 We wanted to know whether any with-profits companies actually refer to MVRs as a penalty. We googled for articles where the words market value reduction and penalty all appeared in the same article. We found scores of newspaper articles wrongly referring to it as a penalty and the first relevant hit we found from an insurance company was the 94th article to appear where Standard Life stated: An MVR is not a deduction or penalty. If there is an MVR, it means that
the plan value, taking into account the investment returns on the
with-profits fund’s assets, and any smoothing, is lower than the amount
payable when guarantees apply, so if there is an MVR it demonstrates
how valuable the guarantee is.Please take a moment to really understand that statement. It's critical. The MVR is NOT a penalty. If there's a guarantee to not apply an MVR, then that's a truly valuable guarantee. My blog article on Market Value Reductions are NOT penalties explains this in more detail. |
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Explaining Market Value Reductionsposted 28 Jan 2010 04:51 by Miles Hendy [ updated 28 Jan 2010 05:15 ] |