Legal & General this week became the latest life insurer to freeze annual bonus rates for with-profits policyholders, in spite of reporting a 14 per cent investment return last year on the fund backing these long-term savings policies.
Final bonuses on long-term policies due for maturity have also been cut.
L&G’s annual bonuses on conventional endowments and some other policies are unchanged, though some have been reduced.
The maturity value of a sample 20-year pension plan has also dropped £5,000 compared with last year.
The company said that while it was increasing the maturity values of some 10-year policies, the “huge declines” in investment values during the financial crisis were hitting many policy values.
Aviva and Standard Life have also frozen their annual with-profits bonuses.
L&G noted that its with-profits fund was up 43 per cent over the decade, against a 21 per cent return by the average balanced managed fund.
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