| If you have a "with profits" pension, or are being | | | | On an ongoing basis, the picture is unlikely to improve |
| advised to invest in one - read on urgently. | | | | for those investors who have many more years |
| A survey by Money Management, an established | | | | before taking their benefits. This is because the |
| personal finance magazine, has once again highlighted | | | | Standard Life with profits fund has only 21% of its |
| the sinking payouts to many investors from well | | | | investments in shares, which in the longer term is one |
| known investment brands. | | | | of the main drivers of growth. |
| Lets take Standard Life as an example. | | | | Another issue here is that ?144 billion of investors |
| Here are the figures based on the Money | | | | money is invested in "closed funds". These are funds |
| Management survey. For a saver who has invested | | | | that are closed to new business, and the survey |
| ?200 per month over 20 years, the fund value from | | | | shows that quite often investors are getting a raw |
| Standard Life would now be ?94,752. This is | | | | deal with returns. |
| compared to the same saver receiving ?243,375 in | | | | An example here would be London Life, who turned |
| 2002. | | | | ?200 per month over 20 years into ?75,593! |
| This is a 61% drop! | | | | If you add to the mix that there has been a fall in |
| In the same survey, many other major insurers | | | | recent years in annuity rates (the amount of pension |
| showed similar falls in payouts. For example: | | | | you receive in relation to the size of your fund), |
| Company, Now, 2002, Fall % | | | | many investors are very worried. |
| Axa, ?103,663, ?249,532, 58 | | | | The survey further showed that investors in these |
| Clerical Medical, ?118,978, ?195,031, 39 | | | | types of funds were totally confused as to what to |
| L&G, ?105,145, ?183,921, 43 | | | | do or what their options are if they find themselves |
| Norwich Union, ?107,097, ?188,777, 43 | | | | in one of these with profits funds. |
| Prudential, ?124,305, ?179,878, 31 | | | | The Financial Tips Bottom Line: |
| Scottish Equitable, ?108,105, ?191,510, 44 | | | | If you have a with profits pension (or endowment), |
| Scottish Widows, ?97,779, ?164,342, 41 | | | | then do not delay - find out how your fund is |
| One of the reasons why this has happened, taking | | | | performing and then you will be in a position to make |
| Standard Life as an example again, is that they | | | | an informed decision. You will either decide to leave |
| misjudged the market in 2000. This meant they had | | | | the money where it is or transfer it to an alternative |
| to reduce the amount that the fund invested in | | | | provider (the latter option requires careful analysis as |
| equities, which in turn led to lower growth on the | | | | there may be penalties to transfer the fund). |
| with profits fund. | | | | |