Despite stock markets rising and stabilising, Friends Provident has taken the decision to cut both reversionary (annual) and terminal bonuses. Reversionary bonuses have been cut by 0.25% on some unitised with profits policies and terminal bonuses have been cut by around 3%.
Friends Provident commented, the changes announced to bonus rates will ensure there will be a closer alignment of policy payouts with their underlying investment values.
Our View
Many providers, including Friends Provident are still trying to recover from the falling stock markets and be fair to their investors at the same time. Friends Provident confirmed that 2% growth had been seen on with profits investments over the last six months but it had not been enough for them to keep bonuses at the same level. For those unhappy with profits policyholders, spare a thought for policyholders invested with other companies where no bonuses have been paid at all for 3 years. At least Friends Provident is still paying some!