Standard Life has lowered its with-profits bonus payments on maturity and retirement by an average o...
Standard Life has lowered its with-profits bonus payments on maturity and retirement by an average of 6% to reflect reduced investment returns in a low inflation and falling interest rate environment.
Following a review of bonus rates and payouts, the mutual has left annual bonus rates unchanged on conventional with-profits products and annualised growth rates on unitised with-profits policies
In light of these adjustments, Standard Life has lowered the surrender value reduction (SVR) that applies when investors withdraw from the with-profits fund through a switch, surrender or transfer. The SVR has fallen from 15% to 8% on conventional life policies, and from 25% to 16% on pensions.
The aim of SVRs is that the amounts paid on withdrawals are broadly aligned to the market value of the assets underlying each policy and Standard Life has said it will remain under constant review and be changed as necessary. While the group believes equity markets will recover over the next few years, it has stated that, as long-term returns are unlikely to equal those of previous years it has revised bonus rates and payouts down as a consequence of this. As evidence of its bullish stance on equities, Standard Life has increased the equity exposure in its main with-profits fund, from 53.5% at 31 March this year to 59% at 30 June.
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