Suspension of the Prudential M&G Property Portfolio Life & Pension funds
On Thursday 5 December we announced the suspension on transactions on a number of insured property funds that we offer. These funds are linked to the M&G Property Portfolio Fund which was suspended on Wednesday 4 December 2019.
Why have we made this decision?
The last 12 months have seen significant outflows in the Property Fund and M&G have taken the decision to protect the long term interests of investors by suspending the M&G Property Portfolio.
The Prudential insured funds directly affected by this suspension are:
|Insured Life and Pension Fund||SEDOL|
|Prudential M&G Property Portfolio (exSA) S1||0781769|
|Prudential M&G Property Portfolio (exSA) S2||0790312|
|Prudential M&G Property Portfolio Acc (exM&G)||0550390|
|Prudential M&G Property Portfolio Acc (Ex M&G)||0549235|
|Prudential M&G Property Portfolio Pre A||0781833|
|PruFRIA M&G Property Portfolio||3193907|
|Prudential Ex-DSF M&G Property Portfolio Property||B0334F8|
|Prudential M&G Property Portfolio Ser A||0537296|
|Prudential M&G Property Portfolio S1||0710279|
|Prudential M&G Property Portfolio S2||0926612|
|Prudential M&G Property Portfolio S2 (Inc)||B1YVQN0|
|Prudential M&G Property Portfolio S3||3121845|
|Prudential M&G Property Portfolio S4||3164947|
|Prudential M&G Property Portfolio S4 (Inc)||B06GT48|
|Prudential M&G Property Portfolio S5||3165434|
|Prudential M&G Property Portfolio S5 (Inc)||B06GTB5|
|PIA M&G Property Ser B||B00L9B6|
How the suspension affects investors in the Prudential insured funds
Any existing investment in our Prudential insured Life and Pension funds will remain invested with the following transactions allowed:
- Taking retirement benefits (regular withdrawals and income payments)
- Any claims on death or critical illness
- Pension sharing on divorce.
These transactions will not be permitted:
- Further investments into the fund
- Withdrawals out
- Any switches out of or into Property
- Life surrenders
- External transfers
- Increases to adviser charges taken from Property funds
- Starting new adviser charges taken from property Funds
How the suspension of the M&G Property Portfolio Fund affects Retirement Account, Prudential International Investment Portfolio and Prudential Onshore Portfolio Bond clients
The following OEIC funds available on Retirement Account, Prudential International Investment Portfolio (PIIP) and Prudential Onshore Portfolio Bond (POPB) are also impacted and these were suspended at midday on Wednesday 4 December:
|GB00B7SX7S61||M&G Feeder of Property Portfolio Sterling I Acc|
|GB00B842HT59||M&G Feeder of Property Portfolio Sterling I Inc|
|GB00B89X8P64||M&G Property Portfolio Sterling I Inc|
|GB00B8FQVP09||M&G Property Portfolio Sterling D Inc|
|GB00B8FSZ434||M&G Property Portfolio Sterling A Acc|
|GB00B8FWH509||M&G Feeder of Property Portfolio Sterling A Inc|
|GB00B8FYD926||M&G Property Portfolio Sterling I Acc|
|GB00B8G9TT83||M&G Property Portfolio Sterling A Inc|
- Clients invested in these funds cannot buy or sell units, or leave the fund.
- If they’re paying regular contributions into the fund, that money will go into the Cash Account, or they can ask us to put it into another fund free of charge.
- If they’re taking money out to provide an income, we’ll continue to take it evenly from the other funds being used for regular withdrawals. They can change the funds they take money from free of charge.
- Retirement Account clients are able to change the other funds they hold in their Retirement Account, free of charge, by sending an email to email@example.com stating the name and ISIN code of the replacement fund.
- PIIP clients can change the other funds they hold for PIIP through the usual route of completing a fund switch form (Available on PruAdviser)
- POPB clients can change the other funds they hold for POPB through the respective platform
How we’re communicating the suspension to existing investors
During the week of 16th December, we wrote to Retirement Account clients directly invested in the M&G Property Portfolio and M&G Feeder of Property Portfolio funds to explain what this means to them. We’ve also contacted their advisers and supplied a copy of their letter.
All other clients that are invested in the impacted Insured Life and Pension funds, and the Prudential International Assurance M&G Property Fund will be sent their letters over the coming weeks, to explain what this means to them. See the list of impacted Insured and Pension funds at the top of this page.
We’ve also contacted their advisers to make them aware of this. Here’s copies of the letters for your awareness:
- Insured Life and Pension Funds - regular payments letter , and non-regular payments letters.
- Prudential Internaitional Assurance M&G Property fund letter
If you have more questions, we can be contacted at Property.firstname.lastname@example.org
Questions and Answers
Will you be suspending any other funds?
Currently we do not believe this issue will impact any of our other funds.
Will this affect other funds that invest partly in property ?
We do have some multi-asset funds which invest in a wide range of assets, with property being just one of those invested in. These are not suspended even where Property exposure is obtained through the M&G Property Portfolio, but we will continue to monitor the situation.
Can my client make a new investment into property?
At this time we cannot accept any new investments into any suspended funds. We will provide updates on this site.
As an existing customer, can my client switch their investment into property?
At this time we cannot accept any switches into property. We will provide updates on this site.
Can my client switch out of the fund?
They cannot switch or transfer out of the fund while the suspension is in place. They can still send us a completed form and we will hold the form and contact your client once the suspension is lifted to explain their options and to check whether they still want to proceed. You may wish to offer guidance on this.
Can my client withdraw money from the fund?
They cannot withdraw from the fund while the suspension is in place. They can still send us a completed form and we will hold that form but we will contact them once the suspension is lifted to explain their options and to check whether they still want to proceed. We can process withdrawals from any other fund holdings where transactions are not suspended, subject to individual policy rules.
Are there any circumstances when my client can take money out of a linked life and pension property fund?
Yes, taking your retirement benefits and maturities will continue to be paid. We will also continue to pay out on death claims. For further details please contact us.
Will this impact any regular withdrawals/income payments on the insured funds?
Previously arranged regular withdrawals and income payments will continue to be paid.
For how long will property funds be suspended?
We don’t yet know how long the funds will remain suspended for, but we’ll monitor the situation closely. We’ll publish more information on PruAdviser when we have more information or if the situation changes.
Will I/my client be able to get a fund valuation?
Yes, please call your usual contact for valuations.
Is the fund still trading and what is the current unit price?
The unit price of the fund will continue to be published on our website.
How will I/my client know when the fund suspension is lifted?
We will post any updates on PruAdviser and write to affected clients and their advisers.
Will Prudential write to impacted clients about this?
Yes. However, we have a high number of policyholders invested in Property funds across a variety of life, and pension products and it will take some time to work through this and ensure that we communicate clearly with our customers in sufficient detail. We’ll aim to communicate as soon as possible.
Will my client need to do anything on receiving this letter?
No, the letter is for information purposes only. We will write to them again when the suspension is lifted. In the meantime you can check PruAdviser for more information.
Why are regular premiums being reallocated to cash fund?
We cannot invest regular premiums into property funds while the suspension is in place. Instead, to allow continuity of investment, any regular premiums that would have been invested in the property fund will now be invested into the relevant cash fund for your clients’ product during the suspension period.
Why have you chosen the cash fund specifically to reallocate premiums?
Due to the Property Fund suspension, we are unable to allocate any regular premiums to Property during the suspension period. The Cash Fund is being used at it is the most suitable alternative and is defined as the default fund to be used under a fund suspension scenario. Your client is free to choose to allocate these regular premiums to alternative funds if they so wish.
Is this fund value not decreasing, therefore the value of premiums paid will be worth less?
Most of our Cash Funds have a “no unit price reduction” guarantee – which means the value of units in the fund can’t go down. For those Cash funds which don’t currently have a “no unit price reduction” guarantee, we’ll ensure that your client will be treated as if one had applied during the suspension period. This means that we may have to add additional units to their plan upon the lifting of the suspension to put them in the position they would have been if the fund had such a guarantee.
What has happened to the premiums already paid since the suspension?
Any premiums paid before 5 December 2019 have been allocated as normal to the Property Fund whilst we communicated the suspension arrangements to customers and put in place the processes for redirecting regular premiums during the suspension period.
Will my client be charged for the reallocation to cash transaction?
No – this will be free of charge.
Is my clients’ property investment also being switched to the cash fund? If not, why not?
No – the reallocation of premiums is to protect future premiums. Investment switches out of the property fund are currently not permitted.
Does my client have to reallocate to cash fund? If not, what are their options?
No - If they would prefer to choose an alternative fund while the property fund is suspended, then they can. We do need them to send us a fund reallocation instruction to allow us to process this request. Or you may want to provide advice before taking any action.
If my client remains in the cash fund, what will happen when the property fund unsuspends?
Once the suspension is lifted, we will switch their resulting cash fund investment back into the property fund (free of any switch charge) and they will receive confirmation of the switch transaction when complete. If they have chosen another fund in the meantime, they will not automatically be switched to property.
What if my client doesn’t want to switch back to property fund when the fund unsuspends?
If they choose a fund other than the cash fund for their premiums, they will not automatically be switched back and will remain in the fund they have chosen. If they continue to pay premiums into the cash fund and want to remain then we will inform them of this process when we write to them again when the fund unsuspends.
Will it be premiums paid that are switched back into property fund?
During the time premiums are paid into the cash fund
How will you calculate the value to be switched back into property fund? And how will my client know you have done this?
We’ll take the number of units that they have in the Cash Fund through redirected premiums and check what the value of these units is at the point the suspension is lifted and compare it to the value of these units if we had a “no unit price reduction” guarantee in place. If the unit price of redirected premiums is below the unit price that applied if we had a “no unit price reduction” guarantee, then we will add additional units to the Plan to make up the difference in the unit price. We will send your client a statement showing any resulting transaction and the switch back to Cash on the lifting of the suspension. The number of units that they have in the Cash Fund may be reduced accordingly during the suspension period if any withdrawals are made – this includes any withdrawals to cover Ongoing Adviser Charges or Policy Charges where appropriate.