View more on these topics

Providers ‘committed’ to with-profits following L&G exit

Insurers offering with-profits products to new customers say they have no plans to follow Legal & General’s lead and exit from the market.

Earlier today, L&G said it was closing the funds to new business because of falling sales as a result of the introduction of the RDR.

But Prudential, Aviva, Royal London, and LV= reaffirmed their commitment to the market.

Royal London head of corporate affairs Gareth Evans says the mutual will not be following L&G, adding that sales have not been affected by RDR.

He says: ”It’s an option for all pension customers, both group and individual personal pensions. There are no plans whatsoever to close them. Sales weren’t particularly strong before RDR, it hasn’t increased or reduced sales one way or the other.

“We haven’t been in the commission market for a long time, so RDR wouldn’t have had an effect on that.”

An LV= spokeswoman says: “LV= is committed to the with-profits market. In this low interest rate environment, we are seeing customers use with-profits products as part of their general investment plans and more specifically we’ve seen an increase in people using them for their retirement plans.

“For those who are seeking a potential uplift in their pension income and want a level of guarantee these products are an excellent solution. Looking at our most recent performance we achieved 11.1 per cent for our members, this is 2.5 per cent above the market benchmark and demonstrates the value these products can offer.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Our experience of the better With Profits funds that add Terminal Bonus to each and every regular withdrawal has been very good. For example, we have on our books an Aviva WP Bond into which the client invested £50,000 in Feb 2001, enhanced to £52,750. Income withdrawals to the end of 2014 had totalled £21,042 with a current valuation of £61,031. Not a bad result.

  2. I know it’s not necessarily ‘cool’ to condone WP but we have many (primarily retired and cautious) clients sat very happily in the Pru WP fund as part of their balanced portfolio – many of which were invested after RDR I hasten to add (reference to previous article concerning L&G).

  3. So, the remaining insurers are keen to preserve an opaque product where no-one barring the company’s actuary has any (vaguely scientific) way of telling whether or not the investor has been given a fair deal. Hardly a surprise, is it?

    With profits is certainly one area in which the FCA has spectacularly failed to achieve transparency.

  4. So, the remaining insurers are keen to preserve an opaque product where no-one barring the company’s actuary has any (vaguely scientific) way of telling whether or not the investor has been given a fair deal. Hardly a surprise, is it?

    With profits is certainly one area in which the FCA has spectacularly failed to achieve transparency.

  5. @Steve Laird
    Your comments seem a little uninformed and one-sided. Indeed, they could be applied to all packaged products to some degree or another (particularly structured poducts at the opaque end).

    Anyway, COBS 20 directly addresses the points you are making from a WP perspective.

Leave a comment