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Categories: With Profits| Pensions - Retail
Topics: Standard Life| cash| fixed interest
Standard Life is cutting some bonus rates on its UK with-profits plans from 1 February, in a move which will impact about half of the insurer's total policyholders.
From 1 February, bonus rates on some plans will be reduced (see table below) as the insurer invests more money in lower-risk assets such as fixed interest and cash in order to meet higher guaranteed benefits.
"We have reduced the bonus growth rates for some plans to maintain investment flexibility over the long term," said Standard Life with-profits spokesperson Margaret Flaherty.
"For many customers the guarantee continues to be a very attractive element of their investment."
Some with-profits unit prices will grow more slowly from February as a result of the reductions, it said.
The insurer said it expects asset classes such as equities and property to offer better prospects in the long run but higher guaranteed benefits have necessitated a change in investment strategy.
It added most with-profits plans have increased in value in the year up to 1 February, with many consumers receiving valuable guarantees which have built up over the years.
| Bonus growth rate from 1 February 2012 (2011) | Total unit price growth rate from 1 February 2012 (2011) | |
| With Profits Bond | 2.5%pa (2.5%) | 2.5%pa (2.5%pa) |
| Unitised life plans that have a 3% pa unit price growth guarantee | 0.0%pa (0.0%pa) | 3.0%pa (3.0%pa) |
| Other unitised life plans | 0.75%pa (1.25%pa) | 0.75%pa (1.25%pa) |
| Unitised with-profits pensions that have a 4% pa unit growth guarantee | 0.0%pa (0.0%pa) | 4.0%pa (4.0%pa) |
| Other unitised pensions plans | 1.0%pa (1.5%pa) | 1.0%pa (1.5%pa) |
| Share | |
| Comment | Half Standard Life with-profits holders hit by bonus cut |
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see it how it is - a rip off
i am facing an MVR of 20% on my with profits pension fund which i have had with standard life for 12 years. no amount of platitudes around smoothing of investment returns to meet the needs of policy holders in the future will persuade me that this whole business is a con. why if SL paid out too much in years gone by (their claim) should i pay the price via an mvr, why is there a 20% penalty anyway over a 12 year investment period when my mum could have stuck a pin in a donkey's tail on equity choice and still performed better, and why isn't the FSA or the Government pensions regulator forcing SL to take a profits hit and re-distribute that money back into the with-profits funds to forcibly reduce the mvr's? why indeed? the answer to all of this can be found somewhere in Manhattan or the City where the boys club meet to decide on the fate of the little people - same club that self-sorted after the Banking crisis. i thought Christine Lagarde and Obama were going to sort this out from a global perspective, but the club must have got to them.
Posted by: gerald murphy