Eagle Star has just announced it is cutting annual bonus payments to zero on conventional with profits pensions. Conventional with profits life policies will apparently still receive an annual bonus of 1% this year. Series 5 unitised profit policyholders will receive 1% on life policies and 2% on pension policies.
Eagle Star confirmed that any Market Value Reduction penalties would now not apply to any 90:10 policies.
Our View
The move to zero annual bonuses on pension policies was apparently made to enable guaranteed benefits to be paid out to qualifying policyholders. If those policyholders represent the same people now receiving no annual bonus, Eagle Star cannot be criticised - they are protecting people with guarantees.
If not, non-guaranteed policyholders are being penalised by guaranteed policyholders. We obviously welcome the move to eliminate the MVR on 90:10 policies and hope that Eagle Star can start to increase bonus payments to policyholders within the next few years.