Many with-profits policyholders at Abbey National, Scottish Provident and Scottish Mutual could be w...
Many with-profits policyholders at Abbey National, Scottish Provident and Scottish Mutual could be walking away with annual and terminal bonuses of 0% based on announcements from the Abbey Group for bonus rates.
Anyone owning a 10-year unitised personal pension starting in March 2003 could find they receive no bonus at all, thanks to today's announcement, as well as no annual bonus.
Abbey National argues that the smoothing of with-profits means they haven't lost any money, however, some people will be disappointed to find the larger payout usually expected the end of a pension policy, for example, is not being paid.
Annual bonus rates have now been set at between 0% and 4% on Scottish Mutual policies while unitized terminal bonus rates are set at between 0% and 17.5%, depending on the date they were started, compared with last year's payouts of around 3-4%. The few policies that will receive payouts of 3-4% may do so because they hold guarantees.
Abbey and Scottish Mutual single premium unitised 10-year pension plans will get a 3% terminal bonus while 15-year regular premium pension plans pick up only a 1% terminal bonus.
Scottish Provident will pay a rare 17.5% terminal bonus on 10-year single premium, unitised pension plans.
Further MVRs of up to 25% are still imposed on Scottish Mutual products, along with 22% MVR on Scottish Provident with-profits policies.
Abbey has already closed its Scottish Mutual and Scottish Provident with-profits funds to new business at the end of last year, as well as cease manufacturing of such bonds under the Abbey brand, cut the equity exposure of Abbey funds and increase the use of derivatives to reduce the impact of further falls.
SM's S32 policy will remain open to new business until March 31st, says Abbey National.
Despite this, Scottish Mutual says it still intends to launch a Sandler-friendly 'Smoothed Investment Bond', as part of its move towards "less-capital intensive" portfolios.
Bond example tables are based on a £10,000 single contribution made by a man under age 75 at outset while pension examples are as issued to a male for a monthly premium of £200, maturing at age 65, with a return of fund death benefit.
Bonus rates and payouts are as follows:
Scottish Mutual With Profits Bond over a five year period
| ||Commenced 2.10.97Cashed in 2.10.02||Commenced 1.3.98Projected cash-in value at 1.3.03|
|Market Value Reduction||£1,285||£1,892*|
|Yield per annum||2.95%||1.41%|
Scottish Mutual 10 Year Personal Pension
| ||Commenced 1.10.92Maturing 1.10.02||Commenced 1.3.93Projected Maturity at 1.3.03|
|Yield per annum||6.90%||6.06%|
Scottish Provident With Profits Bond over a ten year period
| ||Commenced 2.10.92Cashed in 2.10.02||Commenced 1.3.93Projected cash-in value at 1.3.03|
|Yield per annum||9.29%||7.32%|
Scottish Provident 10 Year Personal Pension
| ||Commenced 2.10.92Maturing 2.10.02||Commenced 1.3.93Projected Maturity at 1.3.03|
|Yield per annum||7.77%||6.14%|
Abbey National Life 10 Year Personal Pension
| ||Commenced 1.3.93Projected Maturity at 1.03.03|
|Yield per annum||5.59%|
*Abbey Nation Life was launched in February 1993, so 10-year figures are only available from that date while the with-profits bond was launch in June 1999 and is therefore no five-year surrender value yet available.
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