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Understanding My Policy

Nordben’s Flex Plan is a retirement savings product that was available in seven currencies until Nordben stopped issuing this product to new business in 2000.  It pays out at least the accumulated account (Policy) value on retirement (maturity), earlier surrender or on earlier death.

WHAT ARE THE POLICYHOLDERS’ FUNDS?

The seven currency Policyholders’ Funds (the Funds) are held by Nordben to meet its liabilities under the Flex Plan retirement savings product.

REINSURANCE ARRANGEMENT

In order to effectively manage the liabilities under its Flex Plan policies in-force, Nordben has entered into a reinsurance arrangement with its shareholder Monument Re Limited.  The reinsurance applies from 31 December 2020. 

SUMMARY OF THE REINSURANCE ARRANGEMENT

For the Flex Plan policies, the reinsurance transfers all of the lapse, mortality, and investment (i.e. market, liquidity, and foreign exchange rate) risks from the Funds to the reinsurer.  This removes the volatility which these risks would otherwise introduce to the profits and losses in the Funds.

As a result, the prime source of surplus in the Funds is the reinsurance arrangement, and the reinsurance arrangement links the surplus directly to short term interest rates of the relevant currency.  Further information is available by clicking here

WHAT ARE THE EXPENSES OF THE POLICYHOLDERS’ FUNDS?

Under the reinsurance arrangement, the reinsurer also meets the Funds’ various expenses (costs).  These costs include the investment management charges, policyholder protection charges, and an expected shareholder charge payable to Nordben.

The expected shareholder charge is part of Nordben’s revenue to meet the costs of administering the Flex Plan Policies including making payments from the Policies, complying with anti-money laundering legislation, tax reporting and fulfilling compliance and data protection responsibilities.

The above costs are itemised in the table below:

Charge

Charging Basis

Investment management charges

0.085% per annum of funds under management (per Fund) subject to a minimum amount of NOK 150,000

Charges in respect of the Guernsey Policyholder Protection regime

GBP 25,000 spread across all Funds

Expected shareholder charge*

0.75% per annum for 2021 increasing by 0.05% per annum until 1%

In addition, there may be direct charges which apply to your Policy (such as a charge applied to premiums paid; or charges for optional death/disability benefits).  Please contact us to discuss any direct policy charges.

WHAT IS THE BONUS PAID TO MY POLICY?

The Flex Plan retirement savings product features a bonus which is credited to the accumulated account (Policy) value each year.  The bonus is paid from the Funds to your Policy.

The bonus is declared in December each year and credited to your Policy in the following January (e.g. declared in December 2020 and credited in January 2021).

The bonus cannot be lower than 0%.

The discretionary bonus for each Fund is declared annually and is available by clicking here, which also gives more information on how the bonus is determined in conjunction with the reinsurance arrangement.

If your Policy is surrendered between February to December (inclusive) then an interim bonus will be credited to the accumulated account value if one applies (policies surrendered in January are not subject to an interim bonus).  The interim bonus applicable to your Policy can be accessed by clicking here.

ENHANCEMENT

The enhancement currently applying to benefits paid out from Nordben’s Flex Plan policies is zero and this is not expected to change.

Under the reinsurance arrangement, future bonus declarations are linked to short term interest rates, so whilst the enhancement is currently zero, this approach has resulted in annual bonus rates being higher than they would otherwise be.

Current enhancement information is available by clicking here.

EXPLAINING THE BENEFITS I RECEIVE FROM MY POLICY ON PAYMENT

On surrender, death or retirement, you will receive the accumulated account value plus an enhancement (if one applies).  As noted above, the enhancement currently applying to benefits paid out from Nordben’s Flex Plan policies is zero and this is not expected to change.

BONUS REGULATIONS (HOW IS THE BONUS DETERMINED?)

In order to determine bonuses, a financial review is carried out by Nordben’s Appointed Actuary each year.   The most recent bonus declaration can be accessed by clicking here.

Once credited to your Policy, bonuses are guaranteed in full if held to retirement (so cannot be deducted from your Policy).

Up until and including 30 December 2020, the bonus regulations described that the prime source of the surplus arising in the Funds for distribution to policyholders via bonuses was determined by investment returns, mortality and disability profits, as well as profits arising from surrenders, lapses and paid-up policies (where contractually possible).

With effect from 31 December 2020, the regulations for Flex Plan policies have been amended to confirm the prime source of the surplus is Nordben’s reinsurance arrangement with its shareholder, Monument Re Limited, and that this arrangement links the surplus directly to short term interest rates of relevant currency.  More detail on how the bonus is set in practice is available by clicking here.

Nordben reserves the right to amend the bonus regulations and use its discretion when declaring future annual bonus rates.