Flexible Investment Plan

dunstonh

Ahh, that makes a big difference. If Ed doesnt beat me to the calculation, I will do it later (cant right now).

EdInvestor

Oh dear

jpvic wrote:

Start date of plan 09/06/1995

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.

It's bad, I'm afraid. It's the "capital and accumulation units" that are doing the damage.

I'm afraid the surrender value is going to be even worse, because usually with these plans if you leave early they deduct all the charges that you would have paid if you had stayed till the end.

Highway robbery really.

Prudential should be ashamed of itself selling a plan like this as late as 1995.

dunstonh

£600 a year at 8% (assuming no charges) is £9387 after 10 years. You are not far off that with just over 7% being what you have been getting from it. So, I think Prudential have nothing to be ashamed off. You could have easily been sold a 10-15 year with profit endowment in its place losing you money over the term. Its very easy to look back in hindsight and apply todays standards to things 10 years ago but you have to remember that we were still a boom/bust and higher inflation economy back then with charges and terms to reflect that.

As I said before, it cannot compare with modern plans retrospectively. However, the projections will be useful comparing where you go from here.

jpvic

By 2016 I may be able to afford a round of drinks with the proceeds!!
I'm underwhelmed. but you will both be invited nontheless :beer:

I'll wait for their glossy broucher on 'their' savings and get the projections, and for a laugh the surrender value, I'll keep you posted...

Thanks again.

exil

I have a similar product, bought in 1985. It's now worth about 19k, having paid into it about 12k. It did include life insurance, but as I was only 26 this would have been
minimal cost.

Was tempted to get rid of it but it's put on 20% in the last year!

jpvic

The surrender value is currently £8405.61 so won't be doing that.

The Projected values
@4%......17400.00
@6%......20500.00
@8%......24100.00

Looks like I'll be hanging on to it.

EdInvestor

If you surrendered it and put the money on deposit @4% also paying in the premiums until maturity, you would end up with 19,800, which is quite a lot more than their projection of 17,400 @ 4%.

So your original instinct to dump this one and put the money in an ISA was quite correct

Why take a risk when you are likely to make more in guaranteed cash savings?

defender_of_the_weak

Any FIP built on the structure you describe contained life cover to make the proceeds tax free at the end, can you confirm the value payable on death.

Why was a PEP not recommended at the time or a regular saving unit trust policy, he was an IFA and these products would have been available at the time

jpvic

defender_of_the_weak wrote:

Any FIP built on the structure you describe contained life cover to make the proceeds tax free at the end, can you confirm the value payable on death.

Only the current value on death which is £9450.00

defender_of_the_weak wrote:

Why was a PEP not recommended at the time or a regular saving unit trust policy, he was an IFA and these products would have been available at the time

I do not know


Are there any tax implications on changing to an ISA?

defender_of_the_weak

So the advice looks like it was founded on commission not suitability. The details you provide point to a qualifying life policy where the proceeds are tax free on maturity. I am sure others can advise on a suitable course of action from here, but I would point out that the initial units or capital units have a very high charging structure on them, thats where the commission got paid from

This wasn't old retorspectively rubbish advicethat is now obsolete, it was rubbish from the start. If one of my advisers had sold that plan to you I would have firmly inserted my toe in to him or her. Assuming you were willing to take a risk with your money to make profits, which it seems you were, then the alternatives mentioned before should have been offered, partcularly the PEP which would have grown tax free.

Perhaps it had something to do with the probable 40% plus commission based on first years premiums against the 3% you would have paid in an ISA