Tens of thousands of people with an investment policy to pay off their mortgage or provide a pension have no idea if the policy will actually generate enough cash, the financial services regulator AFM said on Tuesday.
One in five of some one million policyholders do not know if their investment will generate enough money when it matures to meet their financial obligations, the AFM says.
And of the 800,000 who are on top of their financial situation, three-quarters expect to get less money from their policy than expected, the AFM’s latest consumer survey shows.
The economic downturn means many investment policies are likely to produce much lower returns than expected. And even though financial service firms have to update their clients every year, many people are still not aware of their own situation.
The AFM is also urging financial service firms to alert clients who may be in difficulty and to recommend steps they can take to make up any shortfall.
The nearer a policy is to maturing, the more difficult it will be to bring it back up to the expected financial return, the AFM says.