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Prudential reports dip in with-profits annual bonus rates

by Daniel Grote on Feb 26, 2013 at 13:29

Prudential reports dip in with-profits annual bonus rates

Prudential has reported a dip in its with-profits annual bonus rates for 2012, cutting them by around a fifth compared to 2011 levels.

Annual bonus rates have been set at 2% for the Prudence Bond and personal pension policies, and at 2.25% for corporate pensions. This compares with respective payments of 2.5% and 2.75% last year.

It said it expected to pay out over £2 billion in bonuses, down slightly from the £2.1 billion it announced last year. However, the amount it expects to pay out in final bonuses has risen, from £1.1 billion to £1.2 billion.

Annualised returns stand at between 4.6% and 6.3% across its with-profits funds, a slight drop from the returns it reported last year.

Prudential chief actuary David Belsham said: 'Our approach to setting bonus rates - based on prudence, consistency and fairness - has remained dependable year after year. It has continued to provide a high degree of assurance to our customers during the uncertain market conditions of recent years, and has enabled us to deliver strong annualised returns for our customers over the medium to long term. 

4 comments so far. Why not have your say?

Mark M

Feb 26, 2013 at 15:32

There might be a slight dip but the Pru's funds are still 'sleep easy' funds.

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Paul Barnard

Feb 26, 2013 at 15:57

Yes indeed. Many said the same about bank shares a few years ago.

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Mark M

Feb 26, 2013 at 16:17

Thats true but I am not sure they had as much substance as a with profits fund with the size and strength of the Pru's

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Gerry Cooper

Feb 26, 2013 at 16:47

Pru's consistent payout record is undeniable and superior to most other WP companies, however -

How valuable is an annual bonus of 2%, leaving the large majority of future returns to be by way of final bonus, at the discretion of the Actuaries?

'Not very' is for me the inescapable answer. OK, Pru will say that reducing the basic bonus gives more flexibility and reduces the likelyhood of needing to apply MVRs, but it's still completely outside the control of the Investor and the Adviser.

It's still probably a reasonable deal for 10-20 year old contracts, with high levels of 'guaranteed' bonus (still subject to possible MVR) but for New Business? No way!

With Profits has more than had it's day, even with the Pru.

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