Spottiswoode welcomes the deal, even though it will offer policyholders an average payment of £500 based on the current value of the estate compared with the £1,000 offered under the initial deal, saying it is positive that Aviva is pushing ahead with a reattribution at all in the difficult climate.
But she has attacked the FSA for allowing shareholders to raid life companies’ orphan funds to pay misselling fines, shareholder tax and to fund loss-making new business.
She says: “The regulator allows companies to use inherited estates to pay for things that they would otherwise have to fork out for themselves and that just does not seem right. Aviva’s inherited estate would have been much bigger if the FSA had not allowed this activity.”
Spottiswoode argues that the FSA is company-focused in its approach rather than policyholder-focused.
Consumer champion Which? has also hit out at the regulator, claiming it “looked the other way” while Aviva “plundered” the inherited estate to the detriment of policyholders.
Hargreaves Lansdown pensions analyst Laith Khalaf says the 50 per cent fall in Aviva’s payouts is disproportionate to the fall in the estate’s value which has gone down by 40 per cent.
Intelligent Pensions technical director David Trenner says: “The inherited estate is simply money which should have been paid to policyholders previously but was held back by over-cautious actuaries.
“The fact that there is anything left at all at present demonstrates the extent of this excessive caution, considering the huge slump in equities, bonds and property. This money should be paid to policyholders or held in reserve.”