L&G with-profits bond

p1an0player

Hello

I am helping a friend decide what to do with L&G unitised with-profits bonds she took out in 1998 and 2000 worth about 11k and 4k respectively.

I can't find very much discussion on this site about whether these bonds are worth keeping but I understand the general consensus is to get rid of them. My friend's attitude to risk is cautious and I suspect a high interest account would be better.

I can't find anything to suggest that a MVR would apply now, and there doesn't seem to be an end date or any penalties for surrendering after year 5.

Can anyone suggest how to find out more and decide how to proceed?

Thanks

missile

You ought to get a statement once a year. Phone L&G they will give you all the info you may need. I suggest you check how much compound interest your friend has accrued and compare with what you might get from an ISA or high interest savings account.

wombat42_2

New story today about L&G putting charges up for with profits investments.

http://www.thisismoney.co.uk/investing/article.html?in_article_id=425566&in_page_id=166

EdInvestor

p1an0player wrote: »

I am helping a friend decide what to do with L&G unitised with-profits bonds she took out in 1998 and 2000 worth about 11k and 4k respectively.

I can't find anything to suggest that a MVR would apply now, and there doesn't seem to be an end date or any penalties for surrendering after year 5.

From the link above

L&G says all with-profits bond investors now have the right to sell their plans without incurring a dreaded 'market value reduction' or exit penalty. The only exception is for those who bought bonds in the first quarter of 2000. They will pay a 2% MVR.

Get the friend to check on the tax situation as well.

In general these are obsolete investments so if you can exit without penalty,or with only a very small one, that's usually the way to go. The investor is incurring higher risks and paying higher charges to get a return similar to a savings account.The risk premium has gone.

p1an0player

Thanks for your help.

What tax could be applicable? capital gains tax? in any case she's a non-taxpayer.

Does she need to take care about when she surrenders the bonds, ie is it worth waiting for the next annual bonus?

ManAtHome

My 2p - dreadful investment for a non-taxpayer, not too dreadful if you were a higher-rate payer and expected to be standard or zero rate just before you cashed in (although still only about the same as a decent savings rate). As you suspected, many Building Societies are paying much more than WP these days.

dunstonh

As you suspected, many Building Societies are paying much more than WP these days.

Had a Pru statement turn up a week or two back for an old with profits bond, one of the few I have left on my books and thats showing 8.3% net. They arent all bad (although there are only two providers in my opinion that are worth it if the need fits. L&G is not one of them).