Norwich Union has dropped its exit penalty (market value adjustment or MVA) on with-profits funds from 11% to 7%. Hopefully, this may lead to other providers following suit.
The falling markets resulting in poor investment performance have lead providers to increase their market value adjustment levels over the last few months. Experts believe that NU is the first to cut its MVA but they say it won't be the last.
The markets have been volatile but have recently stabilised, which is good news. MVAs are reviewed daily and with progress in the market, providers could be looking to follow Norwich Union's lead. Although we are still in turbulent times, the dropping of the MVA is a sign of improvement.
However, it is our view at that MVAs will still be around for some time yet.
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