For UK financial advisers only. Not approved for use by customers. Visit the Prudential customer website For UK financial advisers only. Not approved for use by customers. Visit the Prudential customer website

Changes to our customer illustrations

With the introduction of the MiFID II and KIDS regulations, we have improved the clarity and transparency of our communications to our customers. These changes include the information we show customers on charges and expenses in our illustrations on all products offering our PruFund Funds and Unitised With-Profits Fund.

Which funds are affected?

The PruFund Funds and our Unitised With-Profits (UWP) Fund, all of which incur additional investment expenses that will vary from year to year.

Which products are affected?

All individual products which offer our PruFund Funds and / or the Unitised With-Profits Fund listed below

Product Type Product Name Funds Offered
Pensions Prudential Retirement Account PruFund Funds
  Flexible Retirement Plan PruFund Funds & UWP
  Trustee Investment Plan PruFund Funds & UWP
Individual Savings Accounts Prudential ISA PruFund Funds
Onshore Bonds Prudential Investment Plan PruFund Funds & UWP
  PruFund Investment Plan PruFund Funds
Offshore Bonds Prudential International Investment Bond PruFund Funds & UWP

In addition all products open to top ups which offer the PruFund Funds and / or the Unitised With-Profits Fund are affected.

What are the changes in the illustrations?

The illustration figures have changed to show the combination of the AMC and the current additional investment expenses, as a result:

The projected values are lower than before, taking into account the additional investment expenses and Reduction in Yield.

The Reduction in Yield (RIY) is higher, taking into account the additional investment expenses.

The growth rates in our illustrations have not changed. It is a regulatory requirement that the growth rates quoted in our illustrations must use a mid-growth rate that accurately reflects the investment potential of the underlying investment, subject to a maximum of 5% for Pension and ISA products or 4.5% for other products.

Note that for the products listed below it will look as if the AMC is higher as the additional investment expenses will be included in the AMC figure:

  • Prudential Investment Plan
  • Trustee Investment Plan
  • PruFund Investment Plan
  • Flexible Retirement Plan
  • Prudential International Investment Bond

Retirement Account illustrations and the generic illustrations published for the Prudential ISA will detail the additional investment expenses separately.

We will be updating our systems to make the two parts clear in future.

When were the updates to the illustrations made?

The updates were made between 22 December and 2 January 2018, meaning all illustrations now produced are on the new basis. Dates for each product are detailed in the table below:

Product Name Date Changed
Prudential Retirement Account 2 January 2018
Flexible Retirement Plan 22 December 2017
Trustee Investment Plan 22 December 2017
Prudential ISA N/A*
Prudential Investment Plan 22 December 2017
PruFund Investment Plan 22 December 2017
Prudential International Investment Bond 22 December 2017

* We do not produce personalised illustrations for the Prudential ISA. The published example illustrations will be updated in early 2018. The Prudential ISA is provided by Link Financial Investments Limited.

How does this impact Expected Growth Rates for PruFund Funds?

We are not making any change to how we operate PruFund. The smoothed price for PruFund will continue to take account of the additional investment expenses as part of the investment return. Our EGRs are also unaffected - our expectations have always taken account of the additional investment expenses.

How much are the additional investment expenses?

The expenses vary by fund between 0.05% and 0.19% due to the differing asset allocation of the funds. The charges are variable and could change in future.

What types of expenses are included?

An example of the type of expenses being disclosed are property maintenance, renovation and property operational and servicing costs.

Why have the projected values gone down and RIY gone up if nothing has changed for customer?

This is because it's a requirement of the disclosure regulations that we reflect these expenses in the projected values and RIY, There is no change to the overall returns customers have and will continue to receive as a result of these expenses not having been disclosed in our illustrations and literature. These expenses have always been included in our EGR calculations and the returns declared from our Unitised With-Profits Fund.

When will your calculators be updated to reflect the changes?

The Retirement Modeller and FRP Modeller were updated on 29 December 2017 to be consistent with the illustrations.

When will the best advice systems be updated to reflect the changes?

Updates were made to Defaqto, Selectapension and Synaptics on 2 January 2018.

When will TVAS be updated to reflect the changes?

TVAS was updated for both Flexible Retirement Plan and Prudential Retirement Account on 2 January 2018.

Will you be telling customers about this?

Yes we will be doing that in 2018. We will let you know how and when this is planned to happen. System changes are being implemented now to ensure we are ready for the MiFID II and KIDs regulation coming into force from the beginning of 2018.

What are the transitional arrangements?

We moved to the updated illustrations for all products on 2 January 2018. This means that some customers may get a post-sale illustration that is different to their pre-sale (2017) illustration.

Can I get a revised illustration?

We can provide a new business illustration on the new basis, or an illustration for an in force policy on the new basis. For Retirement Account you can run a new illustration online.

© Prudential 2018