Money News
Some four and a half million Prudential policy holders may be in line for windfall payments in 2009. The firm is one of a number of assurance groups, notably Norwich Union, considering buying out policyholders' entitlement to the so-called 'orphan assets' in the firm's with-profits fund.
We're not talking small beer here, the orphan assets are estimated to be worth a total of £8.7 billion. However, individual policyholders are unlikely to get much more than a few hundred pounds each. To be eligible for a payment, policyholders must have held an eligible policy in the with-profits sub-fund (WPSF) on 14 March 2007. New with-profits policies taken out now will not qualify for a windfall.
Making any changes to your policy is "unlikely to increase the size of any cash payment or further bonus additions" but the Pru also warns that, "Existing policyholders who reduce their with-profits investments (through, for instance, surrendering their policy, transferring all or part of their investment out of with-profits, taking their pension benefits early, or stopping making payments to their policy) are likely to lose any entitlement they may have to receive a payment in connection with the reattribution, or reduce the amount of the payment that may otherwise be due to them."
The company emphasised that no decision has yet been taken to go ahead with the distribution of surplus assets and policyholders need not take any action at this stage. There is a hotline to deal with policyholders' questions on 0845 300 2641 (8am to 8pm Monday to Friday). Alternatively, policyholders can write to: Prudential, Stirling FK9 4UE.
The Pru has appointed retired City lawyer Peter Bloxham to consult with policyholders and scrutinise any proposal put forward by the company to make sure it is fair to them. Government policy (such as it exists) would suggest that no more than 10% of the orphan assets should be distributed to shareholders with the rest going to policyholders.
15 March 2007 © Moneyextra.com
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