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Abbey stops bonuses to cut MVRs

Abbey is continuing to pay no annual bonuses on its with-profits funds in a bid to cut MVRs and boost terminal bonuses.

Investors in Abbey Nat-ional Life, Scottish Mutual and Scottish Provident will get no bonuses, except on with-profit bonds with guaranteed bonuses.

MVRs have been cut by an average of 6 per cent since July 2004 after the Scottish Mutual and Abbey National Life with-profits funds posted growth of 9.5 per cent and the Scottish Provident fund 10.5 per cent.

Scottish Mutual and Abbey National Life 10-year and 15-year policies will pay a 5 per cent terminal bonus and Scottish Mutual 25-year policies up to 30 per cent.

Cazalet Consulting director Ned Cazalet says it is not surprising that Abbey is cutting its MVRs, rather than trying to increase bonuses as it offers MVR-free dates across most of its policies.

He says: “Scottish Mutual, in particular, has a lot of policyholders with MVR-free dates, so it does not make much sense to increase MVRs and pay annual bonuses. Abbey is managing its liabilities.”

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