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Friends Life holds with-profits bonuses as returns rocket

Friends Life 480

Friends Life has held annual bonus rates across most of its with-profits funds as the provider achieved double-digit returns in 2012.

Friends Life has three main with-profits funds – the Friends Life FLAS With-Profits fund (ex Sun Life Assurance Policies), the Friends Life FLC With-Profits fund (ex Axa Sun Life policies) and the Friends Life FP With-Profits fund (ex Friends Provident policies).

Annual bonuses have been frozen for 166,000 policyholders in the FLAS fund, which delivered pre-tax returns of 10.7 per cent last year. The provider says final bonus rates have generally increased on the fund.

The FLC fund, which represents 540,000 policyholders, has also maintained bonuses and returned 12.1 per cent in 2012. Final bonus rates have also generally risen.

The FP fund, which has 812,000 policyholders, is divided into two – policies written before Friends Provident was demutualised in July 2001 and policies written after this date.

Returns on pre-demutualisation funds were 8.5 per cent while post-demutualisation funds earned 9.7 per cent during 2012.

Annual bonuses have been increased for unitised policies and held for conventional policies.

No market value reductions apply on any of the provider’s policies.

A Friends Life spokeswoman says because there are a range of different funds within each of the WP funds, bonus rates vary from person to person.

Friends Life with-profits actuary Mike Kipling says: “2012 was a mixed year for financial markets, with world stockmarkets generally performing reasonably well, corporate bonds performing well and other investments such as some property investments and gilts faring less well.

“Against this backdrop, we are pleased that all of our with-profits funds earned good investment returns.”

Hargreaves Lansdown head of advice Danny Cox says: “These figures look good on the surface but investors will want to see this translate into annual and terminal bonuses.

“Our view is that with-profits is an out-dated investment model and investors should steer clear of these type of funds.”

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