The Money section has been inundated with e-mails, blogs and letters from angry readers trapped in with-profits funds that have been closed to new business. Millions of British savers have a total of £95 billion invested in these schemes.
Many thought they were being thrown a lifeline when “vulture” firms such as Pearl and Resolution started buying scores of these funds in 2004, but The Sunday Times revealed last week they have had no impact. Policyholders in funds now owned by these firms missed out on returns of £2.7 billion last year because they lagged both open funds and other closed funds.
Investors are particularly angry about the high penalties, called market-value adjusters (MVAs), that prevent them moving their money elsewhere.
One Sunday Times reader