Important information about our life and pension property and connected funds
Since summer 2007, the UK commercial property market has experienced a marked change in sentiment from positive to negative. This has resulted in valuations falling. In addition, there have been significant withdrawals from property funds the numbers of which have recently increased considerably.
The number of withdrawals from our property funds has reached a level where it has become necessary to sell properties to maintain the cash levels required to meet all requests. As it can take several months for property transactions to complete, we have taken the decision to defer certain payments from the life and pension property funds and connected Select Reserve and Select Distribution funds. The decision applies to requests received after midnight on Wednesday 16 January 2008. It does not affect the AEGON Scottish Equitable International fund because it invests in the Norwich Property Trust.
Payments that are unaffected by this decision and will continue to be made are:
- regular income already being paid (from Investment Bond, Trustee Investment and phased retirement / income drawdown policies)
- retirements
- death claims
- court directed pension sharing orders
Transactions affected by this decision where payment will be deferred are:
- Full or partial switches
- Full or partial surrenders
- Pension transfers
- Pension funds transferring to self invested
The period is dependent on the relevant policy conditions and will not exceed 12 months after receipt at our head office of a request to withdraw money from one of the affected funds. We will meet all requests as soon as practically possible. Unfortunately we can't be explicit about how long it will take as our ability to do so depends on the time taken to raise the required cash levels from appropriately valued sales and the number of requests for payments out of the fund.
If you'd like a full list of clients that are invested in one or more of the affected funds please email your agency number(s) and contact telephone number to smartdata@aegon.co.uk
We have taken this decision to ensure fair treatment of all investors in the fund. This means managing the fund to the benefit of long term investors and enabling those wishing to exit to do so at a reasonable price. Certain payments out have been deferred to allow time to sell selected properties at a reasonable price. It would be of no benefit either to those exiting or investors in the fund if the manager were to sell too quickly. We recognise the importance of certain payments which is why the decision does not affect those listed earlier.
This is a challenging period for the commercial property market and investors. We believe firmly that the fundamentals of property as part of a longer term diversified portfolio remain intact. The market is undergoing a correction after a number of years when returns were higher than long run expectations. Capital values are adjusting and yields have increased as a result. Valuations are going through a period of adjustment to the point where income will account for a greater share of total returns. Sentiment in some areas remains negative however a number of fund managers believe there is value in the market and this has been highlighted in recent press coverage. Many articles have also reiterated the importance of taking a longer term view.
We realise that this decision may be a concern to you and your clients and an inconvenience in some circumstances. If you require anything else, please call our dedicated property number which is 08456 100003.
