Norwich Union savers face penalty

Insurer Norwich Union has announced that more than one million of its savers will have to forfeit up to 22% of their policy's value if they want to cash in their investment early.

Some 780,000 pensions policyholders and 530,000 life customers who have policies in the CGNU, NULAP and CULAC funds will be affected by the move to reintroduce so-called market value reductions (MVR).

The MVR will vary according to when the units were purchased, but will be between 13% and 22% of a policy's value.

The insurer, which is part of the Aviva group, blamed "extreme market conditions" for its decision, adding that it did not want people leaving the fund to take more than their fair share of the assets.

Chief actuary John Lister said: "Since the beginning of the year we have seen equity markets, commercial property and corporate bonds fall significantly in value.

"As a result we have reviewed the situation and have decided to introduce MVRs for policyholders who have unitised with-profits policies and who wish to make a partial or total withdrawal from the CGNU, NULAP and CULAC funds."

The move will not affect customers who have conventional with-profits policies.

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