Pearl With Profits
RWP Research Findings, Overview and Comments
In considering any company and its with-profits RYWP will look to assess a range of factors which will include: the company’s management record; its transparency of information, its financial strength; its prospects for providing future returns and the nature of its with-profits approach.
In this regard we believe that Phoenix run some of the poorest with-profits funds in the UK today. This includes this Pearl fund.
In many respects although their funds are called with-profits, they are run in a similar way to a traditional managed fund. They have lost contact with the basic ethos which originally stood behind the with-profits concept and made it a popular and successful investment. Policyholders are now in funds which more often than not will have poor performance and very limited future prospects.
Overall our view of Phoenix with profits is that their overall with profits performance is poor as is their future return prospects.
We believe we can give the Pearl fund a red light for with-profits – overall its record and position is dire. However, and this may sound extraordinary given how poor their performance has been – there can be reasons to keep a policy even in these circumstances. This may be due to guarantees or penalties, or possible windfall pay-outs. It is only by getting an individual assessment on your own policy that a proper, informed judgement can be made whether to stick with it or look to take action to move.
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Company ownership position
Pearl no longer exists as a stand-alone company, its with-profits is now housed as a closed fund under Phoenix Life.
Phoenix Life and Phoenix Life Assurance Limited are part of Phoenix Group Holdings, a FTSE 250 Company. They operate 13 with-profits funds (10 under the Phoenix Life banner, 3 under the Phoenix Assurance Limited banner) which are all closed to new business. They also operate two non-profit funds. Phoenix is the UK’s largest specialist consolidator of closed life funds. Their funds were all closed to new business by their previous owners, in many cases after experiencing difficulties.
Phoenix Life Assurance Limited Pearl With-Profits Fund
The fund has an estimated value of £9 billion and represents the old Pearl company with-profits fund.
Annual bonuses on nearly all polices appear to have been NIL for a very long time, however policies taken out prior to 1982 do have some annual bonus applied.
This fund really does seem to be the pinnacle of failed with-profits.
The Phoenix policyholders share of bonuses in 2013 was £15.9 million, suggesting that the overall distributed bonuses were around 2% - ALL Included.
Any policyholder in this fund should get an urgent review of their future options, the state of this fund, its past performance and prospects put it amongst the worst possible investment that exists.
THIS FUND IS ASSESSED AS BEING VERY POOR.
Please remember that any of our summary findings or conclusions are general; an appraisal of the general position for that company. There will be situations where an individual policyholder with a company that is ‘good’’ may want to look at surrendering or transferring their policy (for example to secure a guarantee or because it does not suit their risk position), likewise there will be situations where policyholders with a ‘poor’ company want to stick with what they have (for example because the penalty of exiting will be too great). Nothing can replace getting a report based on your unique circumstances; it is only this unique, personalised report which will provide the information that will instruct you on your circumstances regardless of the company and our general comments.