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&#39Abbey closed WP funds need no further capital&#39

Abbey says its closed Scottish Provident and Scottish Mutual funds need no further capital to comply with the FSA&#39s realistic reporting requirements and it plans to increase the equity content of both.

The company says just under half of its with-profits policyholders&#39 market value reductions will be improved, with the remainder staying the same.

ScotProv&#39s maximum MVRs fall from 26 per cent to 17 per cent while ScotMut&#39s maximum MVR stays at 26 per cent although it will affect fewer policyholders. Abbey says the equity exposure in the funds will increase from 24 per cent for ScotProv and 28 per cent for ScotMut to around 35 per cent across the board.

From July 20, Abbey is allowing policyholders in the Scottish Mutual with-profits investment bond and select with-profits bond to switch from the with-profits fund into either the smoothed investment fund or the multi-manager funds without a surrender penalty although a market value reduction will apply.

Abbey will also increase the number of unitised with-profits policyholders who can switch funds to allow investment in funds with higher equ-ity backing ratios than the with-profits fund. Abbey National Life customers can already move their investments to alternative products without facing surrender charges.

In recent weeks, there has been speculation that Abbey intends to sell its with-profits closed books but it says it has no current plans to offload its with-profits businesses.

Director of intermediary distribution Ambrose McGinn says: “The future make-up and ongoing investment management of the with-profits funds of both Scottish Mutual and Scottish Provident have now been settled. Our with-profits customers and their advisers now make investment decisions based on the detail in today&#39s announcement and taking account of individual circumstances.”



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