With-profits bonds from the likes of Royal & SunAlliance, Pearl, Norwich Union and Equitable Life ar...
With-profits bonds from the likes of Royal & SunAlliance, Pearl, Norwich Union and Equitable Life are offering investors penalty free exits.
A number of groups sold tranches of bonds with the right to exit policies on the fifth anniversary of purchase with no exit penalty, and each subsequent year thereafter.
Tom McPhail, pensions specialist at Hargreaves Lansdown, said it was worthwhile for investors to scrutinise their contracts closely for such a clause.
He added if the investors time the sale right, they will avoid market value adjusted penalties, which range from 11.1% at Equitable Life to more than 20% for some other providers. McPhail said: 'Investors who have held with profits funds for five to 10 years would have locked in strong growth over the bull market of the last decade. If they sold now, their policy may be valued on, for example, a FTSE 100 worth 5500.
'With Equitable Life I urge investors to check the fine print of their policies. Anything that can minimise the losses they have incurred would be beneficial.'
The increase in minimum AE contributions has had little impact on opt-out rates - with cessations after April increasing by less than two percentage points, data from The Pensions Regulator (TPR) shows.
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