SCOTTISH WIDOWS WITH-PROFITS BONUS RATES

Transcription

1 SCOTTISH WIDOWS WITH-PROFITS BONUS RATES 11 January 2016 Scottish Widows announces changes to bonus rates for its with-profits policies as of 1 January Regular bonus has been added to 295,000 unitised with-profits policies and 57,000 conventional with-profits policies. The Scottish Widows With-Profits Fund pre-tax investment return was 3% for the 12 months to 31 December Market Value Reductions (MVRs) do not apply to most Unitised With-Profits units. A 25-year 50 a month mortgage endowment will pay 27,490. A 20-year 200 a month personal pension will pay 77,633. 1

2 Included in this news release: 1. payouts 2. Regular bonus rates 3. Final bonus rates 4. Financial strength 5. Asset mix 6. Number of policies 7. Fund size 1. MATURITY PAYOUTS PAYOUT EXAMPLES The tables below show examples of how the values of typical policies changed over the last 12 months. Conventional With-Profits Policies a) Personal Pension 1/1/15 1/1/16 at 1/1/16 of 25 years 110, ,028 26,533 2,400 7,975 The above example is based on a male, investing 200 a month, for 20 years, ending one month before retirement at age 65 on 1 January b) Life Endowment 1/2/15 1/2/16 at 1/2/16 of 25 years 24,306 28,094 8, ,788 The above examples are based on a male non-smoker investing 50 a month from age 29 for the policy terms shown ending on 1 February c) Life Mortgage Endowment 1/2/15 1/2/16 at 1/2/16 of 25 years 23,783 27,490 7, ,707 The above examples are based on a male non-smoker investing 50 a month from age 29 for the policy terms shown ending on 1 February

3 Unitised With-Profits Policies a) Personal Pension 1/1/15 1/1/16 at 1/1/16 of 5 years 10,532 13, ,400 2, years 26,424 30,240 3,452 2,400 3, years 47,172 52,215 9,873 2,400 5, years 71,193 77,633 16,724 2,400 6,440 The above examples are based on a male investing 200 a month, for the terms shown above, ending one month before retirement at age 65 on 1 January b) With-Profits Bond over the 1/1/15 1/1/16 period 15 years 14,846 15, The above example is based on a 10,000 single contribution on 1 January 2001, made by a male aged under 70 at the outset. 3

4 2. REGULAR BONUS RATES a) Conventional With-Profits Policies Regular bonuses on conventional with-profits policies are normally reviewed annually and are added on 31 December each year. The rates added on 31 December 2015 are set out below. The rates in brackets are those added on 31 December Product Category Bonus Rates per annum Sum Assured Attaching Bonus Life Contracts 2.00% (2.00%) 3.00% (3.00%) Pre-15 February 1999 Pensions 0.00% (0.00%) 0.00% (0.00%) Post-15 February 1999 Pensions 1.50% (1.50%) 1.50% (1.50%) b) Unitised With-Profits Policies With effect from 1 January 2016 the regular bonus rates for unitised with-profits policies are as shown below (the last declared rates, from 1 July 2015, are in brackets). Product Category Bonus Rates per annum Pension-fund policies 2.50% (2.50%) With Profits Bond & Regular Premium Life 3.25% (3.50%) policies Flexible Investment Bond 3.00% (3.50%) Jersey Bond 3.50% (3.50%) International Investment Bond (Sterling) 3.50% (3.50%) International Investment Bond (Euro) 3.25% (3.00%) International Investment Bond (Dollar) 3.75% (4.25%) All of these policy types are eligible for. 4

5 3. FINAL BONUS RATES Final (or 'terminal') bonus rates are set taking account of the actual investment experience of investment with the further aim of smoothing out the extremes of fluctuations in stock markets. Rates vary depending on policy types and terms. The following tables show examples of the rates applying from 1 January The rates in brackets are those declared previously on 1 July a) Conventional With-Profits Policies Final bonus Year of entry Life assurance Regular premium pension Single premium pension % (223%) % (103%) 90% (81%) 110% (105%) % (54%) 19% (18%) 41% (40%) % (34%) 31% (29%) 13% (11%) 2005 N/A 41% (41%) 38% (36%) The is expressed as a percentage of guaranteed cash benefit, including regular bonus added. b) Unitised With-Profits Pension Policies Units Purchased Final bonus % (51%) % (47%) % (17%) % (28%) % (19%) The is expressed as a percentage of the bid price of units, which includes regular bonus added. 4. FINANCIAL STRENGTH Independent consultants and ratings agencies have analysed Scottish Widows financial strength and we have been allocated the following ratings: The rating agency Moody s has rated Scottish Widows as A2 (Good) The rating agency Standard & Poor s has rated Scottish Widows as A AKG Actuaries & Consultants has rated Scottish Widows as B+ (Very Strong) 5

6 5. ASSET MIX With Profits Fund The majority of with-profits policies are currently backed by the following mix of assets 31 December June December 2015* Fixed interest Corporate 16% 16% 14% Government 5% 3% 3% Property 14% 13% 13% Equity shares UK shares 20% 21% 20% Non-UK shares 26% 25% 24% Absolute return** 7% 7% 12% Other investments 12% 15% 14% (Including cash deposits) *Estimated asset mix based on the most up to date information available (30 November 2015) ** Absolute return is an investment strategy which aims to generate investment performance from relative stock movements rather than from the general performance of an asset class. 6. NUMBER OF WITH-PROFITS POLICIES IN FORCE The total number of with-profits policies in force as at 31 December 2015 is shown below. Number of Policies Life Pensions Total Conventional 42,000 46,000 88,000 Unitised 38, , ,000 Total 80, , , FUND SIZE The size of the With Profits Fund as at 31 December 2015 is 11.8bn. ENDS For further information please contact: Kevin Brown, Scottish Widows, Notes to editors: Scottish Widows was founded in 1815 as Scotland s first mutual life office and is one of the most recognised brands in the life, pensions and investment industry in the UK 6