Aviva is to pay over £2m compensation to 40,000 pension savers after they were misled over the existence of a capital guarantee within one of the firm’s funds.
Investors in the Aviva Deposit Fund are to receive on average £55.26, meaning Aviva is paying out over £2m, as the provider admitted old marketing material implied fund values could not dip below the level of the original investment.
Aviva says although the underlying fund value does not go down, bank interest rates are so low that investments can go below the level of the original investment once charges are deducted.
The insurer is only making payments to customers whose fund value fell below their original investment.
Customers have also been told their investments will be subject to market fluctuations. Aviva says this is how the fund was originally intended to work.
An Aviva spokeswoman said: “As part of our continual review of our products we are currently mailing our Aviva Deposit Fund customers to emphasise that their investments can fluctuate according to market conditions, and that these type of funds are intended as a shorter-term investment. This is really important given the current market conditions and low interest rates.
“As part of our review we also identified that although our terms and conditions were correct, that we had implied in some of our older marketing literature that customers’ funds would not fall below the amount they had invested. This was not correct and we apologise for any misunderstanding. Our focus is always to correct any error we have made with a fair resolution for our customers.”