Australian Mutual Provident has closed its specialist pension company NPI to new business. This closure to new business now means that none of AMP's life and pension companies are taking on new clients. However, AMP did state that annual or contractual policy increases that are already in place would continue.
Henderson Global Investors actually manage the assets of NPI and has done since AMP bought NPI in 1999. In a letter sent by Henderson, some of the NPI funds will be incorporated with Henderson and take their brand. Others will retain the NPI brand but the intention is for cost efficiency.
The closure will mean around 900 redundancies for staff and there are worries about the future of the fund performance, charges and administration. For with profits fund investors, their money is currently sitting in a very low risk fund with very few equities. This could mean a problem for growth in the future, especially if equities start to move upwards again. This would mean missing the potential for growth. However, lower risk growth of around 4% or 5% per year could be suitable for some investors.
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Henderson stated that they wanted to allay confusion or concerns and that clients should take comfort from the continuity of fund management for their existing investments. With an exit charge of around one third of your fund value, this would seem nothing like comfort but a forced reason to stay with the company, if you don't want to lose 33% of your money.
The higher exit charges will be applied to people that have not been invested for long. For those that have been invested for ten years or so, the penalties will be much lower. It is imperative that you take advice if you have policies with NPI.
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