Axa Sun Life has slashed payouts on its former Equity & Law conventional life and pension policies despite rising stockmarkets last year.
The regular bonus rates for 2003 and interim rates for 2004 have been cut to 2 per cent from 3 per cent in 2002. The cuts affect around 10 per cent of Axa's with-profits policies, with the main bonus declaration taking place in March.
An Axa Sun Life, former Equity & Law, conventional endowment savings policy taken out by a male aged, 30, paying £50 a month over 25 years, will now pay out £51,799 if maturing this month compared with £56,666 in December. Axa says the policy has seen average ann-ual growth of 8.8 per cent over its term.
A conventional pension taken out by a male aged 45, paying £200 a month over 20 years, will now pay out £163,714 maturing in January down from £165,529 in December with the firm saying the pension has grown by an average of 10.9 per cent a year.
Chief actuary Peter Shelley says despite investment returns increasing during 2003, the poor performance of stockmarkets over the past few years means several years of increasing performance are needed to restore regular bonus rates. Shelley says: “This is to ensure that all our customers are treated fairly. Long-term returns are still good on maturing policies. Customers with 25-year conventional life policies maturing now have seen an average return of nearly 9 per cent per annum and 20-year pensions have seen an average return of just under 11 per cent per annum.”