View more on these topics

NU&#39s with-profits guarantee is unfair to other investors

I read with interest the article headlined, NU in cashback pledge for with-profits bond (Money Marketing, February 12) The article states that Norwich Union has worked closely with the FSA on the guarantee and expects 10,000 new investors to take up the offer. Surely, any guarantee taken by an investor would be to the detriment of those investors remaining in the with-profits fund?

Let us assume that the stockmarket declines over the five-year guarantee period and all 10,000 new investors decide to exercise their guarantee option. It will be those loyal investors who remain in the with-profits fund who will lose out because they will be subsidising those who leave with their guarantees intact.

Surely, the concept of with-profits is that investors receive their fair share of the fund based on the performance of the fund during the time they have been invested in it and not one where some investors can leave with guarantees and those already invested have no such luxury?

I am aware that some companies already offer guarantees that market value adjustments will not be applied at certain policy anniversaries. However, in its attempts for transparency and fairness in regard to with-profits, the FSA should not allow the offer of guarantees on with-profits products to the detriment of those investors who remain invested in the fund.

Shaun Pryor

Principal, Shaun Pryor IFA,

Haywards Heath, West Sussex

Recommended

Exam review now delayed until 2007

The Financial Services Skills Council has revealed further delays in its much anticipated exams review saying the review is now not scheduled to be completed until 2007. Newly-appointed FSSC managing director Teresa Sayers told representatives of the industry and the regulator the review timetable would be published in April, along with the first appropriate exam […]

Standard slashes equity content of w-p fund to 50 per cent

Standard Life has cut the equity content of its with profits fund by £7.5bn, resulting in an equity backing ratio for the fund of around 50 per cent. The move out of equities was spelt out alongside the life office&#39s results published today for the 12 months to November 2003. It says it has available […]

Polin leaves HSBC Asset Management

Jonathan Polin, managing director of intermediary business at HSBC Asset Management, has left the group. Polin, who joined the company from Aberdeen Asset Management last January, had been credited with stabilising the group after the high profile departures of star fund managers Tim Russell and Chris Rice. It is not known what he intends to […]

Letwin paves a path between taxation and public services

Oliver Letwin has unveiled key elements of his economic strategy designed to put the brakes on overall public spending while ensuring that more cash is pumped into health and education. And while the Shadow Chancellor aims to reduce the share of national wealth spent by Government – by slashing back on bureaucracy and curbing the […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment