Scottish Provident With Profits
RWP Research Findings, Overview and Comments
In considering any company and its with-profits RYWP will look to assess a range of factors which will include: the company’s management record; its transparency of information, its financial strength; its prospects for providing future returns and the nature of its with-profits approach.
In this regard we believe that Phoenix run some of the poorest with profits funds in the UK today. The Scottish Provident fund has been one of the better performers within this overall mix. However it is better than some truly appalling ones, the comparison is therefore against a low benchmark.
In many respects although their funds are called with-profits, they are run in a similar way to a traditional managed fund. They have lost contact with the basic ethos which originally stood behind the with-profits concept and made it a popular and successful investment. Policyholders are now in funds which more often than not will have poor performance and limited future prospects.
Overall our view of Phoenix is that their performance is poor as is their future return prospects.
We believe we can give the Scottish Provident fund a moderate rating; it is not as bad as some of the other funds in the Phoenix ‘stable’. Overall its record and position is better than most of the other Phoenix with-profits funds, but judged as an investment against many alternatives it remains a ‘questionable’ investment. Any judgement call must ultimately be based on an individual policy by policy basis; there can be reasons to stay or reasons to exit a policy, which can only be determined by that individual policy’s position and that of the policyholder. This judgement can only be made by looking at the specific detail and information.
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Company ownership position
Scottish Provident no longer exists as a stand-alone company, its with-profits is now housed as a closed fund under Phoenix Life.
Phoenix Life and Phoenix Life Assurance Limited are part of Phoenix Group Holdings, a FTSE 250 Company. They operate 13 with-profits funds (10 under the Phoenix Life banner, 3 under the Phoenix Assurance Limited banner) which are all closed to new business. They also operate two non-profit funds. Phoenix is the UK’s largest specialist consolidator of closed life funds. Their funds were all closed to new business by their previous owners, in many cases after experiencing difficulties.
Scottish Provident With Profits Fund
The Phoenix Life Limited SPI With Profits Fund consists of former Scottish Provident Limited SPI Fund policies. This fund has an estimated value of £3.1 million.
The annual bonuses on this fund in the past couple of years have not been too bad compared to other Phoenix with-profits – 3-4% on unitised with-profits.
Their shareholders received a share of traditional with-profits bonuses which amounted to £19.3 million in 2013. Not knowing the split between traditional/unitised with-profits it is difficult for us to estimate the return on their funds, but it looks like this is in the 3-4% range across the board.
Please remember that any of our summary findings or conclusions are general; an appraisal of the general position for that company. There will be situations where an individual policyholder with a company that is ‘good’’ may want to look at surrendering or transferring their policy (for example to secure a guarantee or because it does not suit their risk position), likewise there will be situations where policyholders with a ‘poor’ company want to stick with what they have (for example because the penalty of exiting will be too great). Nothing can replace getting a report based on your unique circumstances; it is only this unique, personalised report which will provide the information that will instruct you on your circumstances regardless of the company and our general comments.