AXA has just announced that former Equity & Law with profits policyholders will face a cut in their bonuses for 2004. The 2003 bonus of 3% will be cut by one third to 2% in 2004 and AXA has once again sited stock market performance as the driving force for the cuts. 50,000 policyholders will be affected.AXA's Chief Actuary, Mr Peter Shelley said "Although investment returns have increased, the effect of the poor performance of the stock market over the past few years means that several years of increasing performance would be needed to restore regular bonus rates.
Our View:
This is another blow for with profits policyholders, taking their returns to less than the rate of inflation. For those policyholders with mortgage endowments, matters are getting worse because returns are not increasing in line with projection letters that are being sent out. Many companies send projection letters based on returns of 4%, 5% or 6% being 'a realistic level of growth'. Clearly, these rates are not being achieved. Mortgage endowment holders need to take action and take advice. There are so many options available but they will become fewer and fewer, the longer you ignore the problem.