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Important changes to Prudential Retirement Account

From 25 August 2017, we are introducing a new series (Series E) of our PruFund range of funds in our Retirement Account product. The differences between this and the current series (Series D) are:

  • The period a customer could be in the PruFund Holding Account reduces from up to 3 months to up to 1 month
  • Investments into PruFund will take place on the PruFund Investment Date (25th of each month or the next working day if the 25th falls on a weekend or bank holiday) rather than quarterly in February/May/August /November
  • The quarterly 5% Unit Price Adjustment (UPA) check will change to a monthly check for Series E. Series D will still have a quarterly check.

The change affects all new monies from 25 August. This includes any regular contributions, new transfers, single contributions received after this date and fund switches to a PruFund. Selecting or enabling a guarantee does not count as a fund switch, nor does moving from the Pension Savings Account to the Pension Income Account without a change in funds.

The result is your customers will access the main fund more quickly than they currently do.

We will be writing to affected customers between 19 June and the end of July to let them know about the changes. The letter will also include an addendum to their Terms and Conditions reflecting the changes.

Here's a copy of the customer letter and T&C addendum we will send to clients from 19 June. If you would like any further information, please get in touch with your usual Prudential contact.

The Questions and Answers below will help to address any questions you may have.

Why are you making these changes?

Prudential is making these changes as part of managing the guarantees offered by the With-Profits Fund through the Holding Account while retaining the fund's investment flexibility and ensuring the fair treatment of all policyholders. These changes will improve policyholder accessibility to the fund.

What is the impact of the changes on existing Retirement Account customers?

Any money your clients have in the Series D version of the fund will remain in Series D and any future contributions or fund switches will go in to Series E.

From 25 August 2017, your clients will only be able to invest new money (including single or regular contributions and additional transfers) in Series E of PruFund. Your clients can switch to Series E if they wish to do so.

How will existing Retirement Account customers be notified of the changes?

All Retirement Account Customers will receive a letter in the lead up to the change confirming the detail of the change and telling them of the impact to them. This letter will also contain an addendum to their T&Cs and a customer Q&A. The customer mailing will start on 19 June and be completed in July.

How will prospective and new customers be made aware of the changes?

Our Retirement Account Pre-Sale Illustrations will have temporary wording added between 26 June and 25 August to highlight the introduction of Series E. For those who apply between these dates, the welcome pack, which is sent to customers when business is submitted online, will also have temporary wording about the new Series in the covering letter and at-sale illustration, as well as an updated Terms and Conditions brochure which will show both Series D and Series E.

From 25 August, the temporary wording will be removed for all outputs and the terms and conditions contained in the welcome pack will be for Series E only.

How can I ensure my clients are invested in Series D?

As per the Retirement Account Terms & Conditions and the supplementary detail provided, should you wish to ensure that investments are made into Series D, please allow for processing times:

  • For single premium contributions and final transfer funds: The final date for receipt of a clean application and funds is Tuesday 22 August.
  • For regular premium contributions: The final collection date is Thursday 17 August.

What is the impact of the changes on new Retirement Account customers?

From 25 August 2017, any money received into the funds will be invested in Series E.

When will the monthly Unit Price Adjustment (UPA) check take place?

The UPA review will take place immediately prior to any new funds being invested on the 25th of each month (or the next working day if the 25th falls on a weekend or bank holiday). Any required UPA will be made before the new investments are added to the fund.

What do my clients need to do?

Your clients do not need to do anything. The new series will be available from 25 August 2017 and from this date it will no longer be possible to put any new or regular payments into PruFund Series D.

If your clients have money in the Series D funds on 25 August then the money will remain in Series D. Customers are free to switch to Series E if they wish to do so.

How often can my clients switch in/out of a PruFund?

Once invested in PruFund funds, your clients are entitled to make one switch in/out of PruFund fund each 3 months. In addition, a 28 day waiting period for switches applies.

Which products are affected?

These changes affect Retirement Account only.

Will my customer be better or worse off as a result of the change?

As with any investment, we cannot predict the impact of any market movements. This change simply means that customers will be able to access PruFund with all its features more quickly.

Are customers in other products affected by the change?

No. The change only affects Retirement Account. Customers who access PruFund funds via any of our other products will continue to have access to their existing series and arrangements for moving from the relevant Holding Account will remain as they are.

What happens if customers move from the Pension Savings Account to the Pensions Income Account?

If customers in Series D move from the Pension Savings Account to the Pensions Income Account either before or after 25 August, they will remain invested in Series D as long as they do not alter their investment strategy as part of the move.

What happens to Capital Guarantees?

Capital Guarantees are unaffected. Any customer with a Guarantee in Series D will continue with this. Any customers with funds in Series D who wish to add a Capital Guarantee at a future date can continue to do so.

Do you anticipate making any further changes to the PruFunds?

We will continue to review the operation of our PruFund fund range and, where we feel any changes will benefit customers and the funds, will consider taking action to improve our PruFund offering.

Does this effect the Expected Growth Rate (EGR) process?

There is no effect on the EGR process. EGRs will continue to be set quarterly and the EGRs reflect the expected future performance of the funds over the longer-term.

What do I need to do if I've illustrated on PruFund Series D before 25 August but need to refresh the illustration or submit an application after 25 August?

When you try to refresh the illustration you will be presented with a warning message confirming the asset selection is invalid. You will need to update the asset selection before you can calculate the illustration.

Does the introduction of Series E mean that there has been a change to PPMG's fund management process?

No. The introduction of Series E does not change the underlying fund and investment management approach of PPMG, Prudential's investment fund managers.

Will the equivalent PruFund funds for Series D and E have the same Expected Growth Rates (EGR) and asset allocation?

Yes. Series D and E equivalent PruFunds funds will have the same EGRs and asset allocation.

For UK Adviser Use Only - Not Approved For Use With Clients