Liverpool Vic MVA's on Investment Bond

hansi

Can't win either way, then. Hope I end up with more than the 5k I started with!

hansi

I asked for a surrender value and I got a reply this morning and my 5k has now morphed into £4740.08 which includes the 1.5% 5th year surrender charge but they say that there will also be (they reserve the right!) to impose an MVR. This policy reaches 5 years in October after which there is no surrender charge. However, it may be better to get out now. I don't know what to do? Any suggestions?

ReportInvestor

I'm sorry to hear this, hansi .

LivVic must be imposing a ginormous MVR to get you down to £4740 after five years.

Since it has been reported that their fund has a strong free assets ratio and will continue to be able to invest in shares (unlike many closed life funds) I'd be tempted to keep it going if you don't need the money.

If there is an MVR free withdrawal date on the 10th anniversary, I'd make a diary note and make sure you don't forget it. [I once did just that with Equitable Life and had to employ a same day motor bike courrier for £70 quid to save myself a whole lot more.]

Please let us know if any MVR free exit date exists on this particular policy, and the size of the MVR they are proposing to charge at present.

"With Profits" - what a dubious name. I don't know whether I dislike it more or less than the the ubiquitous "Bond" which the insurance industry can attach willy nilly to products of widely varying risk in order to build trust and confidence :mad: .

dunstonh

"With Profits" - what a dubious name. I don't know whether I dislike it more or less than the the ubiquitous "Bond" which the insurance industry can attach willy nilly to products of widely varying risk in order to build trust and confidence

Decent with profits funds are performing very nicely and beating many UK equity funds. Indeed a quick check shows that taking sector averages, the with profits fund would turn £100 into £174 over the last 10 years compared with £184 with UK all companies sector.

You are looking at these funds after a stockmarket crash. Already the good ones are paying over 6% again. They are the right fund for the right person and not an answer for everyone. The fault perhaps has been that they were sold as the answer for everyone.

Also, you need to research investment bonds. Some of the current offerings are superb value for money and operate more like a fund supermarket than the investment bonds of old. Particulary if you like property funds or low risk funds where charges can be significantly lower than on unit trusts/OEICs/ISAs.

hansi

Well, I just spoke to them about (on the 0870 number blast it! they must have twigged), they informed me that the MVR if I surrendered now would be 17.92% i.e. £517.60!!!! and that includes the 1% exit charge. I asked what would the position be if I left it until Oct ( 5 years) and he said that, obvously there would be no exit charge, but the MVR may be lower! I may be wrong, but isn't the policyholder supposed to make money on his/her investments and not the Company where the money is invested?

ReportInvestor

So if your Bond has an MVR free withdrawal date after 10 years then you efectively have a 3% pa guaranteed tax free annual return (for a basic rate taxpayer) even if LivVic does not add any more bonuses . That would offer fair prospects IMHO.

Do you have such a ten year MVR free option on your policy, hansi? Some LivVic policies do.

The Bond did not guarantee not to lose money. I doubt whether the accompanying literature made this clear & many investors purchased similar funds with an incomplete picture in mind. Even the FSA underestimated the risk element in WP savings. It is not that the company has necessarily made money (except via its usual charges). In theory their PPFM document should ensure the fair treatment of all WP investors :rolleyes: .

I purchased three such WP Bonds (including that Equitable fund). None of the three advisers ever mentioned that my I could actually lose money on such with profit bonds.

EdInvestor

I would suggest a claim for misselling if you weren't told about MVRs and/ or were told the funds couldn't go down in value.

hansi

I doubt it. There's probably something to cover them somewhere, and they didn't provide advice anyway, just a execution service, and there are two meanings to that word!

dunstonh

Execution only does put the blame in your court and is a risk of doing things to save money.

LVFS have always made reference to their MVR in their documentation and it is a risk 6 product (on a scale of 1 to 10 with 1 being lowest). It would be hard to blame them for this one.

HOWEVER, if any advice was offered during the transaction, at any point and on any issue that could be related, then the transaction ceases to be execution only. If that is what you are inferring, then execution only shouldnt apply.

hansi

I just got back from holiday before which I had written to LV asking what the MVR would be if i withdrew now(before maturity in October and, on my Investment Bond of 5k (invested in 2000) the MVR would be 17.54% ie £514.61! They also say there would an early encashment charge of £514.61!! Surely not!!! Also, THERE IS NO MVR FREE DATE ON THESE POLICIES. Excuse me for shouting!