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Pru to close Flexible Retirement Plan

The Prudential Flexible Retirement Plan will be closing to new business in September, Money Marketing can reveal.

The provider will stop accepting new top-up contributions or transfers, and will no longer accept new money into the income drawdown option from 17 September.

Existing customers will still be able to continue paying regular contributions.

Prudential has been writing to advisers and customers to inform them of the wind down, Money Marketing understands.

The provider has taken the decision to close the product after launching the Prudential Retirement Account in 2016.

Money Marketing understands around 90 per cent of new business sales are now going into the Retirement Account, which is a “more modern product” backed by a new administration platform, with greater flexibility and a wider range of features.

The Flexible Retirement Plan was launched in 2005. A spokesman says: “It is fairly common in financial services that when one product gets a bit older it gets replaced. The vast majority of new money is going to the Retirement Account.”

The Flexible Retirement Plan launched its Sipp option in 2006, followed by drawdown a year later and Prufund options in 2008.

The Prudential Retirement Account enables customers to plan for accumulation and income withdrawals at the same time with both a pension savings and pension income account. Those investing through the Prufunds range can also pay additional contributions towards capital guarantees or minimum income security.

However, it suffered teething issues last June after reporting unexpectedly high demand.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Astonishingly, the FRP is still open for new business, despite advisers not informed of this until about 2 weeks ago.
    So you have the situation were some clients may have only been in this contract for less than six months and are now been forced to take an external transfer should they wish to enter drawdown or change any of their options after the 17 September.
    It is appalling that the Pru are not allowing an internal transfer to the new contract. This is forcing advisers to have to revisit their original recommendation with all the cost that involves, if the client wishes to make any changes post September 2018.
    From our perspective we have 13 clients in this contract, most of whom have been in for less than a year. There is now a risk that if any of these clients want to make any changes we will have to instigate a brand new round of advice for which we cannot charge the client. I have estimated the cost to our firm for this will be upwards of £15,000. If the Pru would only offer an internal transfer this would save us having to do this.
    Once advisers realise the cost to their firm of this, I suspect the Pru will lose the majority of the funds held under their FRP contract and I for one will think twice from now on about placing any clients with the Pru

  2. Echoing David’s comments, time and again I wonder for whose benefit providers make changes such as this.

    As part of Treating Customers Fairly, such actions should be considered – every development we make as a firm has TCF overlaid.

    How can Pru’s actions be TCF? In my opinion, it’s irrelevant where new funds are going, it’s those in the FRP who are affected – Pru’s EXISTING customers.

  3. David Cathcart 12th July 2018 at 1:18 pm

    Can I also add, that the Prufund Series is different in the new contract. The new series is review monthly rather than quarterly. There excuse for this is that it is better for the client. Well in that case why were all the previous series of Prufund all quarterly not monthly. So does it follow that the clients on quarterly reviews are getting a worse deal than those on monthly ?
    Come on Pru, we all understand that any changes like this benefit the insurer not the client, otherwise you would not spend all this money on a new contract and then be worse off than retaining the old one

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