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We agreed at our recent board meeting that it would be useful for the Chairman to pen a brief update on matters arising from the National Committee discussions after each meeting, and on other occasions where appropriate and necessary. These notes could be a more digestible basis than the formal minutes of each meeting for the routine feedback to area committees and their members. With that in mind, as well as being succinct, I will try to avoid including anything that might be regarded as sensitive or needing further discussion and agreement before more general dissemination.
Your Pension
As most of you will probably have seen from the recent issue of Future Focus, the Aviva Staff Pension Fund remains in a strong and healthy position and is more than fully-funded despite the recent publicity that you may have seen about a liability-driven investment “crisis” forcing some pension funds to sell off assets cheaply to raise cash.
The Aviva pension fund does pursue a liability-driven approach, but – put simply – this means that it knows what its future liabilities (ie the payment of current and future pensions) are, and invests and insures to meet those liabilities, rather than adopting a “make the biggest returns that you can” approach, which of course would carry inherent downside risks. But, in summary, whilst the media reports were correct that some pension providers were “rushing about in panic”, this did not apply to your Aviva pension.
This strong position is also reflected by the Fund's ability to pay without strain the contractual levels of indexation on all final salary pensions, despite the large recent increases in all measures of inflation. Ex-Norwich Union staff thus received increases of 10% (the maximum amount covered by the scheme) in July, which is their date for annual increases; ex-CU and exGA staff will also receive 10% in January. For historical reasons, other pensioners have lower guaranteed indexation levels, but they will get the maximum allowed under their particular pension scheme.
It is important to stress, however, that these increases apply only to the “excess” pension after the “GMP” elements have been paid. You'll probably recall that members of the schemes “contracted out” of both the State Earnings-Related Pension (SERPS) and the State Second Pension (S2P) when these were introduced to boost the retirement income of pensioners lacking a strong employers' pension. The deal was that contracted-out pension funds agreed to pay (from state retirement age) a “guaranteed minimum pension” in lieu of any additional state pension as part of their total payments to pensioners; the fly in the ointment is that these GMP elements are indexed separately from the Aviva part of the pension – not at all in respect of pre-1988 employment, and only up to a maximum of 3% on the Consumer Prices Index (the Aviva part of the pension uses the Retail Prices Index) for post-1988 employment.
The balance between the GMP and “excess” elements depends on personal circumstances and contribution history. This split used to be shown routinely on each payment advice slip, but this disappeared when the routine administration of the fund was contracted out to XPS, whose systems are unable to reproduce this information. Although the details are always available on request, this is an unsatisfactory approach that we raised at the board meeting – and it was confirmed that, from now on, the annual letter detailing the increase in your pension will split the information into these three elements. This will allow you to keep full track of your current and future entitlements and to check for any possible errors.
Cost of Living
We are all very conscious of the rapid rises in the cost of living. As Aviva pensioners, with the annual increases mentioned above, the triple-locked (10% +) increase in the state pension coming in April and the government support for gas and electricity costs, we are perhaps in a better position than many.
But individual circumstances change, and we recognize that these times will still be difficult for many of our members and their friends. With that in mind, the next issue of In Touch, which will be delivered and/or available online shortly, includes an article on the charitable support that is available to former employees of the insurance industry. Any such help is entirely confidential, so if you sense that any of your friends from Aviva or any other insurance company are in difficulties, please do point them to the article.
Area Fellowships
There is good news and bad news on this front.
We hope that many of you will shortly be enjoying a Christmas or festive lunch organized by your local area committee and generously subsidized by Aviva to the tune of £10 per head. The good news is that, recognizing the likely increases in the cost of eating out, that subsidy is being increased to £15 per head for next year.
The bad news is that the organization of these lunches and other Fellowship activities falls to the local area committees, and across the whole country it is proving difficult to get full, or sometimes even any, committees. If you are fortunate enough to be enjoying a Fellowship Christmas lunch thanks to the Aviva subsidy and the behind-the-scenes activities of committee members, please do reflect on whether there is any way in which you could help out. If there is no Christmas lunch in your area because there Is no committee, and you would like to help reestablish one, please get in touch with me or your local regional chairman – our contact details are in the diary and on the website.
Scams and Security
Finally, just another warning that the scammers are still with us, and seem to be particularly active at the moment in the festive season and with the cost of living crisis. There's a brief piece on this the next issue of In Touch, but do please be careful. The watchwords are that if it seems too good to be true, it's probably a scam; and if you are in any doubt about any letter, email, text or phone call, treat it as a scam.
Malcolm Oliver
Chairman
Aviva Fellowship National Committee
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