Should I surrender "With Profits" bonds?

I'm surprised if this bond had a ten year 'life'. I would expect it to be encashable at any time, although what you might mean is that there is an exit penalty during the first ten years (which I doubt). Personally I doubt if this bond will 'come good', partly because it's a closed fund. If there are no exit penalties or an MVA , look at alternatives like Standard Life's Higher Income Fund or Invesco Perpetual's High Income Fund (much riskier). But this isn't advice!

Rob Graham

Thanks for that. I've had a look at the recent literature and there is a MVR. For his month of investment (Sep 1997) it shows a MVR of -8.3%.

The literature goes on to say: "...Currently, if the MVR applicable in a particular case would be 5% or less, we do not apply it to encashments totalling less than 25,000 in any 12 month period (regular encashments are included in this total). We may change this practice at any time. When necessary, we also limit the MVRs which apply to policies so that they reduce smoothly to nil at the 10th anniversary, irrespective of our profits...."

This is probably a crystal ball question but if the MVR smoothes out to zero do you think it's likely that it will be reduced significantly, or removed, within a year? If he pulls out now he stands to lose around

1625 but could make up the loss in a couple of years invested elsewhere, but if there's a chance the MVR will be removed in a year that might be the better option? Anyone know how often they review the MVR?

In message , Mark writes

Sounds like it reduces on a pro-rata basis somehow.

I've got 15K in the same bond (unfortunately I think) mine has been in

5years 2 months, and past the 5 year mark there is no surrender penalty. From recent enquiry with R & S Alliance, I understand that the MVRs are reviewed on the 1st of each month, not that they are neccesarily changed you understand, just reviewed. So if you call them for a valuation, it is best done shortly after 1st of month. Hope this helps

dfrog

The MVR will be applied partly due to the reduction in share values that happened a few years ago and partly because some companies will not have been able to go back into shares, having partly pulled out. There are technical reasons for this and it will result in funds not going up even thought the stockmarket has, because they are no longer properly invested in them. Thus MVRs for some products/companies may take years to extinguish.

You might ask Sun Alliance how much equity exposure its withprofits fund has now. Very little I expect.

Often the first loss is the least loss. I don't like the smell of this bond.

Rob Graham

I'll write to them and see what's what. The Guardian website published a handy template letter for people to use.

I think your plan might be different to my dads. If you go to the R&SA section of the Resolution Life website, You can view a PDF version of the T&C's of the 4 different plans available. My dad's plan is the 2nd download in that list - He now tells me that in Sep 2004 he did ask for a surrender value and at that time there was a MVR of -8.6%.