Prudential will remove MVR-free guarantees on a number of with-profits bonds and pension products next month in response to rising costs.
The provider will make a series of changes to its with-profits product range on 11 November as the cost of offering guarantees continues to increase.
Prudential currently promises not to hit investors in the Prudential Investment Plan, Prudential International Investment Bond and International Prudence Bond with a market value reduction 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 any future top-ups into those bonds will not be affected by the changes.
Investors in the Flexible Retirement Plan, the Pru’s personal pension product, will need to agree to a term of at least ten years if they want to access the with-profits fund, twice the current five year 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 Pru says: “There are no changes to existing Flexible Retirement Plans. However, for existing FRP customers who want to increase their contributions we have to set up a new plan for the increased amount – therefore, from 11 November, additional contributions from these customers will be impacted by the changes.”
The provider is, however, maintaining the guarantee of no MVR at selected retirement age for FRP customers. It will also continue not to apply an MVR on death on all of its products.
A Prudential spokesman says: “Over recent years, market conditions have changed and the cost of providing guarantees has increased.
“Rather than passing the increased cost to all customers, we believe it is fairer to change some of the guarantees we offer on new business.”