Important update - increased guarantee costs and a special offer coming soon
We understand that guarantees, at an appropriate price, are an important product feature for many customers and we continue to be committed to providing them. However, as the market price of guarantee has increased, due in part to low interest rates and market volatility, this has caused the cost of providing these guarantees to rise.
In the simplest of terms, volatility leads to a greater degree of uncertainty around future market performance, which in turn leads to increases in the cost of providing investment and income guarantees.
Like many providers, these increased costs have led us to review what we charge, to ensure that customers buying a guarantee are paying a fair cost. This is a prudent and responsible approach to setting our charges, and it ensures that all customers are treated fairly. This review has led to the need to announce the following changes.
Increase in the guarantee cost for PruFund Protected Cautious
The increased cost of providing a fund with an investment guarantee has led us to the decision to apply an increase to the charge for the guarantee on the PruFund Protected Cautious Fund. The charge will increase by 0.15% to 0.90% per annum across these products:
- Onshore Bond - Flexible Investment Plan and Prudential Investment Plan (from 9 August 2010)
- Pension - Flexible Retirement Plan and Trustee Investment Plan (from 4 October 2010)
It's important to note that this change will have no impact on existing investors in the fund - the charge at the time of original investment is fixed throughout the term of the guarantee period. These customers will continue to benefit from the security of their guarantee at the price they originally bought at.
Income Choice Annuity Re-price
Income Choice Annuity guarantees to pay an income for life, and also guarantees that a client's income will not fall below a certain level over the lifetime of the annuity. The cost of providing these guarantees continues to increase and as a result we are re-pricing Income Choice Annuity from 9 August 2010. Starting incomes will fall as a result by around 2%. This will come into effect for new business quotations from 9 August 2010.
Any quotations produced prior to 9 August will not be impacted by the change, providing the case is completed within the guarantee period of the quotation.
Again, this does not impact any existing customers who have taken out an Income Choice Annuity before 9 August 2010.
Coming soon - an extra 0.75% allocation on selected bonds
From 9 August 2010, all of your customers' investments into the following plans will benefit from an enhanced allocation of 0.75%.
- Onshore Bond - Flexible Investment Plan and Prudential Investment Plan (from 9 August 2010 to 11 February 2011)
This offer applies to all funds available under these plans, including top ups and new investments taken out during this special offer period.
We reserve the right to extend, amend or withdraw this offer without notice and at any time.
For further information:
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