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Clerical cuts with-profits payouts

Clerical Medical is cutting regular bonus rates on most with-profits policies but is leaving bonuses on its with-profits income fund unchanged at 4.5 per cent.

Bonuses on most with-profits bonds will be cut from 2.5 per cent to 1.5 per cent and bonuses on pension policies will be cut from 3 per cent to 2 per cent.

A 25-year with-profits endowment at £50 a month will pay out £55,450 compared with £68,142 last year, a drop of 18.5 per cent and a yield of 9.27 per cent.

A 20-year with-profits pension policy paying £200 a month will pay out £140,401 compared with £143,353.

Clerical, which is part of the HBOS group, warns that it may have to review bonuses again if there is not sustained recovery in the stockmarket, saying that while the equity markets were up by about 11 per cent over the last year, they are still a third lower than the 1999 peak.

At the same time, final bonuses on new with-profits bonds have been reintroduced and market value red-uctions have been improved.

Appointed actuary Richard Myers says: “This bonus and MVR announcement allows us to ensure that all policyholders continue to receive their fair share of the fund while we continue to manage the fund prudently.”

Wentworth Rose managing director Philip Rose: “It completes the picture that the only company which has managed to stand against the flow is Prudential, using its financial strength.”

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