Friends Provident has announced average cuts of 6% to with profits policy payouts and cuts in annual bonuses.
Main Series policies have been cut between 0.25% and 1%, New Generation pensions have fallen from 3.4% to 2.4%, unitised with profits bonds have fallen from 2% to 1.5%, pension investment bond bonuses have reduced to 1.5% from 2.5% and endowments have had their bonuses halved from 0.5% to 0.25%.
Our View:
Friends Provident openly commented that their investments had returned 9.4% last year but since the year 2000 the overall returns were still -6.5%.
As has been the case with many other companies, bonus rates have been cut, seemingly in an attempt to build reserves and strengthen the assets of the company. This will be bittersweet news for with profits endowment policyholders who will possibly see their maturity forecasts fall deeper into the red.
However, many conventional endowment providers have not been paying bonuses over the last few years but Friends Provident are continuing to do so.