Q&A – Suspension and Closure of insured Life & Pension Property funds

We have announced a suspension on transactions on a number of insured property funds that we offer. These funds are linked to the M&G Property Portfolio Fund which was suspended on 19^th October 2023.

In December 2023. the Financial Conduct Authority (FCA) granted approval to M&G Investments to start the wind up (closure) process for the M&G Property Portfolio fund. M&G Investments expect this to take c18 months to sell the properties in the fund and fully distribute the proceeds to unitholders in their fund.

As a result of the wind up of the M&G Fund, Prudential has started the process of closing the linked insured life and pension funds. We are still working on the timeline for closure and will contact impacted advisers and policyholders c8-10 weeks before the closure date.

Our linked Life and Pension funds are suspended from 11am on 20^th October 2023.

Property funds have been less popular with investors over the last few years. Investors have sold their holdings, and the Funds are smaller. M&G Investments believes that withdrawals from the funds are likely to continue, and there is a risk this may accelerate in the future. As the funds reduce in size, it becomes necessary for the fund manager to sell some of the fund’s larger properties and buy smaller ones. Doing this will incur high transaction costs which will negatively impact the performance of the funds.

M&G Investments believes that the funds will continue to reduce in size, and after considering a number of options, they've decided that it's in the best interests of investors to close the funds as soon as practicable to allow for an orderly disposal of the funds’ assets and return the proceeds to investors.

The following OEIC funds on Retirement Account are also impacted:

Currently we do not believe this issue will impact any of our other funds.

Their existing investment in the Prudential M&G Property Portfolio life and pensions funds will remain invested.

The following transactions are allowed:

• Taking retirement benefits
• Any claims on death or critical illness
• Pension sharing on divorce

Not allowed:

• Further investments into the fund
• Any switches into the fund

Deferred for up to 6 months:

• Withdrawals out
• Any switches out of the fund
• Life surrenders
• External pension transfers
• Increases to adviser charges taken from the fund

We do have some multi-asset funds which invest in a wide range of assets, with property being just one of those invested in. These are not suspended even where that Property exposure is obtained through the M&G Property Portfolio Fund, but we will continue to monitor the situation.

Due to the planned closure of the Prudential M&G Property Portfolio, we will not accept any new investments into the fund.

Due to the planned closure if the Prudential M&G Property Portfolio, we will not accept switches in to the fund.

Clients can request to switch out of the fund, but this transaction will be logged and deferred for up to 6 months.

Clients can request to withdraw money out of the fund, but this transaction will be logged and deferred for up to 6 months. We can process immediate withdrawals from any other fund holdings where transactions are not suspended, subject to individual policy rules.

For unvested money (in the savings account), partial transfers are permitted. If the money is vested, a partial drawdown transfer is not permitted.

Yes, taking your retirement benefits and maturities will continue to be paid without any deferral. We will also continue to pay out on death claims. For further details please contact us.

Previously arranged regular withdrawals and income payments will continue to be paid.

The funds will remain suspended until they are closed - the suspension will not be lifted at any point prior to closure.

Yes, please call your usual contact for valuations.

The unit price of the fund will continue to be published on our website.

The funds will remain suspended until they are closed - the suspension will not be lifted at any point prior to closure. We will post any updates on PruAdviser and write to affected clients and their advisers once the closure date has been confirmed.

Yes, we have written to all policyholders invested in the fund to advise them of the suspension.

Copies of suspension letters sent to clients:

• https://www.mandg.com/dam/pru/shared/documents/en/10/client-mailing-letter.pdf
• https://www.mandg.com/dam/pru/shared/documents/en/11/genl100663103.pdf
• https://www.mandg.com/dam/pru/shared/documents/en/11/genl100662903.pdf
• https://www.mandg.com/dam/pru/shared/documents/en/11/genl100663102.pdf

We will also be writing to all policyholders invested in the fund to advise them of an objective change as a result of the wind up of the M&G Property Portfolio.

Copy of the objective change letter being sent to clients:

• https://www.mandg.com/dam/pru/shared/documents/en/03/genl100738102.pdf

Once we have finalised the details of the closure of the Prudential fund, we will write to all impacted clients and advisers c8-10 weeks prior to the final closure date.

No, the letter was for information purposes only.

We cannot invest regular premiums into property funds while the suspension is in place. Instead, to allow continuity of investment, any regular premiums that would have been invested in the property fund will now be invested into the relevant cash fund for your clients’ product during the suspension period.

Due to the Property fund suspension and closure, we are unable to allocate any regular premiums to Property. The Cash fund is being used at it is the most suitable alternative and is defined as the default fund to be used under a fund suspension scenario. Your client is free to choose to allocate these regular premiums to alternative funds if they so wish.

Any premiums paid before 20^th October 2023 have been allocated as normal to the Property fund whilst we communicated the suspension arrangements to customers and put in place the processes for redirecting regular premiums during the suspension period.

No – this will be free of charge.

No – the reallocation of premiums is to protect future premiums. Investment switches out of the property fund are currently not permitted.

No - If they would prefer to choose an alternative fund while the property fund is suspended, then they can. We do need them to send us a fund reallocation instruction to allow us to process this request. Or you may want to provide advice before taking any action.

As M&G Investments will be making cash distributions during the wind up process, we have had to make a resultant change to the objective of the Prudential M&G Property Portfolio Funds.

We will be writing to policyholders in the Prudential fund to advise them of this change of objective, prior to us writing to them about the closure of the fund.

We are still working on the details of the planned closure and timeline, once we have finalised the details of the closure of the Prudential fund, we will write to all impacted and advisers c8-10 weeks prior to the final closure date.