Understanding Market Value Reductions (MVRs): what they mean for you
A Market Value Reduction may be applied to certain withdrawals or switches from our With-Profits fund. MVRs are like a safety net protecting everyone who invests in our With-Profits fund. They make sure that every investor gets a fair amount back based on how well the fund has been doing since they started investing.
We think MVRs should be used to make sure that everyone gets treated fairly – whether they keep investing or decide to take their money out.
A Market Value Reduction may be applied to certain withdrawals or switches from our With-Profits fund. We will not apply an MVR if you take your money on a date when a guarantee applies, or on certain life events such as death. Find out more in the sections below.
We will not apply an MVR if you take your money on a date when a guarantee applies, or on certain life events such as death. We promise not to use MVRs to make anyone's investment worth less than it should be based on the value of the assets underlying the plan.
Does the MVR amount stay the same?
No, the amount of an MVR isn't fixed. We calculate it separately for each withdrawal you make and it changes over time. We only apply an MVR if the value of your plan's assets is lower than your plan's total value, including any bonuses you've earned.
Market Value Reductions are used across the industry, but each company has its own way of doing it. Some companies might call them Market Value Adjustments (MVAs).
The MVR amount depends on:
The total value of your plan, including any bonuses.
How well the With-Profits Fund has performed since you invested in it.
Do lots of providers use MVRs?
Market Value Reductions are pretty common across the industry, and each financial service provider has its own way of doing them. You might hear other companies call them Market Value Adjustments (MVAs) too.
If you want to know more, check out 'Your friendly guide to our main With-Profits fund.' You can also get copies of these guides if you need them.
When might an MVR apply?
We might take out an MVR if you decide to switch out of a With-Profits Fund and the value of what your plan is invested in is less than what your plan is worth, including any bonuses. You can find out more about when an MVR might come into play in the documents you get when you start your plan.
Here are some examples of when it might happen:
If you switch to a different investment fund or between our With-Profits Funds.
If you cash in or transfer your plan.
If you retire early or late.
If you take some or all of your money out of your plan (if you're allowed to).
If you pay Adviser Charges from a With-Profits Fund.
If you make certain regular withdrawals.
If we do take out an MVR, it'll be on top of any other charges, like an early cash-in charge, that might apply.
We might change our MVR rules at any time without telling you first. For example, if the value of the investment markets our With-Profits Funds are in goes down a lot and lots of people want to cash in their investments.
If we do change our rules, it'll affect both new plans and any plans already set up when the change happens.
When do we not apply an MVR?
There are times when we won't take out an MVR under certain circumstances. For all the details about when this might happen, take a look at your Product Guide, Key Features and / or Policy Documentation.
Here are a few examples:
We promise not to take out an MVR if the planholder passes away, for plans where this applies.
For pension plans, we won't take out an MVR at the chosen or normal retirement date, as specified in the pension plan info you got, or at the Anticipated Annuitisation Age for relevant Income Drawdown plans.
For endowment plans, we won't take out an MVR when the plan reaches maturity.
