Investors could ditch £3.4bn of with-profit bonds
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Investors will be able to withdraw £3.4bn in with-profit bonds this year without paying a penalty fee, according to Skandia.
The pension provider says around £10bn held by 350,000 investors in with-profit bonds will reach its tenth anniversary during 2012.
Skandia says savers can withdraw around £3.4bn of these assets this year without paying a market value reduction charge.
Head of proposition Graham Bentley (pictured) says: “It is not in the interest of life offices to pay out large bonuses as it adds to the guaranteed value of their customer’s investments which in turn adds to the life offices’ liabilities. This restricts their investment freedom and hinders future growth prospects.
“People holding with-profit bonds should check with their financial adviser whether their policy has a penalty free exit date and if it is in their best interest to encash it.”
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Readers' comments (1)
Ned Naylor | 16 Jan 2012 10:27 am
Why on earth would any sensible low risk investor who has a WP investment want to put their money at higher risk funds if they have not reached any maturity or SRA date.
Considering the state of the market, the threat to the Eurozen single currency and the possible dissolution of the EU as we know it, seems to me that the option of "if in doubt, do nowt" applies.
AND before anyone lambasts me for telling my clients to stay put, I would be very uncomfortable telling clients to leave WP funds and invest in much higher risk funds in such a market place.
The reason WP funds are attractive is more to do with the physcology of clients who like to see their fund values increase each year than whether there is a penalty for coming out.
MVRs in any event are an anachronism and no longer valid in todays transparent world, they are not defined in specific terms within WP fund contracts and may even actually be illegal under the terms of the English Bill of Rights 1689 (No fines or forfeitures without trial)
Now there's a thought !
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