# Friends First With Profits Pension



## exiledrover (29 May 2014)

I have my pension with FF and the funds is the With Profits funs. Normal Retirement age of the scheme is 65. I have been told that currently a Market Value Adjustment would apply if I were to move to another fund or if I were to retire early

I am 10 years away from retirement. Do you think the MVA will still apply should I wish to retire before NRA.
Ifn effect has this fund any chance of re-gaining ground above the 4% guarantee.

Thanks,


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## Steven Barrett (29 May 2014)

It depends on whether the fund recovers. With Profits fund is mainly invested in bonds to pay for the guarantees. With the way the bond markets are going, it is difficult to see the fund recovering in the next few years. 

The guaranteed With Profits funds were on their way out when I entered the industry so I never recommended them to clients. But it is my understanding that the MVA value is the true value of the fund. The current value you are given includes the bonuses. Maybe someone else with greater knowledge of these funds can confirm? 

I would say you will be extremely lucky to get anything over 4%. 


Steven
www.bluewaterfp.ie


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## LDFerguson (31 May 2014)

I agree with Steven.  Friends First offered this minimum guarantee at a time when it was a lot easier to generate a return of 6%+ per year, but inflation was higher too.  They're now contractually obliged to continue to provide a minimum of 4% growth.  In order to provide that guarantee, the actual investment content of the fund is very conservative - versions of the Friends First With-Profit fund have over 90% in Bonds at present.

So my speculation would be that the 4% annual bonus currently exceeds the actual returns the underlying assets in the fund are producing and therefore you're unlikely to get a better return any time soon, nor are you likely to escape the MVA any time soon.


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## PadKiss (31 May 2014)

Hi Exiledrover there may also be a guaranteed annuity rate attaching to this policy as it may be out quiet a while and worth checking out, and if so it will be worth keeping the plan till the actual retirement date for this reason alone but with 4% g'teed growth this is good in todays terms and also the market adjustment figure cannot apply at normal retirement age. I would even suggest if you could increase the premium to it I would Padraic


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## kateball (2 Jun 2014)

HI Exile drover
Its worth checking into the 4% guarantee by asking some questions of the life company.

What exactly does the guarantee mean? 
What charges are coming off that return?  
What charges are coming off any new premiums you invest?
Who is providing the guarantee and are you entirely comfortable with the counterparty risk? If the bonds dont deliver - will Friends First pay out?

Sorry if i appear negative but its crucial you get the facts before you make up your mind.


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## exiledrover (2 Jun 2014)

Thanks for all the replies. I think you have confirmed my thoughts that I am unlikely to avoid the MVA should I want to retire before my NRA. I'm happy enough with the 4% guarantee and will in all probability leave this go to its natural conclusion.


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## kateball (3 Jun 2014)

I would just be careful that the 4% guarantee doesnt become closer to 2% after all charges. You need to request the guaranteed maturity value -after charges   -and ask what this equates to on an annual basis. Hopefully it will still be 4%.

Thats the only way you will know the real investment return from this plan.


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