NU imposes 22% endowment surrender penalties

baby_boomer

dunstonh wrote: »

Pru imposed MVRs a while back. They didnt reduce terminal bonuses though. So maturities and deaths have no issues.

dunstonh wrote: »

Dont worry about the MVR if you are holding to maturity. It's only levied on surrender. It was expected and a number of other providers have done the same. Bonus rates have not been changed.

Times - NU cuts terminal bonuses by up to 10% - as from last Monday.
"..The cuts will apply across all four of Norwich Union's with-profits funds.."

And what about with profit bonds which have no fixed maturity date?

Not all financial professionals take such a calm view as dunstonh.

Telegraph

"...Andy Cowan, the head of private clients at the independent financial advisor Towry Law, said: "This is an appalling industry who don't know how to manage money."

dunstonh

You always get doom mongers out there who are critical of things like this.

The with profits funds run like balanced managed funds with smoothing. The hits taken inevitably had to result in MVRs being introduced. To think otherwise means you are delusional. That is why I dont see it as such as issue. That and perhaps as its not my first bear market and it wont be the last. Some act as if they have never gone through a bear market before

baby_boomer

You've never had a bear market where the FTSE100 has been down over ten years!

The problem is that this unforseen damage has messed up the working of most with profits funds, leaving a couple of exceptions before the recent falls.

If I was setmefree2 I'd be a bit annoyed that you said bonuses were being maintained at NU. Annual bonuses, maybe, for the moment, but in setmefree2's case the terminal bonus will be more important and it's been severely cut. He might have felt misled by your earlier comment.

dunstonh

If I was setmefree2 I'd be a bit annoyed that you said bonuses were being maintained at NU. Annual bonuses, maybe, for the moment, but in setmefree2's case the terminal bonus will be more important and it's been severely cut. He might have felt misled by your earlier comment.

Bonus rates are unchanged. The terminal bonus is not the bonus rate. The TB changes daily and took most of the hit over a month ago. I posted yesterday, long after the drop already occured.

setmefree2

Hi all:hello:

I'm not annoyed that we might not make that good a return on this investment. We made the decision to keep hold of this policy years ago tbh and were more than aware that we were investing in the stock market, which goes down as well as up;). It's a gamble, and who knows it might still pay off (but I doubt it).

However, I am annoyed with the state of the financial intrustry. I do feel like it has been run for the benefit of bankers and not for the benefit of customers or shareholders.

Indeed, it's starting to feel to me like the returns from investing in equities over a long time are pants. Overtime it will probably be shown that we would have been better of investing in a bog standard savings account rather than this endowment policy, but we'll see:rolleyes: If you can't get a good return on your money over 25 years, what the hecks the point

SMF2

baby_boomer

dunstonh wrote: »

The TB changes daily and took most of the hit over a month ago. I posted yesterday, long after the drop already occured.

Damn journalists, again

The [terminal bonus] changes, which came into effect on Monday

Of course, in with profits, annual bonuses aren't really bonuses at all. They're a [pretty threadbare] comfort blanket while you wait for their investment magicians to reveal all on the final day, 25 years later. The real bonus - for most people - is the terminal bonus [which disappeared from many weaker WP funds than NU].

What a way to plan your future! In the dark for 25 years.

setmefree2

baby_boomer wrote: »

Damn journalists, again

Of course, in with profits, annual bonuses aren't really bonuses at all. They're a [pretty threadbare] comfort blanket while you wait for their investment magicians to reveal all on the final day, 25 years later. The real bonus - for most people - is the terminal bonus [which disappeared from many weaker WP funds than NU].

What a way to plan your future! In the dark for 25 years.

'tis all true, I'm afraid. At the moment I was thinking we might get the 4% forecast return on this policy. After this I wonder if we even going to achieve this? How can anyone make less than a 4% return on my money over 25 years? If I get back less than a 4% return I can only reach the conclusion that I have been robbed.

dunstonh

Old with profits (especially Industrial branch and conventional with profits) is very much smoke and mirrors and guesswork. Modern with profits (unitised) is a lot better. Although its only really NU and Pru that you would really consider. That says a lot about with profits as you go back 10-15 years and the majority of business placed was with profits. Now you only have 2 viable WP options (there are others that offer it but I wouldnt really call them viable).

Personally, I was trained in the 90s from a unit linked provider. So, I was lucky enough to avoid WP. Although I did use it 2003 and early 2004 for some people. I have a couple I may be placing very shortly as well. It's really a niche fund now. The parrot isn't dead.....

'tis all true, I'm afraid. At the moment I was thinking we might get the 4% forecast return on this policy. After this I wonder if we even going to achieve this? How can anyone make less than a 4% return on my money?

Remember that the 4% projection on endowments really means around 2%. The project at 4% before charges. Not 4% net return. NU also have the mortgage promise value. I dont know if that applies to you or now and there is the special bonus of just over 3% being added on some plans this december (and the two after for those that havent matured). Again assuming you qualify for that.

setmefree2

dunstonh,

I'm sure you are nice bloke/lady with good intentions but can you please explain to me how OVER 25 years the returns on these policies are so poor. Over the last 22 years I feel like we have got no benefit in the good years of the stock market and always taken the hit in the bad years When we didn't get any gain in the good years I'm sure I was told that this was because the funds were no longer invested in risky equities. But now suddenly I'm exposed to the losses from the stock market crash?

I'm sorry, I'm sure it's a con:o

baby_boomer

dunstonh wrote: »

Remember that the 4% projection on endowments really means around 2%. The project at 4% before charges. Not 4% net return. NU also have the mortgage promise value. I dont know if that applies to you or now and there is the special bonus of just over 3% being added on some plans this december (and the two after for those that havent matured).

Do the people in the WP fund without these "special" promises end up paying for those with them?