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Added frequency for Standard declarations

Standard Life may introduce more frequent bonus declarations on its conventional with-profits products amid continuing controversy surrounding its bonus policy.

It says criticism of its payouts does not take account of the variety of with-profits it has on its books.

The bonus rates on stakeholder with-profits and with-profits bonds are altered daily and these have been reduced to reflect market conditions.

But its conventional and some unitised with-profits, which account for the majority of its book, currently have a single annual declaration.

Standard says it is considering twice-yearly declarations because of concerns that with current market volatility, there could be big variations in performance from year to year.

IFAs have written to the life office expressing their concerns about the amount of information available on Standard&#39s bonus policy and the effect on its financial strength.

Competitors such as Prudential and Norwich Union have already cut payouts by introducing mid-year bonus declarations. Some commentators and rivals have suggested that Standard has been jeopardising its financial strength by paying out too much on with-profits.

A leaked memo shows Standard&#39s reserves fell to £3.3bn from £8.3bn last year. The company&#39s policy is not to disclose current figures.

Head of with-profits communication David Hare says: “We are considering introducing more frequent bonus declarations. It is better to have more frequent small changes rather than infrequent bigger ones. I believe that everyone is moving in this direction and I can see interim bonus declarations being introduced across the industry as a matter of course. Interim bonus declarations could be up as well as down.”

Dennehy Weller managing director Brian Dennehy says: “We have written to Standard Life to ask for more details on the amounts that they are paying out to get assurance that they are still a good option to place business with. I suspect other IFAs are too. I have not yet had a response.”

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