How to Ditch your Crap With-Profit Bonds without Penalty

2010

dunstonh wrote: »

T
Please dont post rubbish about vested interest when you don't know what you are talking about.

You have a vested interest to try to put the best "spin" you can on these products because you sell them.

This thread is specific to cashing in policies on a certain anniversary and not having a massive chunk of the money snatched from you in the form of a MVR.
It is not uncommon for as much as 20% to be taken.

From the responses so far, it looks as though these bonds are not too popular, and everyone who`s posted so far, will be taking the opportunity to exit penalty free, which just about sums up "the proof of the pudding

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2010

I have just been on the phone to Aviva to find out if the final bonus of the distribution was added in January this year.
There were three payments in total, first in Dec 08, second in Jan 09 and the final in Jan 10.
All paid in the form of units added to your policy.

When you phone,they will tell you what the cash value was but it is paid in the form of units,and it is this information that you should pursue and ask how many total units does your policy have TO DATE.

Reading the bumph that came ten years ago from companies selling these policies and some of their forecasts about how your money could grow over a set period of years at x,y and z per cent, is total nonsense to the reality of how they actually performed.

dunstonh

You have a vested interest to try to put the best "spin" you can on these products because you sell them.

I haven't recommended any for years. However, I have recommended some hold on to the one's they have. I have no interest in putting a spin on them. I just don't think you can eliminate a whole product/investment type out of hand when in some cases they are still viable.

Some are still doing the job and there is no reason to dump those ones. Others are dismal and should be dumped at the earliest opportunity.

cardsharps

parcival wrote: »

Smoothing.......................

Seems like they smooth out the good years so we don't get the benefit but still hammer us in the poor years.

.

Yes, isn't the concept of smoothing incompatible with the introduction of MVR's? What exactly do they do with the money they hold back from investors in the good years? Probably pay it to the staff in bog bonuses.

With-profits: it's more like With Losses.

2010

Today I received from Aviva my three month "No MVR guarantee window".

In other words, my with-profits bond will reach it`s ten year anniversary in August and I have, from July, a 3 month period to let them know if I want to cash-in partly or wholly my bond, penalty free.

I will, without hesitation, be getting all my dough out pronto and never investing in these types of products again.

Working it out, if I had put my lump sum into a fixed rate account 10 years ago I would have had just as much if not more return than the bond has produced and none of the fat-cat fees that went with it.

Bearing in mind this particular bond has only done as well as it has because of the distribution of the "orphan`s fund" and without that would have been well behind a fixed rate bank/B.soc account.

I would advise anyone with the ten year "get out of jail free" option to do just that.

Get your money and get out because you don`t know when it`ll be penalty free ever again.

parcival

I will also be getting out when the 10 years is up. However I am not sure that it will be MVR free.

As I understand it the original investment and growth (sic) will be MVR free BUT the 3 special bonuses are treated as new money and have not been invested for 10 years so this portion will have an MVR.

I hope my understanding is wrong but it's just the kind of sly trick that Aviva will try........

2010

Parcival

I think you could be correct about the 3 special bonuses.
You will have to calculate how many units you had BEFORE the bonuses were added and treat the special bonuses seperately which will as you so rightly say incur a MVR.

No matter what, I`m getting out because it`s the last and only chance not to get a panalty on your ORIGINAL lump sum investment.

Well spotted.

Luckily it took them so long to add the bonuses that it won`t exactly be a fortune with the MVR although it`s not welcome.
I think the first bonus was added in Dec 08 followed closely in Jan 09 then Jan 10.
Is that your take on it?

Also do you think it`s likely we`ll get any "final bonus" ?

2010

Beware of the "carry forward no MVR guarantee"

http://www.ifaonline.co.uk/ifaonline/news/1585719/ifa-warns-aviva-mvr-offer

Investors should be wary of Aviva’s offer to carry forward its no-MVR guarantee on with-profits bonds, warns Fraser Heath Financial Management.
The IFA firm says the offer could cause many investors to take no action, which could ultimately cost them thousands of pounds.
Announcing its latest with-profits bonus rates today, Aviva revealed 50,000 with-profits bond customers will be able to take advantage of a no market value reduction (MVR) guarantee on the 10th anniversary of their investment.
It also offered the option to carry forward the value of the guarantee, to protect from future MVRs.
However, Miles Hendy, chartered financial planner at Fraser Heath, says investors should seek financial advice on the issue.

"I'm very concerned about Aviva's carrying forward of the no MVR guarantee and how this is likely to encourage policyholders to take no action," he says.
"Unfortunately, taking no action on the 10th anniversary of a with profits bond with a no MVR guarantee is likely to cost the policyholder thousands of pounds of lost opportunity while allowing Aviva to continue to cream off their annual charges."


From what I can find out at the moment the current MVR on policies taken out in 2000 is a massive 18%

So if your three special bonuses amounted to £4000, they will take £720 off you in penalties when you exit on the tenth anniversary.

Of course your original lump sum which has served the full 10 years cannot be penalised.

Old_Slaphead

The MVAs on reattrib bonuses will be applied at rates applicable to 2008 and 2009 new investments.

I see those cunning dudes at Aviva have reduced MVAs this month. My 2000 pension contrib to WP fund has seen MVA reduced by 2/3rds ( from 18% to 6% ????).

Still won't stop me cashing portfolio bond on 10th anniversary next month.

2010

Old_Slaphead wrote: »

The MVAs on reattrib bonuses will be applied at rates applicable to 2008 and 2009 new investments.

Do you know what those rates are?

https://www.aviva-for-advisers.co.uk/adviser/site/public/news/all/article/?WCM_GLOBAL_CONTEXT=/Hybrid%20Content%20Library/news/published-news/aviva+reduces+market+value+reductions+in+light+of+improving+market+conditions

If I`m reading this correct the special bonus for Dec 08 will have a MVR of 8% and the one for Jan 09 --- 0%

I can`t find anything regarding Jan 10