Aegon illustrations

benjaminfabi · May 2016

Hi,

Has anyone ever asked Aegon why they produce non-compliant illustrations? I am in the process of doing so but my question just keeps bouncing off the difficult question force field.

Ralfos · May 2016

Can you expand please? We use Aegon a lot due to the fee cap but have not noticed this.
thanks

benjaminfabi · May 2016

Yeah basically COBS 13 Annex 2 is explicit in that a 'standard deterministic projection' must be rounded down to no more than 3 significant figures. (eg £113,789.54 becomes £113,000, £14,875.32 becomes £14,800)

Aegon's are always produced to 2 decimal places.

amarshall · May 2016

Agreed Ralfos, I would be most alarmed if their new product illustrations were non-compliant.

If Ben is talking about pension projections then I'm not in the least bit surprised or bothered. Pension projections are a waste of time and rarely stand up to even the slightest scrutiny. And that goes for just about any provider!

benjaminfabi · May 2016

I agree Andy but rules are still rules. Whilst we frequently query the charges that some providers use (or don't use!) in their illustrations, failure to display the fund value in accordance with COBS is really sub-standard.

Also to be clear, I am talking about existing business projections.

amarshall · May 2016

I am intruiged as to what they have done that's wrong. I can't remember the last time I saw an AEGON illustration (which I would naturally have assumed wasn't worth the paper it was written on) so please enlighten us (or is it only me still reading this thread?).

Jamie_Barnes · May 2016

While we're at it we should ask several providers why they only project on one basis! doesn't that same annex also state it has to be done on low, medium and higher?

benjaminfabi · May 2016

Sadly not Jamie.

Jamie_Barnes · May 2016

	A standardised deterministic projection must:
	(1)	include a projection of benefits at the lower, intermediate and higher rates of return;
	(2)	be rounded down; and
	(3)	show no more than three significant figures.

This is what you are referring to right? it also states it must be on a real terms basis.

Unfortunately, it seems later on in the same annex there are caveats that basically give those providers leeway to project on 'generic' bases instead, where the rules are seemingly more lax. Either way, I think you are right though about the three significant figures part so I'd be interested to see if you can get AEGON to provide a response. Would be surprised if they don't have a good reason though as they've projected on their decimal places basis for as long as I can remember.

benjaminfabi · May 2016

R
1.10	A standardised deterministic projection for an in force product may omit theintermediate rate of return except for personal pension scheme and stakeholder pension scheme contracts taken out after 5 April 2014.

This is the one that lets them do only low and high only for pensions, there is another that allows SMPI illustrations to do only intermediate. I think this is more to do with the historic systems that these plans are built on and the fact that when illustrations first came in they were only done on two rates (8% and 13% originally I seem to recall!). The cost of changing them overrides the benefit that the client would receive.

In the end, as someone here has already said, they are not really worth the paper that they are printed on these days. But that doesn't excuse Aegon's non-compliance.

BecciJ · May 2016

Projections drive me mad in general with differing growth rates for differing funds - especially those with multiple funds or lifestyled funds all projected at different rates within the same policy, and unrealistic growth rates for with profits funds with a 0% bonus rate. We end up using excel to project on like for like basis for our research and comparisons of pension switching - as long as we know the charges that it...which is a different kettle of fish!

Aegon illustrations

Comments