Aviva Personal Pension Plan · CAS-101572-H8S9

CAS-101572-H8S9

Ombudsman’s Determination Applicant Mr S

Scheme Aviva Personal Pension Plan (the Plan)

Respondent Aviva

Outcome

Complaint summary Mr S complained that Aviva told him that his regular annual statements did not include a final bonus, and that a final bonus would be added when his policy matured. However, when he came to take his benefits, he was informed that the final bonus was already included in his annual statements.

Mr S asked to receive the final bonus he was expecting, amounting to approximately £40,000.

Background information, including submissions from the parties Mr S is represented by Mr N (the Representative).

In February 1987, Mr S set up a regular premium with profits personal pension policy (the Policy) with Friends Provident. The Policy provided a guaranteed annuity of £6,987.85 per annum, plus profits, payable from June 2024. Mr S could elect to start receiving a lower guaranteed annuity from June 2014.

Aviva subsequently took over the Policy from Friends Provident.

Mr S received annual statements for the Policy from Aviva (the Policy Statements). From 2012, the Policy Statements included the following information:-

a) The guaranteed amount for bonuses showed a guaranteed annuity of £6,987.85 per annum.

b) Bonuses added in previous years showed bonuses of £6,276.12 per annum.

c) There were no new bonuses added during the previous year. CAS-101572-H8S9 d) The total of guaranteed amounts plus all bonuses was £13,263.97 per annum, which was a) + b). A footnote stated the following:

“If your plan remains in force unaltered this is the minimum amount we’ll pay at the chosen retirement date. If you retire early or transfer to another provider the amount we pay may be lower than this.”

e) The bonus rate on the guaranteed amount was 0%.

f) The bonus rate on existing bonuses was 0%.

g) The Policy’s current value. A footnote stated the following:

“This is the value at [date of statement]. The value may go up or down depending on investment conditions and may be different at a later date.”

h) Another footnote stated the following:

“We’ve not shown the final bonus rate on the statement because investment conditions mean the figure could change during the year.”

The Representative said that Mr S recalled telephoning Aviva (the Telephone Call) to discuss his benefits, including the final bonus, soon after receiving the Policy Statement dated 12 July 2017.

On 20 June 2018, the 2017 Policy Statement stated that the Policy’s value was £100,049.95.

On 11 October 2018, Aviva wrote to Mr S and provided the following information about the Policy (the October 2018 Letter):-

• The current transfer value was £97,971.35.

• The following notes were included about the transfer value (the Transfer Notes):

o it was not guaranteed and could go down or up depending on investment performance;

o it was the amount that would be paid if the Policy was transferred to another provider; and

o it was inclusive of the current final bonus.

• The projected value on June 2021, assuming medium returns, was £101,000.

On 25 September 2020, following a request from Mr S, Aviva informed him that the Policy’s transfer value was £108,928.03 (the September 2020 Letter). The September 2020 Letter included the Transfer Notes.

2 CAS-101572-H8S9 On 15 July 2022, the Policy’s transfer value was £128,696.17.

On 22 August 2022, following a request from the Representative, Aviva provided the following information about the Policy:-

• The transfer value was £128,780.48, and included a sum assured of £45,907.04, a final bonus of £41,230.57 and a declared bonus of £41,642.87.

• The projected value, assuming medium returns to June 2024, was £133,000.

The Representative requested further information about the Policy.

On 14 November 2022, Aviva wrote to the Representative and said that the Policy’s transfer value was £129,033.41.

On 16 November 2022, Aviva emailed the Representative and confirmed that all bonuses were included in the fund and transfer values.

On 28 November 2022, Aviva wrote to the Representative and said that the Policy’s transfer value was £129,033.37. It also enclosed a copy of the Plan’s Policy Conditions (the Policy Conditions). The Policy Conditions did not mention a final bonus.

On 12 December 2022, Aviva sent the Representative a breakdown of the Policy’s bonuses. The transfer value was £129,117.68, and included a sum assured of £45,810.20, a final bonus of £41,860.98 and a declared bonus of £41,446.51.

In January 2023, the Representative complained to Aviva about the difficulty he was experiencing in obtaining information about with profits, and that the Policy Statements were misleading about final bonuses.

On 19 January 2023, Aviva replied to the Representative’s complaint with the following points:-

• It had given Mr S written confirmation that the final bonus was included in its valuations.

• It could not find where it had told Mr S that the final bonus was not included in the valuations it had provided him. All the documents and emails clearly stated the final bonus was included in its valuations.

• It agreed that some of the wording in the Policy Statements could have been worded better. It was difficult to write the information in simple terms due to the type of pension product. For this reason, it recommended customers obtained independent financial advice, and it paid Mr S £100.

3 CAS-101572-H8S9 • It was satisfied that it had provided sufficient information to confirm that there would be no further bonuses due on the fund valuations shown in Policy Statements.

The Representative said that during telephone calls between Mr S and Aviva, Mr S was told that the Policy Statements showed the current valuation, and that the final bonus would only be added at retirement. After receiving his 2021 Policy Statement, during a telephone call, the Representative said that Aviva told Mr S that his final bonus would be in the region of £41,000, and this would be added to the Policy at retirement.

On 19 January 2023, the Representative emailed Aviva with the following points:-

• The term ‘final bonus rate’ in the footnotes in the Policy Statements was at best misleading to a lay person.

• He did not accept that the final bonus was included in the Policy Statements. There was no reason not to disclose the final bonus rate on the Policy Statements.

• Both he and Mr S had been told orally that the final bonus would only be added on maturity. So, he believed the Policy would increase by approximately £41,000 when Mr S retired.

• Aviva had failed to act in a competent and professional manner, had seriously misled Mr S over many years, and provided inaccurate information. This led to Mr S being significantly worse off than he was led to believe.

• Mr S had recently been diagnosed Motor Neurone Disease (MND) and had limited life expectancy.

Following the complaint being referred to The Pensions Ombudsman (TPO), the Representative and Aviva made further submissions that have been summarised below.

The Representative’s further submissions:-

4 CAS-101572-H8S9 • Aviva did not return his telephone calls. When telephoning Aviva, it was difficult to find someone who understood the with profits investment.

• Aviva should not be allowed to have untrained staff speak to clients.

• On multiple occasions he was sent standard terms and conditions, which he already had.

• In respect of the footnote about the final bonus rate in the Policy Statements, during one telephone call, he was told “I think you are correct as that’s what it says on the statement”.

• Mr S had continued to pay into the Policy for several years while receiving no annual bonuses. He had planned his retirement on the basis of receiving an additional £41,000.

• Aviva’s treatment of Mr S had caused him to suffer stress and Aviva had added to his health problems.

Aviva’s further submissions:-

• Its system automatically logged telephone calls.

• It had records of telephone calls with Mr S in August 2015 and October 2018, but not July 2017, the alleged date of the Telephone Call. So, there was no evidence of the Telephone Call taking place.

• The final bonus of £41,000 was stated in 2022, so it did not accept that the final bonus would also have been £41,000 in 2017.

• Aviva did not give customers advice. An independent financial adviser would know about how with profit funds operate and would be in a position to advise on the matter.

In March 2023, Aviva initially told the Representative that on retirement, Mr S could receive either his maximum Pension Commencement Lump Sum (PCLS), or no PCLS at all. Later, Aviva told the Representative that Mr S could choose how much PCLS he wanted to receive, up to the maximum. The Representative said that this was another example of Aviva providing false information and showed that its staff were incapable of understanding their own products.

5 CAS-101572-H8S9 Adjudicator’s Opinion

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• Aviva could not substantiate its defence. If it could not provide recordings of Mr S’ telephone calls, the evidence about the calls was inadmissible and should be disregarded.

• The Adjudicator’s Opinion was contrary to the regulator’s processes, where the benefit of doubt should be in the favour of the customer.

Aviva’s comments are summarised below:-

• Due to the age of the two telephone calls conducted in August 2015 and October 2018, its system did not allow access to recordings.

• A screenshot of a system note about the telephone call in October 2018 suggested that Mr S had requested information and a projected value of the Policy, which were subsequently sent to him.

Ombudsman’s decision Mr S complained that Aviva told him that his regular annual statements did not include a final bonus, and that a final bonus would be added when his policy matured. However, when he came to take his benefits, he was informed that the final bonus was already included in his annual statements.

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Dominic Harris

Pensions Ombudsman 6 May 2025

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