Important changes have been made to the value of investments held in the Profit Sharing Account (PSA) from 8 October 2005.
The changes mean that fund values have generally been reduced for all:
Transfer Values
Early retirement fund values
Return of fund (ROF) death claim values
Investment switch values
Please note fund values have not been affected where the investment remains in the PSA fund to the Normal Retirement Date. Fund values will only reduce when exiting the PSA fund before Normal Retirement Date.
Which policyholder investments are affected?
The PSA fund is available as an investment option on 2 policies.
These policies are:
NPI's original Executive Pension Plans (EPP), including those sold under Small Self-Administered Schemes (SSAS) and those subsequently set up as EPP Re-issue policies; and
Pension Transfer Plans (PTP), including those sold as Spectrum 32 policies.
Within these policies, investments in funds in the Unit Linked Account (for example, the Managed and UK Equity funds) or Capital Account remain unchanged.
The affected EPPs and PTPs were sold from 1985 to 2000 through the National Provident Institution (the estate of which was transferred to National Provident Life Limited in 2000). EPP Re-issue policies, including those set up since 2000, are also with National Provident Life Limited.
N.B. EPPs sold under the "New Approach" product range from 1998 to 2003, and PTPs sold through NPI Limited from 2000 to 2003, do not offer the PSA fund as an investment option and are therefore unaffected by the changes.
What has changed?
We have updated the factors used in the basis to calculate PSA fund values to reflect changes in the underlying investment returns for the period contributions have been invested.
Why has this been done?
Changes in the investment mix of funds backing the PSA fund were made in 2003 to ensure the guaranteed Normal Retirement Date policy benefits were secure. This action was taken because of substantial and sustained falls in equity markets during the previous three years. The underlying investment performance since has not been sufficient to maintain previous fund values.
In view of the historical and ongoing investment environment, this action is necessary to ensure investment values are equitable to all policyholders invested in the PSA fund.
Does this change affect retirement benefits?
No, provided funds remain invested in the PSA fund to Normal Retirement Date. At Normal Retirement Date existing guarantees (which includes the guaranteed sum assured and declared bonuses) remain secure. However, PSA fund values in respect of early retirement (and other early exits) will be impacted.
The guaranteed minimum retirement value for investments left in the PSA fund to Normal Retirement Date (Guaranteed Sum Assured plus Declared Bonuses) will not reduce.
How will the impact on policies be communicated?
All policyholders will receive statements within the next twelve months, which will show the revised value of the PSA fund.
More information
You can get further information about these changes by downloading our Question and Answer document below.
Note: You need Adobe Acrobat Reader to view pdf files. You can obtain Adobe Acrobat Reader free from here.
Pearl Assurance Limited No. 1419, London Life Limited No. 1179800, NPI Limited No. 3725037 and National Provident Life Limited No. 3641947 are authorised and regulated by the Financial Services Authority. All companies are registered in England and have their registered office at: 1 Wythall Green Way, Wythall, Birmingham, B47 6WG, Tel: 01564 204321. We may record or monitor telephone calls. Important Company Registration and Legal Information.
