MVR - Market Value Reductions

planesaver

Hi all,

Can anyone please give advise on the subject of MVRs applied to my co-operative platinum bonds.

Have had the bonds since 1999 but shortly after taking out the bonds the co-op slapped heavy MVRs on the policies if cashed in .

The MVRs are reducing year by year but its still a lot of money to lose if i cash them in.

Can someone please advise if i should take the hit now and cash in now or continue waiting hoping things may get better , under the current financial climate and possible worsening of the markets.

Planesaver

dunstonh

Hard to say. I would have had them out years ago and taken the hit. That strategy worked very well but it could have failed. You are asking a hypothetical that requires future knowledge we dont have.

If you are medium risk or higher then you should perhaps look to get out. Remember if things get worse, the MVR is likely to be increased. If things get better the MVR is likely to be decreased. Either way the bonus rate is naff and its an obsolete product. So, if it goes down you may as well be in a modern investment spread as you lose either way. If it goes up, you will benefit more in a modern spread than leaving it where it is. Which is the lesser of two evils?

How much is the MVR now? It cant be much

ad44downey

MVR's are a right con, so much for the principle 'smoothing' that the people who sell these dodgy products are always going on about.

planesaver

Thanks ,

My thoughts entirely just needed more views

MVRs currently set at approx £3000 on a £20000 investment

Planesaver

dunstonh

15% MVR is probably worth taking the hit if you intend to reinvest on a medium risk or higher based.

Primrose

I think the rules are different for each financial institution's bonds but as an alternative you could investigate whether you could draw down an annual tax free income from them, which I think according to Inland Revenue rules is about the same percentage as the Retail Price Index. I believe this amount is not subject to the MVR penalty and you can take this withdrawal for a number of years so you could perhaps invest or save it elsewhere. If this is possible with your bond, it might exempt a proportion of your bond from this penalty. I'm also stuck with one of these With Profit Bonds. It seemed a good idea at the time, before MVR's started to be introduced. I think they're a real con and wouldn't be bitten a second time.

planesaver

Thanks all,

Some good gen , i agree what a con !!! likewise i wont be bitten twice