With Profits funds were designed to provide policyholders with a safe and sound investment which could be relied upon to deliver profits both in good and bad years on the stock market.

They achieved this by holding back some of the profits in very good investment years – putting them into a reserve fund – to be used to subsidise losses in bad years so that investors enjoyed a ‘smoothing’ of investment returns.

This strategy worked well for many decades for investors and insurance companies alike. But, then, insurance companies started to give away generous guarantees to policyholders about future investment returns and make rash promises about minimum rates of growth.

When investment markets turned against these insurers, and annuity rates started to fall dramatically, large numbers of With Profits insurance companies suffered badly. Not as badly as their policyholders, though!

It isn’t over yet, though. Not by any means. Specialist With Profits actuaries and consultants regularly review dozens of With Profits providers and are not afraid to name and shame those who continue to offer very poor value to policyholders and, they believe, look likely or certain to continue to do so for many years to come.

If you are currently invested in one of the following With Profits funds you must, please, contact The Pensions Office urgently.

Equitable Life
London Life
NPI
Pearl Assurance
Scottish Mutual

Many others might not be quite as questionable as these, but perhaps they aren’t much better! If in doubt……