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How can MVR be applied to terminal bonus?

I am mostly in agreement with Peter Hargreaves’ remarks regarding with-profits bonds. I have not recommended them for years and cannot imagine a set of circumstances that would convince me to do so.

I do not, however, follow Peter’s logic in his comment that “surely the time to use with-profits is when markets are high and likely to decline”. Maybe he has forgotten about MVRs.

I certainly haven’t, in fact, I received a statement today from Scottish Widows regarding a client’s investment with them. £10,000 was invested in Febuary 1999, no withdrawals have been taken and the current bid value is £11,952.

What about the terminal bonus, I hear you ask? Well, the good news is it is £1,912, almost as much as the reversionary bonuses added to date, pushing the overall value to £13,864, representing a return of 3.5 per cent net per annum. Wow.

The bad news, as if I needed more, is that there is currently an MVR of £717, bringing the overall value back down to £13,147, or an annual return of just under 3 per cent.

Steve Laird

Certified financial planner Belfast


The King- size crunch

Bank of England governor Mervyn King’s heavy-handed rejection of proposals to help the mortgage market floated by Sir James Crosby shows there is little consensus on what needs to be done in the homeloan sector.

Stewart Ritchie

Stewart Ritchie was first lauded by Money Marketing back in 1990 for saving the SSAS. At the end of 1989, it was almost curtains for most small self-administered schemes. The Tory Government’s Social Security Secretary Tony Newton had decided that SSASs would not be exempted from the 5 per cent self-investment rule.

Broker Talkback

Do you agree with Bank of England governor Mervyn King that it would be wrong to inject extra liquidity into the mortgage market?Yes 50%No 50%


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