Standard Life has commented that final or terminal bonuses are falling because the high investment returns received during the 1980’s are now dropping out of maturing policies.
Whilst Standard Life did not say by how much terminal bonuses would fall, their review of payouts confirmed terminal bonuses would fall.
There is good news for those wanting to cash in their unitised with profits policies because market value reduction rates have fallen. However, for people remaining in the with profits fund, Standard confirmed that the equity content of the fund has fallen from 55.5% to 45.5%.
Our view
Standard Life has always given realistic payouts to policyholders and we have always thought them fair. They need to give what is due to policyholders leaving the fund and protect those that remain. They obviously believe that equities are going to be volatile in the near future and want to lock in any gains they have made by reducing the equity exposure.