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Guide to With-Profits



    It is easy to see why with-profits proved so popular. Indeed if you ask most people what they want even in 2014 they describe the aim of with-profits funds: to offer part of the upward curve of stock markets, in a trade-off for a cushion against some of the downside.

    That is why, despite front page headlines screaming the demise of this product and regulators tackling actuaries who struggled to explain their “smoothing” techniques, with-profits policies remain and still come in many forms.

    This guide will explain what your options are for closed with-profits pots, the shape of popular policies of this type today, and what to consider when contemplating your with-profits options.

    Supporting material for this guide has been provided by: Mike Kipling, with-profits actuary at Friends Life; Paul Turnbull, actuarial and capital director at Aviva; and Phil Brown, head of retirement propositions at LV.

    In this guide


    Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

    1. What is the typical profit split for a mutual with-profit fund?

    2. Who was described by Lord Penrose as a “manipulative and autocratic character”?

    3. As a general rule, large funds and those still open to new business have lower exposure to equities and property.

    4. What is the sign of a strong closed with-profits fund, according to Mr Kipling?

    5. What does the FCA have to be sent when a with-profit fund closes?

    6. What must a with-profits provider produce and make publicly available for each of its funds?

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