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Abbey Nat scraps bonuses as payouts plummet

Abbey National says it will not pay bonuses on with-profits policies with Scottish Mutual, Scottish Provident and Abbey National Life unless contractually obliged to by guarantees.

Payouts across Abbey Nat-ional Group&#39s life companies have been slashed by up to 25 per cent.

The company has already started selling Prudential with-profits funds after closing its own with-profits funds to new business. But it insists it is still going to be a player in the smoothed investment market with the launch of a Sandler-style with-profits product.

Abbey says it has pumped nearly £1bn into its life subsidiaries in the last 18 months.

A £50 a month 25-year endowment will pay out £58,599 on maturity compared with £78,616 a year ago.

Abbey National intermediaries sales and marketing director Ambrose McGinn says: “I am concerned that competitors&#39 payouts may not be sustainable. We remain committed to our life businesses and have taken sustainable and prudent action. We have to look at policyholder interests first but these have to be balanced against shareholder interests.”

Chartwell chief executive Craig Wetton says: “It seems harsh initially but to get a nil return at the current time is still to be doing rather well. Reality is unpalatable but we would be more worried by firms that pretended nothing was wrong. There are always going to be suspicions about a closed fund.”

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