Aviva puts saga of inherited estates to bed in 470m deal
AVIVA said it will hand out a £470m windfall to around 805,000 policyholders that invested in two of its with-profits funds by Christmas.
The special payout comes from inherited estates built up by the funds – pots of money that were hoarded in boom markets to protect against market downturns.
The reattribution of the inherited estates comes after the policyholders voted in favour of Aviva’s £470m offer in return for giving up their rights to the funds.
Aviva chief executive Mark Hodges confirmed the final deal yesterday, saying around 87 per cent of the savers voted and 96 per cent chose to share in the payout.
Divvying up the £1.25bn of spare cash has proved hugely controversial for Aviva, with many arguing the offer was too low.
David Trenner, technical director of Intelligent Pensions, yesterday called the plans Aviva’s “policyholder rip-off”. “Let’s be clear about this. Shareholders are getting money that should go to policyholders,” he said.
He said City watchdog the Financial Services Authority allowed the deal that will bring an end to interest in with-profits funds altogether.
“It is difficult to see any adviser recommending with profits in future when it is clear that the only people to profit from these funds will be shareholders,” he added. Most policyholders being offered between £214 and £1,230 to end any future claim to a share of surplus money in the funds that hold their investments.