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Pru bonds ‘substantially less attractive’ without guarantees

Prudential is removing MVR-free guarantees on a number of with-profits bonds and pension products.

Advisers say Prudential’s decision to remove market value reduction-free guarantees on a number of with-profits bonds and pension products next month will make them “substantially less attractive”.

Pru currently promises not to hit investors in the Prudential Investment Plan, Prudential International Investment Bond and International Prudence Bond with an MVR if they make regular withdrawals from the with-profits fund. This guarantee will be removed from 11 November.

However, bonds will continue to allow MVR-free withdrawals of up to £25,000 in a rolling 12 month period, provided the investment has been held in with-profits for at least five years.

Those bonds already in force before 11 November and future top-ups will not be affected.

Investors in the Flexible Retirement Plan, the Pru’s personal pension product, will need to agree to a term of at least 10 years if they want to access the with-profits fund, twice the current minimum. 

This will apply to new business from 11 November, whether invested in with-profits at outset or switched later, and to Flexible Retirement Plan product switches from personal pension to income drawdown.

In addition, the Pru will remove the MVR-free guarantee on income payments for new FRP income drawdown plans.

Existing FRP customers who want to increase contributions will also be impacted by the changes.

The guarantee of no MVR at selected retirement age will continue for FRP customers, as will the guarantee of no MVR on death on all of its products.

Syndaxi Chartered Financial Planners managing director Robert Reid says: “These changes make the products less flexible and substantially less attractive.”

Intelligent Pensions technical director David Trenner says: “When even the Pru is removing guarantees, then you have to question the future of with-profits in the UK.”


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