Lifetime value - AMC Discounts

The Pru FRP rewards your clients by applying discounts to the basic annual management charge (AMC) based on the insurance fund* value (Fund Size Discount) and the amount of time invested in the FRP (Loyalty Discount) and both discounts can apply at the same time. The total fund value of all insurance funds across all Personal Pension and Income Drawdown plans will determine the fund size discount at any given time.

The tables below show the maximum AMC discounts that can apply:

* All funds excluding the Self-Invested Fund and the FRP Holding Account

** The fund size discount is calculated monthly, so will move up and down with changes in the Insurance Fund on a monthly basis.

The example and graph below show how, over the longer term, your client could benefit from the Loyalty and Fund Size Discounts with the Pru FRP, including when they move into income drawdown and take tax free cash and an income. The example and graphs are for illustrative purposes only. They do not relate to any particular individual and should not be looked upon as a recommendation of a particular course of action.

Your client will be 30 years old next birthday and would like to pay a net premium of £100 per month into the Pru FRP until age 75. You select 20% fee based commission.
At age 35 - The client becomes a higher rate tax payer
At age 40 - Your client chooses to invest £60,000 as a lump sum from an inheritance - You select 4% Unfunded Initial Commission
At age 50 - Your client chooses to consolidate £80,000 from 3 other pension funds into their FRP - You select 4% Unfunded Initial Commission
At age 59 - Your client chooses to incorporate their protected rights fund of £50,000 into their FRP before moving into income drawdown - You select 4% Unfunded Initial Commission
At age 60 - The client decides to move into income drawdown. The client opts to take 25% tax free cash - You select 3% unfunded commission on the balance of the fund
At age 65 - The client decides to taken an income of £12,000 per annum until age 75
At age 75 - The client chooses from our range of award winning annuity options (Financial Adviser 2008 - Best Annuity Provider)

A basic AMC of 1.00% has been assumed to have applied initially and an assumed investment return of 7% per annum before charges have been used in this example. These figures are only illustrative.

The rate of growth of funds cannot be guaranteed. The value of investments may go down as well as up and the fund available to provide benefits may be less than the payments made.