With Profits Pension Funds - Beware

If you have got a "with profits" pension, or are being advised to put in one - read on urgently.

A study by Money Management, an constituted personal finance magazine, have once again highlighted the sinking payouts to many investors from well known investing brands.

Lets take Standard Life as an example.

Here are the figs based on the Money Management survey. For a rescuer who have invested £200 per calendar month over 20 years, the monetary fund value from Standard Life would now be £94,752. This is compared to the same rescuer receiving £243,375 in 2002.

This is a 61% drop!

In the same survey, many other major insurance companies showed similar waterfall in payouts. For example:

Company, Now, 2002, Fall %

Axa, £103,663, £249,532, 58

Clerical Medical, £118,978, £195,031, 39

L&G, £105,145, £183,921, 43

Norwich Union, £107,097, £188,777, 43

Prudential, £124,305, £179,878, 31

Scottish Equitable, £108,105, £191,510, 44

Scottish Widows, £97,779, £164,342, 41

One of the grounds why this have happened, taking Standard Life as an illustration again, is that they misjudged the marketplace in 2000. This meant they had to cut down the amount that the monetary monetary fund invested in equities, which in bend led to take down growing on the with net income fund.

On an in progress basis, the image is improbable to better for those investors who have got many more than old age before taking their benefits. This is because the Standard Life with net income monetary fund have only 21% of its investings in shares, which in the longer term is one of the chief drivers of growth.

Another issue here is that £144 billion of investors money is invested in "closed funds". These are finances that are closed to new business, and the study shows that quite often investors are getting a natural trade with returns.

An illustration here would be Greater London Life, who turned £200 per calendar month over 20 old age into £75,593!

If you add to the premix that there have got been a autumn in recent old age in rente rates (the amount of pension you have in relation to the size of your fund), many investors are very worried.

The study additional showed that investors in these types of finances were totally confused as to what to do or what their options are if they happen themselves in one of these with net income funds.

The Financial Tips Bottom Line:

If you have a with net income pension (or endowment), then make not detain - happen out how your monetary monetary fund is performing and then you will be in a place to make an informed decision. You will either make up one's mind to go forth the money where it is Oregon transportation it to an option supplier (the latter option necessitates careful analysis arsenic there may be punishments to shift the fund).

ACTION POINT

If you would wish feedback on this important issue, for a limited time period we will offering to measure your place and concerns individually for no complaint (up to 1 hours work).

If you desire to take advantage of this offer, delight obtain full inside information of your policy/policies as soon as possible and contact us, Graeme or Ray, at docden@rwplc.uk or 0191 217 3340.