Investors in the LV= with-profits fund will see their policy values fall by an average of 1.2%.
Over the past five years, the with-profits fund has made a cumulative investment return of 29%, while average annualised returns were 5.23%.
LV= expects to add around £84.5m in bonuses to policies, but confirmed it will cut annual bonus rates on with-profits products, in line with other providers.
Customers using a With-Profits Pension Annuity Series 3, purchased in 2007, will see annual bonuses cut from 2.8% in 2007to just 1.4% over 2008, the biggest single reduction in LV='s range.
Wit-profits income bond has also been hit, with rates cut to 3% from 3.75%, while with-profits growth bond will now yield a 1.75% bonus, compared with 2.25% a year ago.
John Perks, life & pensions director at LV=, says: "Exceptionally volatile investment markets in 2008 have inevitably impacted the performance of many funds, including short term with-profits returns.
"The average fall in the value of a maturing 25 year with-profits policy is 1.2% but thanks to smoothing this is much smaller than the fall in the actual value of the assets backing the policy. It also compares favourably with a fall of over 32% in the FTSE All Share Index over the same period."
The firm says it will continue to manage the fund with long-term goals as a priority.
Contact: John Bakie, Tel: 020 7484 9805, e-mail: [email protected]IFAonline
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