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With-profits X-ray: CIS With-Profits Stakeholder fund

by Guy Vanner, AKG on Dec 11, 2008 at 00:01

Good performer? This week’s fund may well be a legacy of past government thinking but it is nevertheless relatively modern and scores well on transparency and future performance prospects, says AKG’s Guy Vanner.

Keeping in step with government financial initiatives can be quite challenging. Indeed it is perfectly possible to be following yesterday’s drive when today, those on high, now want you to do something completely different.

Currently we are seeing significant activity by government to get us to spend more, and thus minimise the effect of the economic downturn or even lift the country out of recession.

But was not yesterday’s talk all about a savings gap and the need for compulsion and other measures?

This week’s reviewed fund is a legacy of past clever government thinking; stakeholder pensions. Given today’s predicament, this initiative gives cause to wonder what the situation would be like now if it had caught on.

Review implications

Being of stakeholder origin the fund is modern and quite transparent. While financial strength has been eroded in recent years, future performance is good and advisers may not consider reviewing holdings in the fund as a priority based on its financial strength, future performance and transparency position.

Being of stakeholder origin the fund is modern and quite transparent. While financial strength has been eroded in recent years, future performance is good and advisers may not consider reviewing holdings in the fund as a priority based on its financial strength, future performance and transparency position.

The following extract covering the Co-operative Insurance Society Ltd CIS With-Profits Stakeholder fund is drawn from AKG’s 2007 UK Life Office With-Profits Report (full details: www.akg.co.uk).

Company financial strength

CIS has come under some pressure in recent years and is going through a ‘modernisation’ process to ‘ensure its future as a profitable and growing operation with a distinctive customer service proposition’. It now operates as a long-term business operation with a relatively low level of free assets. Successful implementation of its modernisation plan is key to ongoing financial strength.

Fund background

The fund, a sub-fund of the CIS Long Term Business Fund, was launched in 2001, to provide a segregated pool of assets to meet the requirements for offering a with-profits option when CIS entered the stakeholder pension market. The fund effectively became closed in April 2006, when CIS launched its new individual personal pension product. The fund technically remains open, but it is not actively marketed.

As the name suggests, the With-Profits Stakeholder fund consists entirely of the unitised with-profits portion of CIS’s stakeholder pensions business. The fund is used solely to manage with-profits stakeholder pensions business. The assets of the fund are separately identifiable from the other assets of the CIS Long Term Business fund.

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