What is a Market Value Reduction

On 20th March 2020 the Society implemented a Market Value Reduction for the first time in its history, to protect those continuing to invest with the Society and to ensure fairness to all members. 

The MVR currently being applied is: 

  •  2.5% on ISAs

The Society continues to monitor the situation closely and will look to remove the MVR when markets improve and stabilise. 

If you would like further information on what a Market Value Reduction is, please see our Q&A’s below:

What is a Market Value Reduction (MVR) & what does this mean for me?

A Market Value Reduction or ‘MVR’ is designed to protect members who are not taking their money out of the Society during adverse market conditions and ensures that all members receive their fair share of the with-profits fund. An MVR reduces the amount of payout you receive when withdrawing your monies during exceptional circumstances. 

You will only see the effect of an MVR should you wish to withdraw your monies at the time there is an MVR in place. An MVR can be added, removed, increased or decreased at any time.

Why/when is an MVR applied?

2020 is the first time in the Society’s history that an MVR has been applied.  It only occurs in exceptional circumstances and is implemented as a last resort.

An MVR may be applied during extreme market conditions such as the current global Covid-19 pandemic, to bring the overall payout of a withdrawal or surrendered policy closer to the asset share when the underlying value of the assets in our fund is lower.

We do this to: 

  • Protect the remaining members by making sure that a fair share remains
  • Ensure the surrender value of a policy is not unfairly higher than the market value of the assets in the fund; at the time it is withdrawn

When might an MVR be applied & on which policy types? 

An MVR may be applied to Bonds* 

  • On maturity (any time after five years)
  • A full surrender (before five years) 

An MVR may be applied to an Investment ISA on: 

  • A partial surrender (withdrawal)
  • A full surrender
  • Transferring to another provider 

An MVR may be applied to a Junior ISA:

  • Transferring to another provider 

*Sheffield Mutual Bonds have minimum guarantees despite MVR:

Investment Bonds: We guarantee to pay out a minimum of 103% of the initial investment after five years, regardless of any MVR. 

Income Bonds: The Society guarantees that the application of an MVR after five years will not reduce the proceeds below the capital balance (the initial investment less income and partial withdrawals).

How do I know if an MVR is in place?

We will let you know if you ask for a surrender value, request a partial withdrawal or wish to close your plan when one is in place.

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