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Friends cuts bonuses by an average of 3%

Friends Provident has joined the swathe of life companies making further cuts to bonus rates by reducing its payouts by an average of 3 per cent.

The change affects bonus rates on some unitised policies along with final bonus rates on unitised and conventional with-profits policies.

It means that a with-profits pension based on a male retiring at 65 and paying £200 a month over 20 years will now pay out £146,373 compared with £154,207 in March.

A with-profits endowment based on a male aged 30 paying £50 a month over 10 years will pay out £6,624 compared with £6,871 in March.

Friends says unless equity markets see a strong recovery, there is likely to be further reductions. Its next formal review will be in the first quarter of next year although rates will remain under review.

Managing director Ben Gunn says: “This is about being fair to our policyholders now and into the future. We do not anticipate a return to the market growth and fund returns that we saw over the last three decades and it is essential that we set regular bonus rates now that reflect both future expectations and the level of guarantees already provided.”

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