New Model Adviser - For professional financial planners

Register for full access to Citywire’s Fund Manager database, news and analysis. Registration is free and only takes a minute.
6570.88 + 26 0.39% 04:12

One million customers hit by Aviva with-profits bonus cuts

One million customers hit by Aviva with-profits bonus cuts

Over one million Aviva customers will see their regular with-profits rates cut for 2012 which the insurer blamed on market turmoil.

With-profits customers in unitised life and pension with-profits policies saw a 0.25% reduction and some with-profits annuity customers seeing their regular bonus cut by 1.5%.

The life company also reduced the regular bonus rates by 0.5% for conventional endowment policies in ex-CGNU and ex-CU funds.

Regular bonus rates for 2012 are 2.5% for bonds, 3% for pensions, and 2.75% for stakeholder pensions.  These are all drops from the 2011 rates of 2.75% for bonds, 3.25 for pensions and 2.75% for stakeholder pensions.

Aviva has a total 1.8 million customers in with-profits policies with 500,000 in endowment policies and the remainder split between bonds, pensions and stakeholder policies.

A spokesman for Aviva said: 'We are trying to avoid building a high regular rate which would mean applying a high market value reduction on the pot at the end of its life. We want our customers to have a bigger pot at the end.'

Final bonus rates increased by an average of 4% in July 2011, but have been reduced by an average of 6% due to falls in investment markets since the increase in July.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.