Deferment of certain payments from our Life and Pension Property and connected funds
This information should help answer questions you may have about our recent decision to defer certain payments out of our life and pension property, select distribution and select reserve funds.
1. Why have you taken this decision?
The UK commercial property market has endured a difficult period since last summer with a marked change in sentiment from positive to negative. This has resulted in property funds experiencing a higher number of sellers than buyers. The level of withdrawals from our property funds has reached the stage where we now have to sell properties to raise cash to meet the requests for payments out. Commercial property is not a liquid investment and it can take several months to complete a sale.
The decision to defer certain payments has been taken 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.
2. Will my policy be affected?
Your policy will not be affected by this decision unless you wish to switch or surrender existing investments from one or more of the affected funds (property, select reserve and select distribution). We will continue to make regular income payments and when you retire and have investments in one of the funds, we will not defer making payment.
3. How long will you defer my switch or surrender instruction?
The period is dependent on your policy conditions and will not exceed 12 months. 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.
4. What price will I receive when you eventually action my request?
You will receive the price ruling on the date when we are able to action your request. Where a switch has been requested, the same date will apply for the price of the funds into which you are switched.
5. Can I switch or surrender part of my policy that is not invested in one of the funds?
You may switch any investments not held in one of the affected funds at any time under our normal switching procedures. Any switch request should only specify the amount that is to be switched out of the non-property funds. It may be possible to partially surrender your policy however you should speak to your financial adviser before making any decision.
6. How will I know when my request has been actioned?
If you have requested to surrender your policy, we will write to you confirming that payment has been made. Where you have requested a switch, we will write to you confirming that the switch has been made and showing your resultant fund holdings.
7. Can I change my mind before my request has been actioned?
We will allow a request to be cancelled for up to two weeks after the original was made. You should write to us asking that the request be cancelled.
8. Is property still a valid investment?
It’s widely accepted that property has an important place as part of a broader investment portfolio. It is a key asset class that offers diversification from other investments such as equities, bonds and cash. Overall returns are achieved through a combination of income and capital growth and over the medium to longer term property should deliver returns that are somewhere between bonds and equities. Property has also historically shown less volatility than bonds and equities. It should be considered as a longer-term investment similar to bonds and equities. Before you make any decision about your property investments you should speak to your financial adviser.
