The with-profits funds explained

Your circumstances and needs may have changed since your plan started and you should also be aware that the investment strategy of the Zurich with-profits funds has changed over the years. Your adviser will be able to help you decide whether the plan still meets your needs.

Like many other with-profits funds, the Zurich funds don’t invest in equities to the extent they did before the stock market falls in 2000-2002. The funds are now invested significantly in fixed and variable interest investments and have limited exposure to shares.

We will let you know each year how the fund is invested for your plan.

Zurich aims to pay a value that is fair to you and to the other policyholders remaining in the fund whenever you end your plan. There is no specific penalty for ending a life plan early. Some investment bonds have a fixed charge where withdrawals are made within the first five years of the investment.

A market value reduction (MVR) could apply if you take benefits before any MVR free date shown on the yearly statement or the bonus statement. However, we are not currently applying an MVR when investments are taken out of either of our unit linked with-profits funds. Ask us for a value of your plan now and at maturity to make a comparison before you decide what to do. If you’re not sure, ask an adviser.

This depends on the type of plan you have:

• Pension plans cannot be normally be cashed in, although it’s possible to take some of the benefits as tax-free cash when you buy retirement income. They can be transferred to other providers.
• Life plans and investment bonds were often issued as a cluster of individual contracts which can be cashed in separately. If your plan is being used as security for a loan, we would need the lender’s agreement.
• Investment bonds also allow partial withdrawals where you can take some money from each cluster.

Taking money from your plan can create an income tax liability. There is a difference in the tax treatment of withdrawals between cancelling clusters and taking money from each cluster. You should seek advice if you're not sure which method is best for you.

Yes, you can usually move your investment into other funds. If you’re making regular payments you can invest future payments into other funds. The with-profits fund is no longer open to new money so if you switch out, you won’t be able to switch back in.

Different unit-linked funds invest in different types of assets, so you should consider the level of investment risk you are comfortable with. These funds do not smooth investment returns, so if the value of the investments fall, the value of your policy falls at the same rate. You also need to take into account the value of any guarantees you might lose. We recommend you seek advice if you are considering this option.

Yes. Plan administration charges and the cost of providing any life cover or other plan benefits would continue to be met by cancelling units. This may mean your final plan value could reduce and eventually stop without a value.

If you wanted to restart payments, the with-profits fund would no longer be available. For life plans, restarting payments would only be allowed within 13 months if you repaid all the ones missed.

Yes. On yearly statements we tell you what the transfer value is at that time. Values aren’t guaranteed and can change daily. If you transfer your plan on the selected retirement date any market value reduction would not apply. Your selected retirement date is shown on the yearly statement or the bonus statement.

Some pension plans started before 1996 may incur a charge if you take benefits or transfer your plan earlier than the date you selected. On these plans, the plan charges were high in the early years and the amounts allocated to plans from regular payments increased in later years. Ask us for illustrated maturity values and make sure you understand the value of guarantees before you decide to transfer.

You should also take account of any set up charges for a new plan. We recommend you seek advice if you are considering this option.

Yes. We can make regular payments from your investment bond either as a fixed amount or as a percentage of the bond value. Withdrawals greater than 5% of the amount(s) invested may create an income tax liability. Your yearly statement tells you whether or not we might apply any MVR. Find out about setting up a regular withdrawal.

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

0370 333 1500

Monday to Friday 8.30am - 6.30pm and on Saturday 9.30am - 12.30pm, excluding Bank holidays.

We may record or monitor calls for training and quality purposes.

Your yearly bonus 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 0370 514 3624.

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.

For the 100:0 fund, the final bonus/MVR rates change daily. The bonus rates differ with each series.

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 funds 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.

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 call us on:

0370 333 1500

Monday to Friday 8.30am - 6.30pm and on Saturday 9.30am - 12.30pm, excluding Bank holidays.

We may record or monitor calls for training and quality purposes.

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.

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 call us on:

0370 333 1500

Monday to Friday 8.30am - 6.30pm and on Saturday 9.30am - 12.30pm, excluding Bank holidays.

We may record or monitor calls for training and quality purposes.

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.

Mortgage Endowments

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, to find out more call us on:

0370 333 1500

Monday to Friday 8.30am - 6.30pm and on Saturday 9.30am - 12.30pm, excluding Bank holidays.

We may record or monitor calls for training and quality purposes.

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 (age 50 for offshore pension plans). If you belong to a pension scheme, you will need to deal with the scheme administrators or if this is your own plan, call us for more details of your options.

0370 333 1500

Monday to Friday 8.30am - 6.30pm and on Saturday 9.30am - 12.30pm, excluding Bank holidays.

We may record or monitor calls for training and quality purposes.

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

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

0370 333 1500

Monday to Friday 8.30am - 6.30pm and on Saturday 9.30am - 12.30pm, excluding Bank holidays.

We may record or monitor calls for training and quality purposes.

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.