For many people invested in with profits policies, the last bonus declarations were not what they expected - zero. Other companies dropped their bonus rates from last year but continued to pay something.
For those people that did not receive bonuses, the question is how long will it take for them to be reinstated? Will they start to be paid next year? Some companies say that they will need returns of upto 20% before bonuses can start to be paid again.
The other concern is market value penalties that are imposed if you surrender or switch your with profits investment. Some companies are charging up to 30% of your fund value as a penalty, in an attempt to keep some of the value in the with profits fund.
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Our belief is that market value penalties need to come down before there is a possibility of bonus increases. Companies need to make sure their funds are viable and will impose penalties if not. If you start to see penalties reduce and the markets perform well, bonuses could then follow.
If you have a with profits policy and are not sure whether to keep it or surrender it, contact us for advice or guidance.