Money News
Standard Life has confirmed that bonus growth rates for unitised with profits life policies will remain at 2% p.a. for With Profits Bonds and 1.5% p.a. for other life policies not subject to a 3% unit price growth guarantee. Where the 3% guarantee applies, unit prices will continue to grow at 3% p.a.
The bonus growth rates for unitised with profits pension policies remain at 2% p.a. except where a 4% unit price growth guarantee applies. For the latter, unit prices will continue to grow at 4% p.a.
Elsewhere, annual bonus rates for conventional with profits life policies remain unchanged at 0.25% on the sum assured and 0.5% on attaching bonuses. For conventional with profits pensions policies the rates are 0.25% on the sum assured and 0.25% on attaching bonuses.
Due to more positive investment conditions policies of all types have grown in value since February 2006. For customers with policies reaching maturity or retirement, the firm says payouts will be significantly higher than the value of their policies a year ago. In addition, customers who have With Profits Bonds (a whole of life investment with no maturity date) will also have seen higher returns.
Payouts in the future may also contain an element of Inherited Estate. This consists of additional assets over and above those needed to meet the expected liabilities of the with profits fund. The main purpose of the Inherited Estate is to meet any unforeseen liabilities. The estimated value of the Inherited Estate at December 31st 2005 was £500 million.
The firm says that when it becomes clear that some or all of this money is no longer needed for meeting unforeseen liabilities it will begin to distribute it to eligible policyholders when they leave the with profits fund. None of this money will go to shareholders. No decision has yet been taken as to when this distribution will begin.
The following data shows sample with profits pension policies, the policy value at February 1st 2006, total premiums paid over the year, the retirement value at February 1st 2007 and the return over the year, i.e. the annualised return on both the February 1st 2006 policy value and the premiums paid from February 1st 2006.
The figures are based on an individual unitised with profits pension policy taken out by a man retiring at age 65 paying £200 per month. 10 year, £23,686/ £2,400/ £30,390/ 17.3% - 15 year, £46,961/ £2,400/ £55,092/ 11.9% - 20 year, £82,877/ £2,400/ £92,820/ 9.0%
Meanwhile, The following figures show sample with profits savings endowment policies, the policy value at February 1st 2006, total premiums paid over the year, the maturity value at February 1st 2007 and the return over the year.
The figures are based on an individual conventional with profits endowment assurance policy taken out by a man aged 29 paying £50 per month. 10-year, £5,446/ £600 / £6,579/ 9.2% - 15 year, £10,480/ £600/ £12,303/ 11.3% - 20 year, £19,281/ £600/ £22,224/ 12.0% and 25 year, £33,632/ £600/ £38,054/ 11.3%
01 February 2007 © Moneyextra.com
Moneyextra.com recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.