by William Robins on Feb 16, 2012 at 15:10
Article from City Wire
Around 400,000 Legal & General (L&G) with-profits customers will see their regular bonus rate cut by 0.25% amid volatile market conditions.
According to a spokesman L&G has 600,000 with profit customers with approximately 200,000 in endowment policies, where annual bonus growth rates remain at last year’s 1.25%. However 200,000 pension policies will see a drop from 2.25% to 2%.
Another 200,000 are in bonds. Of that number around half are in income-based bonds where annual bonuses have also fallen from 2.25% to 2%. The other half are invested in growth bonds where rates have also been cut by a quarter of a percent at 1.75%.
Total bonuses of £459 million have been added to with-profits policies, up 11.6% on the £411 million paid in 2010.
L&G said the increase reflected a rise in the number of customers whose with-profits policies matured over the year.
Tim Sheldon, L&G’s with-profits actuary said: ‘In current market conditions the core features of with-profits…mean [they] remain a good choice for investors seeking steady growth from a spread of investments over the longer term with some downside protection. In these uncertain times the benefits of smoothing and guarantees can provide advantages to with-profits policyholders over other forms of investment.’
L&G is the latest provider to cut regular bonuses for 2012.
Around one million Aviva customers will face a cut with rates at 2.5% for bonds, 3% for pensions, and 2.75% for stakeholder pensions. These are all drops from the 2011 rates of 2.75% for bonds, 3.25 for pensions and 2.75% for stakeholder pensions.
Article from City Wire
