Perfect Choice sellers to receive £1/2 million loyalty bonus
The transfer of Perfect Choice Funeral Plans from a trust fund-based operation to an insurance-based product with Ecclesiastical Insurance Group not only helped secure future business in the changing pre-arranged funerals market, but has also resulted in an unexpected benefit for Perfect Choice sellers: 400 of them will now share a tax free loyalty bonus worth in excess of £500,000.
Since 1 July 2006 Perfect Choice Funeral Plans have been administered by Ecclesiastical, which has invested the monies within whole of life insurance policies for the future provision of the funeral. Similarly, funds originally held by Perfect Assurance Funeral Trust in two trust funds were transferred to Ecclesiastical and converted into whole of life policies.
As a consequence of the change of investment, NAFD Services Limited undertook a full valuation of the assets of the two trusts and identified a surplus of funds which will now be returned to accredited plan sellers as a loyalty bonus.
“Over the years, in accordance with advice received from the Actuary for Perfect Assurance Funeral Trust, the trustees maintained a prudent approach in respect of the allocation of earnings by the trusts to plans within the scheme, which gave rise to a significant surplus over and above the sum required to fund those plans,” explains senior trustee Barry Hutsby.
“Then, a further surplus was created when the monies held in the trust funds were used to purchase the whole of life insurance policies, because the amount required to purchase policies equating to the plan values was approximately 98% of the actual plan values.”
Rewarding accredited plan sellers
A reserve fund has been set aside to provide for any future financial eventually and the surplus will now be distributed among NAFD members who held plans within the two trusts as of 1 July 2006. To achieve a fair distribution, the loyalty bonus payments due to each firm will be based on the number of plans in place and the total value of those plans at the changeover date.
“We are delighted about this distribution to Perfect Choice plan sellers, which has come about because of the prudent management of the trust funds operated by Perfect Assurance Funeral Trust between 1992 and 2006,” says NAFD chief executive officer Alan Slater.
“Given the current economic climate, I’m sure NAFD members who sell Perfect Choice Funeral Plans will agree that these loyalty bonuses have come at an opportune time, while the fact that the monies are tax free adds further value to those businesses receiving them.”
The process has been slow because NAFD Services first had to validate the financial status of the two trusts, to establish the extent of the surplus, and then negotiate with HM Revenue & Customs to clarify and resolve the tax liability. Its accountants then worked to achieve tax free status for the distribution.
Perfect Choice Funeral Plans – flexible and secure
The transfer of Perfect Choice to an insurance-based product has enabled plan sellers to retain the flexibility to set prices in line with their business requirements and local market forces. They also receive a definitive return, since the investment is guaranteed to rise in line with increases in the Retail Price Index, including the amount that covers disbursements.
Since Ecclesiastical operates as a registered charity it ensures the highest possible protection for plan purchasers’ money and this, in turn, means that Perfect Choice sellers are secure in the knowledge that funds will be available when they are called upon to carry out funerals.
“As the third anniversary of our relationship with Ecclesiastical approaches, the benefits are clear – plan sales continue to rise, the level of service both to plan holders and participating funeral directors has never been so good and the speed at which payments are made when claims are submitted must be a scheme leader,” adds Mr Hutsby.
“We look forward to the forthcoming enhancements to the Perfect Choice product and continuing high standards, both in terms of investment and plan administration.”
