Are these guarantees any good?

DancingDragon

My husbands employers have been paying (on his behalf)a small sum into a Prudential (previously Scot Am) Indepension series 2 for many years. I've recently discovered the original paperwork for this and it has "2 guarantees, namely that the offer price will never fall and bonus will be at least 4% per annum"

What does this really mean? Is it the same as a bank giving an interest rate of 4%

I realise we need to take account of charges etc but am thinking we should be paying more into this (contributions may be increased at any time subject to minimum allowable increment)

I guess what I really want to know is does this mean investment can not go down - only up?

Your time and thoughts appreciated
DD

mania112

That's right, it's guaranteed not to go down and it's guarantee to grow by at least 4% each year (recently I would imagine 4% is exactly what it's grown by).

Is that good? Depends on your husbands attitude to risk. If he is anywhere from very cautious to moderate (say 1-5/10) then this is pretty good.

If he is more adventurous, there are investments that are likely to perform better.

However, as this fund is guaranteed (in 2 ways) he should be very careful before switching out of it. The 4% pa guarantee is not available to new business (it's that valuable!).

DancingDragon

Many thanks for confirming that. We are both pretty cautious so think we'll put some extra funds in there.