Understanding my with profits fund

Workerdrone

Ive had a WP fund with Aegon (Formerly Scottish equitable since 1998). I only have a little bit in this fund, I subsequently learned it was better to invest at higher risks.

I check it occasionally and the daily fund price creeps up steadily (as I understand its meant to). The fund is currently £31,682.89. The fund also shows a final bonus £25525.15. This also creeps up slowly (Although during covid it took a tumble of a few grand).

The providers factsheet is here

https://www.trustnet.com/PDFAd?pdf=https%3a%2f%2fdocumentscdn.financialexpress.net%2fLiterature%2f4A0BFFB9B7C7A18B4273D452CE7E4E2B%2f199240174.pdf&citicode=SN22&universe=P

Ive never really be able to make head nor tail of it. I get that there is a smoothing element so the daily unit cost slowly goes up. I can see that on the FT's charts. a pretty straight line with a little wobble.

I don't understand the final bonus part. Aegons web portal shows the final bonus, the documentation talks about a terminal bonus (To my mind the same thing), then it gives a table of rates for each year and month. I assume this table refers to the year and month the fund was taken out. For me it would be may 1998 so a tb rate of 71%

Additionally when I took this out, my retirement target date was in January of 2041 at 65, but I will probably go at 60 in 2036.

I don't need to touch this WP element, but I am trying to understand what it might be worth in 13 years time, and if I can't touch it until Im 65 without affecting the bonus element.

Can anyone help me understand what the fund might end up at in 2036 (given its pretty straight line) and also explain how the terminal bonus part works and what the table of dates and percentages means.

Thanks

dunstonh

Ive never really be able to make head nor tail of it. I get that there is a smoothing element so the daily unit cost slowly goes up. I can see that on the FT's charts. a pretty straight line with a little wobble.

Unitised WP funds cannot have their unit price reduced.   So, that part is your steady eddie.   However, the final bonus accrues as you go along and can be reduced to zero (but no more).  That is your more volatile element.   A higher equity WP fund should perform in the ballpark of a multi-asset fund with similar asset mix.   However, the smoothing element will typically be a slight drag on returns compared to the multi-asset fund.

I don't understand the final bonus part. Aegons web portal shows the final bonus, the documentation talks about a terminal bonus (To my mind the same thing), then it gives a table of rates for each year and month. I assume this table refers to the year and month the fund was taken out. For me it would be may 1998 so a tb rate of 71%

Final bonus and terminal bonus are the same thing.  They were renamed at some point in the past and used interchangeably depending on your age and experience.  Conventional WP funds tend to still use old language.  Unitised WP funds tend to use new language.     The other one is reversionary bonus being old language and annual bonus being new language but both effectively being the same thing.

I don't need to touch this WP element, but I am trying to understand what it might be worth in 13 years time, and if I can't touch it until Im 65 without affecting the bonus element.

Final bonus accrues daily.  So, whether you go at 60 or 65 won't matter.
However, market value reduction (MVR) are not normally applied at scheme age.   So, if there was an MVR in place at the scheme age, you would not normally suffer it.  But you would at an age different to scheme age.
Some older plans have a guaranteed minimum fund value at scheme age.  They are not very common but in some cases, that will be adjusted pro-rata for different ages but in other cases, the guarantee may only apply at scheme age.

Can anyone help me understand what the fund might end up at in 2036 (given its pretty straight line) and also explain how the terminal bonus part works and what the table of dates and percentages means.

Depends on how safe you want to play with your projections.  Any projection you make will be wrong.  Statement projections issued by Aegon will be pessimistic.      
You could take the current transfer value and add on the amounts you will pay between now and retirement and take that value as a real terms figure.  It won't include any growth or adjustment for inflation but it plays it safe.    

LHW99

Policies don't necessarily have to apply an MVR at any point, its usually if the provider feels that paying out the annual + terminal value at a given point would be unfair on the policyholders that remain (I believe). Its usually guaranteed that there would be no MVR at the scheme age / maturity date, but sometimes it won't be applied even if you are a few years away. You'd need to contact the provider when you are close to 60 and ask what their policy would be at that time.