Aviva holds annual with-profits bonuses as investment returns surge

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Aviva has frozen or cut annual bonus rates for 1.5 million with-profits investors as the provider’s bond delivered annual returns of 5.5 per cent over a 10 year period.

Annual bonus rates have been held at 2.5 per cent for bonds, 3 per cent for pensions and 2.75 per cent for stakeholder pensions.

Annual bonuses are also unchanged for most existing unitised life and pensions business. The two exceptions are ex-CU bonds, where rates have fallen from 2.5 per cent to 2 per cent, and ex-NU bonds (without guaranteed bonus rates), where rates have reduced from 1 per cent to 0.75 per cent.

Aviva says the majority of unitised with-profits policyholders have experienced an average increase in final bonus rates of 2.5 per cent, while most conventional policies have seen final bonuses rise by around 3 per cent.

Someone who invested in the provider’s 5 year with-profits bond in January 2008 would have seen their fund grow by 2.8 per cent a year, while a 10 year bond bought in January 2003 delivered returns of 5.5 per cent a year.

Aviva’s 20 year with-profits pension product has returned 5 per cent annually since January 1993, while an investor who bought 25 year endowment policy in January 1988 would have seen their fund increase in value by 5.1 per cent a year.

The main Aviva with-profits fund delivered an estimated investment return of 7.3 per cent before tax last year.

Aviva propositions and pricing director Tim Orton says: “Our with-profits funds continue to perform well for our customers.

“With bank and building society accounts yielding low returns and stock market volatility an on-going concern, the great strength of with-profits is its ability to invest in assets that provide income and growth whilst protecting from the full effects of volatile markets.”