Norwich Union will shortly be contacting those customers who were originally advised by the company about their pension, to inform them that it will proactively be contracting them back into the state second pension.
Norwich Union will shortly be contacting those customers who were originally advised by the company about their pension, to inform them that it will proactively be contracting them back into the state second pension. This follows Norwich Union’s original mailing six months ago urging policyholders to contract back into the state second pension and re-affirms Norwich Union’s original recommendation that for the vast majority of policyholders no matter what their age that they should rejoin the state second pension.
Norwich Union believes that over the past few years, changes in the economic environment have eroded the potential financial benefits of contracting out of the state second pension for the vast majority of people. The company is taking this step as it believes that it has a responsibility and duty of care to its customers who it believes would be better off contracted back in.
The company is proposing to automatically contract back in all customers who were sold their policy direct by a Norwich Union adviser or those policies where the policyholder has no adviser registered to their policy, unless notified otherwise by the customer. For the remaining customers it still strongly recommends that they seek independent financial advice on this issue.
This decision follows a surprisingly low response from customers following Norwich Union’s recent mailing to urge them to seek advice on the issue of contracting back in to the state second pension. Only 20% of policyholders responded despite the very clear letter which sets out the company’s recommendation that policyholders should contract back in.
The company will start mailing identified customers in the summer to notify them of the change and give customers six weeks to respond should they wish to remain contracted out, or if they want to seek independent advice on this issue.
Mike Kirsch, operations director at Norwich Union, said: "We are disappointed that only 20% of the customers we mailed over six months ago have responded on this important issue. Our research shows that nearly 60% of customers are still undecided or are simply avoiding making a decision on this despite receiving our clear communication outlining Norwich Union’s recommendation to rejoin the state scheme.
"We are concerned about the high levels of customer inertia on issues such as this and believe that the next logical step is to automatically switch these customers back into the state second pension and take the responsible approach for our policyholders."
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Notes to editors:
- Norwich Union previously mailed 253,000 customers who were contracted out. To date around 20% customers have requested to be contracted back in to the state second pension.
- Norwich Union is the UK's largest insurer. It is the UK's largest provider of life, pensions and investment products and one of the leading IFA providers. IFAs provide around 75% of the company's long-term savings business in the UK.
- Norwich Union has strategic alliances with building societies and other leading UK brand names including Tesco Personal Finance and The Royal Bank of Scotland Group. Norwich Union’s news releases and a selection of images are available from Aviva's internet press centre at www.aviva.com/media