STANDARD LIFE, Europe's largest mutual life insurance company, has slashed bonuses for its 'with profits' life assurance and pension policies, sharply reducing the return to policyholders.
Scott Bell, managing director, said yesterday: 'Reductions in bonuses are unwelcome. I cannot over-emphasise, however, that they are the result purely of the falls in nominal investment returns, and in prospective future returns that have taken place over the last few years.'
The effect of the bonus cuts reduces the maturity value of a 10-year policy, with a monthly premium of pounds 30, from pounds 7,672 to pounds 6,839 if that policy matures this year.
For a man retiring at 65 on 1 February and having contributed pounds 1,000 a year gross over 11 years, his retirement fund will be pounds 23,916, compared with pounds 26,597 last year.
John Hylands, deputy general manager, blamed the lower investment returns in the stock and property markets.
The rates of reversionary bonuses for whole-life with-profits policies are 4.25 per cent on the sum assured, and 5.5 per cent on existing bonuses compared with 4.75 per cent and 6 per cent paid out respectively. The interim bonus rates remain at 4.25 per cent on the sum assured and 5.5 per cent on existing bonuses.
For individual pension policies the reversionary bonus rate declared for 1992 is 5.25 per cent, compared with 5.75 per cent.Reuse content