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Adviser slams Pru for 20% MVR on switch

An adviser has hit out at Prudential after it said it will levy a 20 per cent market value reduction on a member’s with-profits fund if the money is switched to a different Pru product.

Caliber Financial Management IFA Paul Ormerod says his client wants to shift a £10,000 personal pension to a phased income drawdown product to release funds before his selected retirement date. The Pru says it needs to process a product switch, triggering a 20 per cent MVR across the entire fund.

Ormerod says: “Instead of just charging the MVR to the tax-free element which is leaving Prudential, it is charging the MVR on the full £10,000, even though 75 per cent of the money is being kept by Prudential.”

A Prudential spokesman says: “When moving money from a personal pension into income drawdown, it must be disinvested equally across all underlying funds, as a result of which the client will incur an MVR.

“Waiving an MVR would ultimately be penalising other members of the with-profits fund.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Unless the 75% balance of the client’s funds is remaining in Pru’s with profits fund this seems perfectly reasonable to me!

  2. I think we have an IFA here who doesn’t understand with profit funds.

  3. Paul Ormerod do you seriously think £10,000 is a suitable amount for drawdown?

    We all know how with – profits works – The MVR is there to stop encashments.

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