With Profits Pensions

Pension plans have a chequered history, up until the 1980s, most pensions contracts were in the form of some type Life With Profits Pensionsof annuity, and these were often based on with-profits. Individuals would pay money into a retirement plan and would partake in the with-profit fund of the insurance company that they selected.

Companies such as the Prudential and Pearl dominated this market for many years. As pensions became slightly more modern in the 1980s and became known as personal pensions, the range of companies and funds that were accessible were increased, however, a great majority of monies flowing into these plans still went into with-profits or with-profit funds. During the 1980s and 1990s these plans produced respectable returns for the investor, however, as with all with-profit investing, it is in more recent years that the returns have fallen away and the average with-profit fund is struggling now to produce a return that is equivalent to a cash holding.

As it is possible for a pension fund to hold cash, this would mean that unless there were other factors such as guarantees to take into account, there would be little point in holding a with-profit fund within a pension plan today. There are some significant funds still in existence with hundreds of millions of pounds in with-profits.

We list a few companies, which have very substantial pension with-profit funds still in place. All of this money is contributed to investors who are still saving towards retirement and who by default or design have decided to hold their money in these funds for longer periods.

Our site hopefully challenges the whole notion of with-profit investing in the modern world, and if you are holding a with-profit pension or any part of your pension is in with profits then we would strongly encourage you to at least obtain an analysis of the current state of plan of the fund, and what alternatives exist.

The information on this website is to be viewed as general information and does not constitute advice. Views and opinions expressed are those of the individual contributors. Individuals reading the site should not rely on any of the information contained within the site in making any decisions. DMP Marketing cannot be held responsible for any liability suffered by any individual as a result of information contained within the site. In the event that advice or help is required then independent advice should be sought from a regulated independent adviser.