21st March 2021 – because of this change, it affected the rate at which your investment programme moved your money between the funds. Usually in an investment programme, your money is split between two funds, and it will naturally de-risk and move your money into the less risky of those two funds, the closer you get to your retirement age.
However, because you selected a retirement date that was within a year, it sped up this process, meaning that your funds were moved over into the less risky of the two funds, the My Future Annuity S0 fund, quite quickly. This means that there wasn’t a ‘fund switch’ per se that was put through on your account, but rather an automated process that took place due to the change in retirement date.”
- The definition of risk was a key driver in the decision to move to a low risk annuity fund, this turned out to be a high risk fund due to the way in which it had been designed. In the UK, a high risk of pension loss is associated with investments that have high volatility, a greater chance of losing a significant amount or all of the capital invested, and often lack the consumer protections associated with standard, regulated pensions. In 2025 Aviva still class this fund as ‘less risky’ despite having lost 32.03% over a period of 12 months and despite no active changes being made to the fund.
My Claim
- Detrimental Reliance
I have detrimentally relied on the trustees and managers of this pension fund to provide an investment vehicle for my pension. The fund design was for unit linked life insurance not defined contribution pensions.
- The Fund ISIN number is unambiguous
| Fund Name | Provider | ISIN | Fund Description |
| My Future Annuity | AVIVA | GB00B6V5WP48 | AVIVA Pension |
| Future World Annuity Aware | L&G | GB00B6V5WP48 | Unit linked life insurance |
- I relied on AVIVA fund to provide an adequate pension. On further investigation I have found that the fund is not a pension fund it is a life insurance fund. The ISIN number is not an AVIVA managed fund as stated on the AVIVA fund sheet. It is a life insurance fund managed by L&G.
- I placed good faith in the trustees to ensure that the fund was designed for my defined contributions in order to provide an adequate pension. I have lost a third of my initial employer contributions. Additionally the fund experienced a major loss of 32.03% of the fund value between 30/09/21-30/09/22. (Fig.1).
- Professional Negligence
Prior warning from the Pension Regulator and the Bank of England regarding LDI was not acted on. Aviva are responsible for holding my pension, the liability rests with the pension scheme trustees and their appointed managers. I hold Aviva, the Trustees and the Pension fund managers in breach of trust and negligent in their duties and they did not act in the best interest of scheme members.
- Prior to 2021, The Pensions Regulator (TPR) and the Bank of England had identified and issued warnings and guidance regarding general investment and liquidity risks within pension schemes, including those using Liability Driven Investment (LDI) strategies. Prior warnings had been given regarding the vulnerability of funds of this nature, Aviva and the trustees did not act in the best interest of the fundholders when:
2019 Leverage and Liquidity Study: TPR, in collaboration with the Bank of England, conducted a study in 2019 to better understand industry behaviour regarding leverage and liquidity, which helped inform their assessment and alerting of trustees to risk.
- 2021 The Bank of England exposed vulnerabilities of pension funds and outlined changes required due to the reliance on households of the non-bank financial sector such as pension funds. The Bank of England Financial Policy Committee in May 2021 set out 6 proposals for reform and transparency in order to ensure principles of rigorous analysis and liquidity risk, preventing non-bank causes of market dysfunction. Had these proposals been adopted the losses could have been avoided.
- 27 April 2022 The Pension Regulator: – TPR’s Annual Funding Statement 2022explicitly states that liquidity, specifically in reference to geared hedging (ie, leveraged LDI) and margin calls, is one of many risks that trustees should actively manage.
- 28 September 2022. Aviva and the trustees had a duty to prevent the huge fund losses due to the collapse of the gilt markets on 28thSeptember 2022. This has exposed the fatal flaw of this fund being hugely exposed to changes in long dated gilt rates and reveals a level of understanding, liquidity planning and operational capacity that was inadequate. This fund should have governance and strategies that allow managers with the operational capacity to replenish liquidity buffers at pace during periods of stress.
Two blogs from HenryTapper.com from 2012 and (ten years later) 2022.
Henry Tapper 31/05/2012 – Self-serving nonsense from the City on LDI DC pensions
Note to editors: LDI is not going to make the lives of us retiring from DC any better. In fact it is going to make it a whole lot worse.
The industry that Professional Pensions claims is more that 50% behind using LDI in DC is no such thing. This is phoney reporting of a phoney survey and it is right that blogs like mine put a stop to this nonsense before it twists the heads of investment consultants into believing they can make a living from my pension pot!
- Henry Tapper 23/11/22 – Why Employers should be pig sick about LDI (as should many DC savers)
LDI programs have created such demand for long dated gilts that the price of those gilts has been extremely high throughout the past ten years, as annuities are priced against long dated gilt yields, that has made annuities very expensive too. Anyone who has bought an annuity in the period when LDI has been ascendant will have smaller pensions because of LDI.
- Compensation under the Pensions Act 1997
DB schemes rely on Actuarial reports provide the necessary expert, evidence-based assessment of a pension fund’s financial position for DB schemes, which is critical for trustees to demonstrate they are properly managing the scheme and safeguarding members’ benefits as required by law. DB Schemes are also protected under the Pension Protection Scheme.
DC schemes are not protected under the Pension Protection Scheme however individuals are protected by the Pensions Compensation Provisions.
The Pensions Act 1997 provides for Pensions Compensation Provisions including DC pensions.
The Trustees have not provided for the proper investment of the assets of my pension scheme according to the Pensions Act 1997.