Prudence account

JollyNolly · 12 March 2006 at 3:24PM

So if I've understood correctly, it is doing quite well now, but hasn't been in the past (if my calculations are anything like accurate it looks like I've averaged about 2.5 percent over 12 years :mad: ). The trouble is, this is the full extent of my savings (having cashed in some others to pay off debts) - so would the wise thing be to drop it all into ISAs for a reliable return?

dunstonh · 12 March 2006 at 4:22PM

You had a stockmarket crash right in the middle of your term which wiped out much of the final bonus. You have only really had the annual bonus. Plus you must remember that with regular savings, you dont have much of a balance in there at the start.

A cash ISA would be more reliable. If you wanted to take a cautious investment, there are better ways of doing it. It shouldn't cost you anything to take the money out now as it has gone past the five years. Pru themselves have made this product more or less obsolete now so there is little reason for them to support it long term.

So, whilst I cannot give you advice to keep or surrender the plan on the forums (as that is in breach of forum rules), I think you have enough information there to decide what the best option is for you.

EdInvestor · 12 March 2006 at 5:13PM

Here's someone else with what looks like the same product and also totally confused.

These plans appear to be a variation on an endowment, like those AXA plans discussed earlier.

Does it have a maturity date and a guaranteed sum assured as well as declared bonuses?

dunstonh · 12 March 2006 at 5:34PM

No, prudence savings account is not an endowment. It has no defined term. it is treated as a non-qualifying whole of life assurance. The life assurance would be upto 1% of the value of the plan.

This product should not be compared with the AXA plans which are far worse. This is not a bad plan in it's principle and can actually be pretty beneficial for higher rate tax payers who can use it to avoid the higher rate tax liability if used correctly. The limitation is the with profits fund, although being Pru, that isn't a disaster and with the next bonus statements due in April to show 2005 bonuses, it would probably be best waiting until then. Any figures obtained now would only show upto dec 2004 figures (i know this is I got some Pru figures in the post yesterday stating that).

JollyNolly · 12 March 2006 at 5:39PM

So maybe I won't cash it in just yet - that'll mean I'll miss the 2005-06 ISA deadline, but then I don't suppose I'm going to have loads of other spare cash in 2006-07 lined up for ISAs anyway. Presumably the Pru will let me know what the bonus situation is in April?

EdInvestor · 12 March 2006 at 5:40PM

OK, the dreaded WoL.

I think the concern here really is that people seem to have been sold these plans as "savings plans" without really knowing the money was being invested in the stock market, not saved somewhere safe and they could lose their capital.

This is the same "attitude to risk" based misselling problem we had with endowments.

dunstonh · 12 March 2006 at 5:49PM

Its a very poor marketing name as well. Designed back in the day when they could get away with such things. Prudence savings account suggests deposit based and not investment backed.

Perfect product really for the tied agent salesforce.

And yes, I would hold until you get your statement. The monthly commitment, if you are still paying monthly, can be ceased at any time without penalty according to the products terms and conditions.

JollyNolly · 12 March 2006 at 6:40PM

Thanks very much for your thoughts, guys - I feel I know a little more about what I've got now - perhaps enough to make a relatively sensible decision this time

Prudence account

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