The total payout on 25-year endowment policies maturing this year was down more than 18 per cent compared with 2004 - although, at 8.7 per cent, its annual rate of return was slightly ahead of most of its main rivals
The fall in the returns was sharper than those of its peers, prompting speculation that worse times may be ahead for existing policyholders.
Annual bonus rates on its life with-profits funds fell from 2.5 to 2 per cent, a similar reduction to those of other life companies. Rates on its pension with-profits funds typically fell 0.75 percentage points to 2.5 per cent.
Commenting on the cuts, John Gill, a managing director of the UK life and pensions business, said: "Stock markets continued their steady recovery during 2004. This has partly compensated for losses during 2001 and 2002 but the transition in recent years to a low inflation, low interest rate environment means long-term investment returns are well below historic levels. This is reflected in lower bonus rates which are necessary to help ensure payouts remain fair. Even so, our payouts continue to stand up well against other types of long-term investments over similar periods."
Meanwhile, a Standard Life policyholder and former financial services industry professional, Mike Hogan, has begun a campaign to get elected to the board in the run-up to the company's proposed demutualisation next year. He is seeking election as an independent director, representing the interests of members.
"There are 2.6 million voting members of Standard Life," Mr Hogan said. "They need proper representation on the board. I am seeking nominations and support to become an independent director who puts members' interests first. The job of turning Standard Life around and demutualising it by 2006 is complicated, risky and expensive. Standard Life's owners, the policyholders, should be involved formally in monitoring progress and protecting their interests."
Elsewhere, Clerical Medical, the life assurance arm of HBOS, announced yesterday an increase in bonus rates for its life business, but a reduction for pension customers. It also unveiled a reduction in penalties for policyholders who choose to exit its with-profits funds. Richard Myers, Clerical's with-profits actuary, said: "Our robust actions to manage the fund in previous years have ensured that policies should see higher payouts than previous years."
Outlook, page 37