Aviva with-profits payout approved

Aviva Ocean Racing

Aviva has been given the green light to pay around one million with-profits customers cash payments of up to £1,200.

The High Court has approved the insurer’s plans to return its with-profits inherited estate - the financial buffer built up over time – to policyholders. This is currently estimated to be worth £1.2 billion.

The decision means the majority of payments will be made to customers before the end of the year. Around 850,000 investors (85%) have already lodged their votes, of which 96% have opted to receive the cash payment. Most are likely to receive between £200 and £1,200.

Nearly all of the cash payments will be tax-free and Aviva expects to start making payments to policyholders in November, with the majority completed by the end of this year.

However, customers who accept the cash payment must in return give up their rights to any future payouts from the inherited estate. All policyholders - regardless of whether they accept the cash payout or not - will continue to have an interest in their with-profit fund, and as such will receive normal bonuses and payments.

Around 34,000 investors have voted to opt out of the cash payments - while they will not receive any cash from the current inherited estate they do, in theory, retain the right to future payments of surplus money. 

Mark Hodges, chief executive of Aviva's UK life business, says the reattribution represents a “good deal” for 99% of eligible investors.

“This is not a majority vote - customers have an individual choice,” he adds. “Only those that vote ‘yes’ will receive a payment.”

Aviva hopes to conclude its reattribution plans on 1 October, but must first get approval from its boards.

Policyholders still have until 21 September to vote. Those that miss the deadline will not be able to participate in the payouts. For more information policyholders can go to aviva.co.uk/fundtransfer, or call its helpline 0800 051 1566.

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