Article date: 16 May 2005
Norwich Union will shortly be contacting those customers whowere originally advised by the company about their pension, toinform them that it will proactively be contracting them back intothe state second pension. This follows Norwich Union’soriginal mailing six months ago urging policyholders to contractback into the state second pension and re-affirms NorwichUnion’s original recommendation that for the vast majority ofpolicyholders no matter what their age that they should rejoin thestate second pension.
Norwich Union believes that over the past few years, changes inthe economic environment have eroded the potential financialbenefits of contracting out of the state second pension for thevast majority of people. The company is taking this step as itbelieves that it has a responsibility and duty of care to itscustomers who it believes would be better off contracted backin.
The company is proposing to automatically contract back in allcustomers who were sold their policy direct by a Norwich Unionadviser or those policies where the policyholder has no adviserregistered to their policy, unless notified otherwise by thecustomer. For the remaining customers it still strongly recommendsthat they seek independent financial advice on this issue.
This decision follows a surprisingly low response from customersfollowing Norwich Union’s recent mailing to urge them to seekadvice on the issue of contracting back in to the state secondpension. Only 20% of policyholders responded despite the very clearletter which sets out the company’s recommendation thatpolicyholders should contract back in.
The company will start mailing identified customers in thesummer to notify them of the change and give customers six weeks torespond should they wish to remain contracted out, or if they wantto seek independent advice on this issue.
Mike Kirsch, operations director at Norwich Union, said: "We aredisappointed that only 20% of the customers we mailed over sixmonths ago have responded on this important issue. Our researchshows that nearly 60% of customers are still undecided or aresimply avoiding making a decision on this despite receiving ourclear communication outlining Norwich Union’s recommendationto rejoin the state scheme.
"We are concerned about the high levels of customer inertia onissues such as this and believe that the next logical step is toautomatically switch these customers back into the state secondpension and take the responsible approach for ourpolicyholders."
Press office contacts:
Louise Soulsby 01904452617 Out of hours 07800 699526
David Gwyer 01904 452828 Out of hours 07800 699508
Rob Pell 01904 452659 Out of hours 07800 699563
Notes to editors:
- Norwich Union previously mailed 253,000 customers who werecontracted out. To date around 20% customers have requested to becontracted back in to the state second pension.
- Norwich Union is the UK's largest insurer. It is the UK'slargest provider of life, pensions and investment products and oneof the leading IFA providers. IFAs provide around 75% of thecompany's long-term savings business in the UK.
- Norwich Union has strategic alliances with building societiesand other leading UK brand names including Tesco Personal Financeand The Royal Bank of Scotland Group. Norwich Union’s newsreleases and a selection of images are available from Aviva'sinternet press centre at www.aviva.com/media