Phoenix to hold annual with-profits bonuses at "low to nil"
Phoenix has warned investors to expect annual bonus rates on with-profits funds to remain “low or nil” in the next few years as the closed life firm gives priority to final bonus rates.
Annual bonus rates on the majority of conventional with-profits life and pensions policies managed by the firm were nil this year.
However, Phoenix increased annual bonus rates on former Royal Life traditional pension policies from 0.2 per cent in 2011 to 1.5 per cent this year. Annual bonus rates for former Scottish Mutual Assurance unitised with-profits pension policies also rose from 1 per cent to 3 per cent.
Despite targeting higher final bonus payments, Phoenix concedes a “significant” number of policies will receive no final bonus because the benefits already guaranteed are higher than the value of underlying investments.
Final bonuses have been added to a number of the funds managed by the provider, including former Britannic Assurance OB policies.
Phoenix chief executive Mike Merrick says: “We have continued our practice of enhancing final bonus rates out of surplus money in those funds which have excess assets.
“In other cases, our emphasis remains on ensuring that the funds are safely managed so that we can deliver on our commitments to meet the guarantees already given and to ensure customers are treated fairly.”
Phoenix manages over 3.25 million whole of life and endowment and 2.25 million pensions.
- 'Free, impartial, face-to-face advice': Can Osborne deliver on his Budget pension promise?
- HMRC: Savers will not face tax-free cash penalties following Budget reforms
- Nick Bamford: Why aren't advisers explaining their charges properly?
- Standard Life hits small firms with £1,200 fee following charge cap