Aviva With Profits Policy

parcival

Hi me again on With Profits!!!

Today our Norwich Union With Profits Policy has arrived - again causing concern!

This time last year the figures were:
Value of units - £63414
Final bonus - £7546
MVR - nil

On statement just recieved
Value of units - £69797 (includes the special bonus)
MVR - £8264

I understand and accept the MVR but there is no Final Bonus at all. Is this likely to be correct?

dunstonh

I understand and accept the MVR but there is no Final Bonus at all. Is this likely to be correct?

Depends on when you took it out. Anything in the last 4 years is likely to be showing nil or minimum final bonus currently.

I just checked a few on my books but the online system only shows the net position of final bonus and MVR. The 2004 ones are virtually breakeven. The 2005 ones have a net position of around minus 5% on MVR/final bonus.

Given the size of your current MVR, that looks like it must be taken out some time between 2006 and 2008. If so, then the reduction in final bonus is to be expected at this time. If its the portfolio bond then the final bonus has the potential to change daily. Although you tend to find big jumps up and down are more like 6 monthly. Given the recent recovery in corp bonds/fixed interest and the stockmarket the next half year adjustment could be a jump upwards.

parcival

Thanks for update - It was a single investment of £50,000 made in August 2001 so maybe I need to get onto NU. Its a Portfolio Bond.

dunstonh

ahh, 2001. So you suffered the double whammy of Sept 11th and US accounting scandals and the tail end of the tech stock crash, saw the recovery years and have now suffered the global recession crash taking you back to values that were less than when you invested.

That would explain the large MVR. Has your version of the portfolio bond got an MVR free exit point in year 10?

parcival

Yes it has, although that does not help with the lack of final bonus.

dunstonh

You have to look at the MVR and final bonus in conjunction with each other. The more recent trend is that there is less smoothing than there used to be with final bonuses being added and taken away quicker than in the past and the MVR being activated quicker (and removed quicker) as well. The CGNU With Profit fund tends to average out to the Aviva balanced managed fund more often than not.