AVIVA's MVR ate my profit

darkpool

dunstonh wrote: »

Annual bonuses once added cannot be taken away. The final bonus can and will fluctuate. The MVR is only chargeable mid term and not at maturity, or if open ended, not charged at an MVR free exit point or death.

but annual bonuses are taken away. this entire thread is about aviva taking away annual bonuses from the OP.

darkpool

jem16 wrote: »

People should though. Otherwise how can you decide if something is right for you? If you take out a contract without doing so, you have only yourself ot blame - ignorance is no defence in the law.

ehhhhmmmm ok, you spend your entire life reading the terms and conditions for every contract you enter. so when you get on a bus do you ask the driver about the t and cs of travel? how about the contracts with your utility providers? perhaps you send them to your lawyer for a quick once over?

jem16

darkpool wrote: »

perhaps WP worked better in the 1970's when inflation was a lot higher? it must have been easier to hide the high commission if inflation/ nominal investment reurns are a lot higher?

What has commission got to do with it?

darkpool wrote: »

but annual bonuses are taken away. this entire thread is about aviva taking away annual bonuses from the OP.

No it wasn't. No bonus was removed.

It was about an MVR being applied.

dunstonh

darkpool wrote: »

but annual bonuses are taken away. this entire thread is about aviva taking away annual bonuses from the OP.

annual bonuses are not taken away. The thread is about the OP not being happy about the MVR which was in place before any MVR free exit point was applicable.

Think of it as follows: original investment, plus annual bonuses, plus final bonus minus MVR.

There will be occasions when you can exit without an MVR and keep the other things. There will be periods in the interim that have the MVR levied potentially where investment returns mean the underlying fund is valued less than the actual value.

The smoothing works as the insurer does not charge MVRs when there are minor fluctuations. It tends to kick in when the final bonuses are not enough to accept the reduction or the scale of the market crash is significant and liability forces them to introduce it.

Let say a fund was £100k and a market crash occurs across the assets that sees the underlying investments equate to a value of £65k. If the investor hits an MVR free exit point the insurer has to pay that £100k despite the value of the underlying investments being £65k. If there isnt an MVR free exit point at that time and the person withdraws the money then the MVR kicks in to protect other investors and giving the investor withdrawing a more realistic value.

With Profit funds are generally classed around the low medium to medium risk levels. They are not capital guaranteed investment funds. They offer some protection in certain scenarios but you should not try and think of them as capital guaranteed.

perhaps WP worked better in the 1970's when inflation was a lot higher? it must have been easier to hide the high commission if inflation/ nominal investment reurns are a lot higher?

Inflation was certainly an issue. However, supply and demand was as well. Insurers made some mistakes in the 80s and increased solvency requirements in the late 90s along with two major stockmarket crashes were the final nail for many. However, commission is irrelevant. You keep saying it and the responses are the same each time but you ignore it. The commission, assuming even that it was commission based, would be the same whether it was unit linked or the unitised with profits fund.

darkpool

jem16 wrote: »

No it wasn't. No bonus was removed.

It was about an MVR being applied.

so a bonus is given then it is reduced by a MVR. so the original bonus is reduced/ removed.

jem16

darkpool wrote: »

ehhhhmmmm ok, you spend your entire life reading the terms and conditions for every contract you enter.

I don't enter into contracts every few minutes so not a problem.

so when you get on a bus do you ask the driver about the t and cs of travel?

Only if he asks me to sign something.

how about the contracts with your utility providers? perhaps you send them to your lawyer for a quick once over?

No need - I'm quite capable of reading them myself.

darkpool

jem16 wrote: »

I don't enter into contracts every few minutes so not a problem.



Only if he asks me to sign something.



No need - I'm quite capable of reading them myself.

ehhhhmmmm you do know you don't need to sign something to enter into a contract?

i'll agree when entering into a major contract you should read the paperwork. but reading the junk the utility companies send you when you change supplier seems a bit strange to me.

jem16

darkpool wrote: »

ehhhhmmmm you do know you don't need to sign something to enter into a contract?

Of course I do - did you miss the smiley face?

i'll agree when entering into a major contract you should read the paperwork.

Good.

but reading the junk the utility companies send you when you change supplier seems a bit strange to me.

How else will you catch them out and complain successfully when they break their own T&Cs?

That's the way to win and one which I have successfully used.

dunstonh

i'll agree when entering into a major contract you should read the paperwork. but reading the junk the utility companies send you when you change supplier seems a bit strange to me.

What about reading the IFAs suitability report that summarises the reasons why with the pros and cons? What about the key features document which summarises the key risks.

Here are Norwich unions words in May 2006:
The guarantee - launched on 30 January 2006 - protects customers’ original investments and tracks the Retail Price Index (RPI). The guarantee means that investors who keep all their money invested for at least five years will either benefit from the growth in the with-profit fund or get back at least what they paid in – plus inflation.

The Inflation Protected Guarantee is available through the Portfolio bond and offshore bonds. It applies to money held in the fund for at least five years and moved out in full on any subsequent date. Early exit penalties may apply if money is withdrawn from the bond before the 5th anniversary.

darkpool

jem16 wrote: »

Of course I do - did you miss the smiley face?



Good.



How else will you catch them out and complain successfully when they break their own T&Cs?

That's the way to win and one which I have successfully used.

i did see your smiley face, i'm just confused why t and cs are only important when you have to sign a contract.

so you only read the t and cs after the contract has gone wrong? originally i thought your read the t and cs before the start of the contract