Widows has reduced regular bonus rates on most of its conventional and unitised with-profits policies by half. Final bonus rates for conventional and unitised with-profits contracts have fallen as much as 63 per cent compared with 2008.
With-profits actuary Kevin Doerr says: “2008 was a very difficult year for global markets and has highlighted the advantages of a diversified investment strategy, smoothing and with-profits guarantees. Coming into 2009, the with-profits fund held 54 per cent in equities and property, a balance between prudent management and being well positioned to gain from market recovery by retaining significant exposure to these asset classes.”
Hargreaves Lansdown pension analyst Nigel Callaghan says: “The with-profits fund took a pretty big hit due to its high equity exposure but if markets bounce back, it is well positioned to benefit.”