Norwich Union Imposes Penalties
Norwich Union has imposed hefty exit penalties on customers' holding with-profits policies.
The market value reductions (MVRs) of between 13%-22% are a heavy blow to the already beleaguered with-profits (hardly an apt name given the ongoing diminution in value of these useless products) policy holders.
The MVRs will apply to about 1.2 million of Norwich Union's 2.4 million holders of with-profits pensions, bonds and endowments.
John Lister, Norwich Union's chief actuary, is quoted in the Times:
"Since the beginning of the year we have seen equity markets, commercial property and corporate bonds fall significantly in value.
MVRs are a mechanism to ensure that those policyholders leaving or wishing to take money out of the fund do not take more than their fair share of the fund at the expense of those policyholders who remain."
All very well but I wonder, if the with-profits funds had been better managed and profits/losses smoothed, whether such a drastic step would have been really necessary.