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Friends Provident scraps MVRs

Friends Provident has scrapped market value reductions on nearly all of its policies.

In its with-profits announcement today, Friends says it reviewed its MVRs actively over 2009 to reflect changing investment conditions and has now decided to remove the charge from all policies except pensions which have a guaranteed regular bonus of 4 per cent.

Friends introduced MVRs in October 2008.

The firm has increased payouts compared with last year. These are roughly in line with those recently announced by Standard Life and Aviva. All regular bonuses have been maintained.

Friends says the fund returned 9.3 per cent over 2009, which compares favourably with Aviva’s 6 per cent. But 95 per cent of clients have been sent red letters, according to the firm.

Chief actuary Andy Carr says: “Investment markets continued to be volatile in 2009, as they were for much of 2008, but staged a recovery in the second half of the year.

“Thanks to this, payouts for the majority of our policyholders have increased compared to last year.

“To illustrate this, the experience of most policyholders will be that the cashable value of their plans will have increased by around 10 per cent in February 2010 compared to February 2009.

“The recovery in the second half of 2009 has also meant MVRs, reintroduced in October 2008, have now been removed on virtually all products”.

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