Aviva has announced that it has followed in the footsteps of other insurance giants by setting out plans to split its life and GI (buildings & contents insurance etc) businesses into two distinct parts and separate from the rest of the group. This reverses an earlier decision in 2017 to consolidate both. The two new CEOs have already been appointed. Aviva say it is the first steps in making their business simpler, more competitive and more commercial.
They believe that these changes, along with the inevitable cost-cutting, will put the business on target to save £300 million a year by 2022. Unsurprisingly, job losses will also feature – A figure estimated at 1800 in their total group workforce of around 30,000.
Inevitably, many of those likely to be made redundant will be members of Aviva’s former defined benefit pension scheme (DB pension), an older style of pension that huge numbers of employers have sought to bring to an end, simply down to the cost of running these types of schemes. They are packed full of guarantees and benefits that are then immediately lost should a pension holder decide to move their fund.
For some, the thought of physically owning their own pension pot is understandably attractive, as is the thought of then being able to leave the residue of their pension to their loved ones when they pass away. However, the considerable downside is then having to pay significant initial and on-going advice charges and the real risk that at some point in the future, their fund may run dry. Neither of these is an issue for pension holders opting to remain within their DB scheme. Movers, of course, also sacrifice guaranteed future increases.
It is a difficult decision to grapple with and it is vital that all DB holders considering their options speak to a pension specialist. Only a small percentage of IFAs hold sufficient qualifications and experience to fit into this category. You should also check that they, their company or network are recorded on the FCA register
You might also want to perform some simple google searches for any negative comments or to consult the register of past Financial Ombudsman decisions.
If you have taken advice in the past to transfer away from a DB pension and are now concerned about the advice that you were given, Beat the Banks are here to help with our pension check. To find out more call 01382 200474 or text Pension to 87007