Questions you may have about your plan: unit linked plans

Unit linked plans were sold after 1985 and generally offered a choice of funds to invest in, including the unit linked with-profits fund. The with-profits fund was closed to new customers in 2003 and is generally no longer available for new investments to existing plans. Payments to us buy units in the fund(s) of your choice. Bonuses are added to these plans by increasing the price of the with-profits units. We send customers a statement each year (near the plan anniversary) showing the value of the units in each fund. Each year, following the bonus declaration, we also send customers information about the fund performance together with a statement telling them what the bonus rate(s) are for the series invested in.

This section aims to provide answers to some of the questions we are asked by customers about their investment in with-profits. 

1. What with-profits fund do I invest in?
2. What are the different types of bonus?
3. What is smoothing and how does it work?
4. How much is my plan worth?
5. What guarantees does my plan have?
6. What benefits does the plan provide?
7. How much might I get back when my plan ends?
8. When does my plan end?
9. Can I end my plan early?
10. How can I get more information about my plan?
11. How do I change my address?

1. What with-profit fund do I invest in?

Your yearly statement will show which with-profit fund you invest in. Series 1, 2, 2a, 2b, 3, 3b & 7 invest in the 90:10 fund and Series 4, 5, 6, 8 & 9 invest in the 100:0 fund. Alternatively, please call us on 0870 514 3624.

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2. What are the different types of bonus?

This includes regular bonuses, final bonuses and market value reductions (MVR).

A regular bonus will be added to a plan by changing the unit price each day. Once added, it cannot be taken away. Bonus rates depend on the type of plan and the series you invest in. They can change at any time. The reason for different final bonus rates for different plan types and series is to give each group of customers their fair share of the fund. This is achieved by adding a final bonus or applying a Market Value Reduction (MVR) when units are cancelled. An MVR protects the interest of those who remain invested within the fund. The amount and timing of investments as well as the claims and expenses experienced by different groups of customers means any final bonus or MVR can vary from plan to plan. Further information can be found in the guides explaining how we manage the fund.

The yearly statement shows the MVR or final bonus at that point in time. It will also show if the plan has a date on which we guarantee an MVR will not apply. However, since 6 September 2010 we have not applied an MVR to any withdrawals from, or cancellations to, plans investing in the with-profits funds.

For the 90:10 fund, the final bonus/MVR rates are regularly reviewed. They tend to change once a year but we can change them more frequently if necessary. We do not give customers advance notice. The bonus rates differ with each series. » Find out the bonus rates for your type of plan

For the 100:0 fund, the final bonus/MVR rates change daily. The bonus rates differ with each series. » Find out the bonus rates for your type of plan

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3. What is smoothing and how does it work?

Smoothing is a method of reducing the ups and downs in the value of your investment by paying out the returns through a system of bonuses. This is a special feature of with-profits.

Smoothing works by holding back some of the returns from good times to help pay out bonuses in poorer times. Equally, losses made in poor times may also reduce gains in good times. In the long term we can only pay out what the fund’s assets achieve. We will do this by increasing guaranteed payouts when it is prudent.

If you end your plan early and at a time when the bonuses added are more than the amount justified by the funds performance, we might apply a market value reduction.

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4. How much is my plan worth?

We send you a statement each year, near your plan anniversary, showing you the fund value and the surrender or transfer value at that time. Values can change from day to day.

If you want to know the current surrender or transfer value, please contact us.

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5. What guarantees does my plan have?

Your plan benefits are guaranteed provided you maintain any regular payments. Guarantees may apply only at a particular date, for example the maturity date or selected retirement date.

Regular bonuses once added cannot be taken away. Some guarantees may be valuable and you should make sure that you understand them before taking any action.

Guaranteed rates of annual bonus (on unit linked with-profits plans in Series 1, 2, 2a, 2b and 7)

The following series have a minimum yearly bonus:
 

* No more money can be paid into these series.

Market Value Reduction (MVR) Free date

At maturity, selected retirement date or death, we would not apply any MVR. Investment bonds started after August 1995 have an option, usually on each 10th anniversary of the plan to cancel the with-profit units without any MVR applying. This date is shown on your yearly statement, although since 6 September 2010 we have not applied an MVR to any withdrawals from, or cancellations to, plans investing in the with-profits funds.

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6. What benefits does the plan provide?

Your yearly statement shows what benefits the plan provides at maturity/retirement or if you die before your plan ends. Some plans include additional benefits covering illness and these will also be shown on your yearly statement.  If you want to find out more about the benefits, contact us.

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7. How much might I get back when my plan ends?

We can provide an illustration based on current assumptions using different rates of investment return. These will give you a range of values for your plan using assumptions for investment growth and our expectation of future charges. These are included automatically on most yearly statements.

If you have an endowment plan, we will send you an illustration each year showing you if it’s on track to meet the target amount at maturity. Find out information about the illustrations we send out on mortgage endowments. » more

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8. When does my plan end?

You can see this on your plan yearly statement or if you have a mortgage endowment, this can be found in the ‘Your plan now…’ section of your plan update letter.  Alternatively, contact us to find out.

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9. Can I end my plan early?

Yes. We’ll need the written instructions of all the plan owners and the plan documents. To make sure we only deal with the plan owners, we’ll also ask for evidence of identity such as bank statement or copy driving licence. The confirming your identity leaflet will give you more information about this process.

If you have a pension plan, you can currently start taking your pension at anytime after 55. If you belong to a pension scheme, you will need to deal with the scheme administrators or if this is your own plan, contact us for more details of your options.

You may also want to consider the alternative choices available under your plan detailed in the Understanding your choices section.

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10. How can I get more information about my plan?

If you want more information about the plan, please talk to your adviser or contact us – we’ll be pleased to help. If you haven't got an adviser, here are details on how you can find one.

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11. How do I change my address?

You can let us know your change of address by calling us or completing and returning the change of address form. If you are also changing your name, we will require proof of this.

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