PMT member shobe recently disclosed that Philippine pre-need firm Prudentialife is lowering the interest rate it is offering to its Pension Plan products.
In the discussion thread Prudentialife Pension Plan to cut pension interest rate from 12% p.a. to 6% p.a., shobe shared that her mother received a letter from Prudentialife saying the interest rate applied to monthly pension benefits will be cut by half.
The pension plan product used to offer 12% interest per annum but starting October 1, the new adjusted rate is 6% per annum.
Excerpt of the Prudentialife letter below.
For 30 years, Prudentialife has earned the trust of millions of Filipinos as a pre-need market leader. We wish to thank you for making us your partner in providing financial security to your family.
However, the global and domestic economic slowdown has not kept the pre-need industry immune from such a downturn. To safeguard the long-term interest of our valued planholders, the interest rate applied to monthly pension benefits shall be adjusted to 6% per annum or .5% per month effective October 1, 2008. You may opt to continue to enjoy your monthly pension at the adjusted rate or you may collect your lumpsum benefit in full.
Rest assured, Prudentialife will continue to adapt and look ahead by providing you quality products and services through sound and prudent management of your trust fund.
This move is proof that Philippine financial companies are beginning to feel the effects of the US financial crisis. There is nothing wrong with Prudentialife offering a lower pension rate because it is meant to protect the company in general, but the ones going to feel the pain is no doubt the pension plan policy holders. We hope that in the long run, such adjustment will cause Prudentialife to remain a solid pre-need firm and once the bearish period has ended, the pension interest rate will again rise.
Are you affected bu this change? What are your thoughts on the issue? Join the discussion in the thread Prudentialife Pension Plan to cut pension interest rate from 12% p.a. to 6% p.a.
As a financial planner, I understand their move, it may seem like a cost-cutting , but in reality they are actually protecting the interests of their clients by not giving interest business-as-usual.
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