PruFund Growth in pensions is about to have its 10th birthday.
Do you remember your 10th birthday? Maybe you do as generally it is a fairly seismic event. You’re probably more likely to remember it if you had a particularly happy experience – perhaps a new bike, a gathering of friends, or some kind of other treat.
However, there’s something about to have its 10th birthday which hopefully has made many people happy over the years – PruFund Growth in pensions is about to have its 10th birthday. Whilst the life fund has been around in different guises since 2004, the pensions fund was a bit late to the party and didn’t launch till November 2008.
Overall PruFund in all its different tax wrappers continues to attract significant volumes. £4.4 billion was invested in the range of PruFunds during the first half of 2018 alone. Inflows in recent years have benefited from the introduction of pension freedoms as advisers seek to find ways to meet clients drawdown needs.
But how has PruFund performed for clients taking an income? Well, here’s an example of how it’s worked for one client who started in drawdown less than a year after the launch date.
Investment in PruFund Growth
Commenced in October 2009
Age at start 60
Amount invested after tax free cash and adviser charge £230,215
Withdrawals were taken as follows.
28/10/2010 – £14,000 one-off
17/11/2011 – £16,849 one-off
26/10/2012 – £16,851 one-off
29/10/2013 – £16,851 one-off
16/03/2015 – £21,825 one-off
02/05/2015 – £14,000 one-off
01/06/2015 – £1,500 per month (total up to 1 Oct – £61,500)
Total Income - £161,876
The value as at 1 October 2018 – £226,928
Mr X has taken an income of £161,876 and still has a fund value of £226,928 – which gives him a combined ‘value of’ £388,804. Seemingly quite attractive when compared to the original investment of £230,215. But how does that compare with what he could have got elsewhere?
Well this equates to an average growth date after charges of around 7.7%. When compared to the IA Mixed Investment 20-60% sector of 5.40% - outperforming this sector average by over 2%.pa. If the investment had only received this lower growth rate then Mr X’s fund value would only be £167,770. We can’t predict the future. Past performance isn’t a guide to future performance.
I would like to think that by prudently selecting PruFund for Mr X’s retirement fund the adviser has made a significant difference to how Mr X has enjoyed his retirement and will continue to do so for a long time.
Congratulations Mr X, and happy birthday Pensions PruFund Growth.
The value of any investment and any income taken from it can go down as well as up so your customer might get back less than they put in.