Pearl Assurance is nearly doubling the proportion of equ- ity and property investment in its with-profits policyhol- der fund from 25 to 45 per cent.The change is aimed at improving longer-term performance and Pearl says it is unlikely to affect its bonuses in the short term. Pearl, acquired in April by Life Company Investor Group, says the move follows a detailed analysis of the assets and liabilities of its with-profits fund. Intelligent Pensions technical director David Trenner says following the sharp exit of AMP from the UK market, this could give new hope to perople trapped in poorly performing policies although he admits the increase has still a long way to go before the fund regains the proportion in equities that was typical of a few years ago. He says: “This is a very interesting move as it will not sell any policies but it will look after the policyholders. I think one has to say that for long-term returns, equities have to be the right place to be. With the existing funds of a closed with-profits fund, if there is no risk, there is no reward.” Pearl Group director and chairman of Sun Capital Partners Hugh Osmond says: “This is good news for with-profits policyholders as it breathes new life into the investment performance of their fund. We believe this is an unpreced- ented move for a closed fund.”
It must be remembered that, like stockmarkets, with-profits goes in cycles. I believe that investments in the right with-profits bonds – those with a high proportion of their underlying investments in equities and commercial property – will do well over the next few years, especially where the provider has a high, realistic free-asset ratio and good investment management.
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