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With profits fund: Throwing good money after bad
Comments
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Old_Slaphead wrote: »Negligible.
I've 20+ yrs in a ClericalMed pension WP fund thats yielding TB of about 3% ( it was circa 30% a couple of years ago in the heady days of 2007 when FTSE touched 6300ish)
That terminal bonus doesn't sound great. TBs are very mysterious, it seems like the insurance companies just pick a figure out of the air...how can the TB go from 30% to 3% in just 2 years?
Anyway, shares did well last year. Surely the idea of a with profits fund is to store some of the profits from the good years, to flatten out the dips in the poor years?
Mike0 -
But bonuses for the remaining 10 yrs will be zilch, or close to it. And I don't expect much of a "terminal bonus" on completing the term. In olden days, the terminal bonus could be a decent amount, I understand.
Why do you think that?
The Aviva WP plans on my books are doing fine. Some of the older versions of the WP fund are not as good but the CGNU version still offers good potential and is paying annual bonuses and accruing final bonuses.
The final bonus will swing with market returns. They dropped heavily last year for obvious reasons but are being added again.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
That terminal bonus doesn't sound great. TBs are very mysterious, it seems like the insurance companies just pick a figure out of the air...how can the TB go from 30% to 3% in just 2 years?
Anyway, shares did well last year. Surely the idea of a with profits fund is to store some of the profits from the good years, to flatten out the dips in the poor years?
Mike
As a rough guide FTSE100 in 1989 was 2000ish when policy started. Plan has gained about 4%pa so basic payout equated to about 4600ish equivalent ofn FTSE (ie 4%pa). When FTSE was 6300 in 2007 this would give TB approx 30% but at last bonus calc FTSE had dropped to 4800 (giving around 3% uplift).
These figures are very, very crude and don't take account of asset mix or dividends - but it gives a vague idea as to where numbers come from.
Unfortunately the last but one time I asked for a valuation coincided with higherst level of FTSE100 in a decade - my expectations were overinflated and rather than getting out I held on convincing myself that it was a reasonable investment.0 -
The Aviva WP fund tends to mirror the balanced managed fund as a rough guide.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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Old_Slaphead wrote: »Thing is they were sold as relatively low risk and boring but turned out to be inferior pseudo-managed funds with special benefits of none transparency so that managers could allegedly use them for a host of other things ie. paying out for misselling, topping up own 'in house' pensions etc.
Don't forget the overpaying out of bonuses in the early years to make them look good and attract more business :eek:'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
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Old_Slaphead wrote: »Agreed - although my Aviva WP fund has underperformed my Aviva BM fund by 17% since Feb 2001 (but AV WP has also benefited from reattribution)
Was yours the CGNU WP fund or one of the other ones?I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
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Old_Slaphead wrote: »I don't know - it was part of the YourPension Series 2 "WithProfits 4 S9 Fund" on my online account
Strange. I am showing that fund as being launched 14/2/2008.
Without looking it up and making a guess, I wonder if this was one of the funds launched to replace the old WP funds that Aviva inherited or discontinued over the years as part of their consolidation.
Currently it shows 42% fixed interest, 18% property,17% UK equity, 12% Int Equity, 5% int fixed interest and 4% money market (cash).
I also notice that there was a CGU WP fund attached to that pension previously. Looking at the performance stats the CGNU versions appear to beat the NU, CGU, PM etc versions.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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