Flexible Investment Plan

jpvic · 26 February 2006 at 4:08PM

I have had this FIP since 1991, it was M&G, now its Prudential.

Is it worth keeping? Its £50pm and as far as I can tell, I would be better off putting it in a savings account.

I dont really know what to do with it. Could it come good? What are my options?

dunstonh · 26 February 2006 at 4:36PM

What funds are you invested in?

The product itself is obsolete by todays standards but with a front loaded charges plan like that, it can make sense to hold on until maturity. It really depends on penalties and fund options.

jpvic · 26 February 2006 at 6:13PM

The funds stated are:

fund ................ unit type

Recovery BF ........ Cap
Recovery BF ........ Acc

I have no idea what that is.

Thanks.

dunstonh · 26 February 2006 at 7:07PM

The M&G Recovery fund is one of a number available on that contract. Its invested in UK All companies sector. Since 1991, it has averaged 9.78% p.a. growth and that is very respectable. Had you been in a savings account you wouldn't have come close to that.

All the funds in the range are now closed for new business but existing contracts can switch funds if desirable and invest across the funds.

Whilst you wouldnt do a plan like this today, it would be hard to check it against a modern alternative (such as ISA) without knowing a bit more about the contract, its ongoing charges and your personal taxation. That would usually involve writing to the Pru requesting such details.

EdInvestor · 26 February 2006 at 7:14PM

50 pounds a month over 15 years @9.8% should now be worth 19,746.

Is the fund's current value something like that?

jpvic · 26 February 2006 at 10:22PM

Thank you both for your replies,

I will write to prudential and get all the details asap.
If I dont understand any of it[highly likely]I'll post back

I'll let you know what the current value is when they inform me.

jpvic · 28 February 2006 at 5:40PM

Had a reply from Prudential,

Start date of plan 09/06/1995, Last payment date 09/05/2016.

Recovery Fund has capital & accumulation units in it.
No of Capital Units 124.530 bid price @ 27/02/2006 588.2 Value £732.49
No of Accumulatin units 441.868 bid price @ 27/02/2006 1807.8
Value£7988.09

Total£8720.58

Still dont know if this is good or bad. They are going to send a fund brochure out to me. [yeah that'll help].

So.. any good or not? what do I stand to get?

dunstonh · 28 February 2006 at 5:50PM

Is there any life cover attached to this plan? You should have close to double what you have got if it was a pure savings plan. However, if there is life cover involved, that would explain the big difference.

jpvic · 28 February 2006 at 6:34PM

Hopefully the fund brochure will spell out what cover and charges are attached.
Then I can marshall my next set of questions for them.

I did take it out as a savings plan and not for life cover I thought. From the same IFA who sold me my endowment in 91, which is why I'm taking a closer look at it.

Thanks for the steerage dunstonh.
Would prudential project a final pay-out figure if I ask them or would they be reluctant to do that?

dunstonh · 28 February 2006 at 6:50PM

You can ask for a projection. I would expect them to quote 4, 6 & 8% in their figures.

I cannot fault the advisor for the choice of fund and the product was right for 1991. Its just obsolete nowadays. For example, a similar fund would have far lower charges today and you dont wrap life cover into the contracts any more. That doesnt make the old advice bad. It just makes it...old. PEPs, followed by ISAs made sure of that.

Just to clarify something further, is that value you got a surrender value or a current value?

jpvic · 28 February 2006 at 7:10PM

The fund was taken out in 95 [my mistake] and the total is the current value.
Out of interest I will be asking for a surrender value next time I contact them.

Flexible Investment Plan

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