Standard Life has announced it is to cut with profits payouts by 8%. The insurer has also warned policyholders of further cuts when their payouts are reviewed again in six months time. Annual bonuses for with profits policies are to remain at the same levels.
Our View
This 8% cut follows a 7% cut in February this year and totals 6 cuts in the past 2 years. Many industry commentators are claiming that any windfall policyholders would have got have now been wiped out by the payout cuts. The average windfall per policyholder is apparently likely to be £1,500. Standard Life said that the cuts were something that needed to happen. We very much doubt they had anything to do with trying not to pay windfall bonuses. Investment markets are still volatile and have even fallen recently, making it unrealistic for insurers and with profits policy providers to pay terminal bonuses at maturity, especially for younger policies.