‘With-Profits plans are anything but…’ Penguin in the Mail on Sunday

23 Nov 2015 | Press |

Tens of millions of investors have £300billion locked away in ‘with-profits’ funds – but many are in the dark about the nuances of the product or are blissfully unaware they could be heading for disappointment with their investments.

We talked to the Mail on Sunday about these poor with-profit investments – read the full article here

Here is a snippet of the article:

Experts say people in their 50s and 60s who are planning financially for retirement need to dig out old paperwork and seek advice on how best to use these funds – now or in the future.

Independent financial adviser Craig Palfrey, of Cardiff-based Penguin Wealth, has long been a sceptic about the merits of with-profits. He says: ‘There is a lack of transparency with these products. Insurers use tricks of the trade to make returns look reasonable when they aren’t.’

Too few investors know how their with-profits plans work, says Palfrey.

Over recent years, he has reviewed the investment portfolios of hundreds of investors, many of whom hold such plans. He says confusion and misunderstanding are commonplace.

Take the ‘terminal’ bonus as an example. People think they are guaranteed when they are not – they can be cut back or withdrawn without notice.

How We Can Help

Musicians Angus and Jane, from Cardiff, are both in their 50s and recently decided it was time to review their pension arrangements.

Angus had an old with-profits pension from early on in his career and initially was keen to transfer its value to his current pension pot for the sake of simplicity.

But after taking advice from financial adviser Penguin Wealth, they discovered what an expensive mistake this would have been.

The pot was worth around £50,000 but to transfer it before retirement would have triggered an exit penalty worth nearly a third of its value. This charge is often referred to as a ‘market value reduction’ and it applies to stop investors rushing for the exit all at once. Angus says: ‘Moving the money would have made a mockery of the title “with-profits”, since any profit would have gone out of the window.

‘At a time when pensions have become more flexible it is frustrating to discover a pension like this that has no flexibility at all.’

Despite disappointment over the early exit penalty, Angus says getting advice from a professional was priceless, even if it was essentially to ‘sit tight’. He adds: ‘I am grateful for the advice because if I had gone ahead alone, I might have made a costly mistake.’

Read the full article here

What do I do with my Policy?

If you hold a with-profits pension, endowment or investment bond and this article has struck a chord, please get in touch. We would be delighted to review your position.

You can get in touch here

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