In 2009, in a leading-edge move for the UK life assurance industry, we offered Phoenix & London Assurance Limited (PALAL) pension policyholders with guaranteed pension rates (GPRs) the opportunity to increase their potential return. This change was carried out under a formal legal process called a ‘Scheme of Arrangement’.

We gave policyholders the chance to convert their policies by releasing their guarantees in exchange for:

  • an immediate increase in their fund value; and
  • changes to the investment mix to include a significant exposure to investments with potentially higher returns.

Guarantees are valuable because they offer a degree of certainty. However, in order to provide that certainty, PALAL had to follow a cautious investment policy which constrained the returns for most pension policies. The terms of the conversion offered a significant opportunity to receive a higher pension, albeit dependent on future performance.

Policyholders could opt out and have their policy and investment strategy stay the same, but only 5% chose to do so. Around 50,000 policies were converted on 1 January 2010.

Information that we sent to policyholders when we were proposing the change is provided below.

Vote letter 

Guaranteed pension rate (GPR) guide

‘Outline of Scheme’ booklet

‘The Scheme in detail’ booklet

Example personal illustration

In 2011, PALAL became part of Phoenix Life Limited (Phoenix Life).

2011 PALAL transfer to Phoenix Life

If you have any further questions please contact us.