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 five-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 a 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.
AWD Chase de Vere head of communications Patrick Connolly says: “This is hardly a surprise. Most providers have frozen or reduced with-profits bonuses in recent years and I expect that trend to continue.”