The UK Life Office Closed With Profits Fund Report, issued two weeks ago has highlighted some significant differences between a number of Life Insurance Companies 'closed' with profits funds.
The report says that some closed funds are doing well and others are not. It highlights Scottish Amicable's Fund (bought by Prudential) doing well and others such as AMP's London Life, Britannic Alba Life not doing as well.
Our View
A 'closed fund' is one that can accept no further new applications and generally only continues to receive existing regular premium contributions. This is viewed as a weakened position because if significant amounts of new cash premiums are not coming into the fund, new investment opportunities to gain growth returns for investors cannot be obtained.
Irrespective of who the closed fund is with, caution always needs to be taken.
Many "supertanker" funds such as Prudential will still, even though the fund is closed, be receiving more ongoing investment than many smaller "open" funds whereas smaller life office closed funds may struggle.
Our advice is simple - if you are invested in a "closed" fund - take advice.
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