IFAs and the Consumers' Association are calling on life offices to make bonus declarations easier for policyholders to understand.
The call comes amid accusations that many life offices use “smoke and mir rors” to blur their fall ing investment returns by using a variety of methods to calculate their rates.
Many IFAs say the obscurity of with-profits is at the root of the problem and some are sceptical that a simpler solution can be found.
The CA says the different methods used make it difficult for consumers to understand.
Many companies now use a system of super-compounded bonuses, which splits the new bonus bet ween the sum assured and already accumulated bonuses.
Wentworth Rose annuities manager Steven Thur good says: “Bonuses on new policies can be made simpler and standardised. The obscurity of with-profits and actuarial discretion is not appropriate.
“We have to take away the smoke and mirrors.”
Richard Jacobs Pension & Trustee Service director Richard Jacobs says: “Bon us rates are dropping and nobody wants to get bad publicity.
“But, following Equitable, there should be some effort for standardi sation for consumers to identify. There is no way of comparing declared bon uses. They show some rates and hide others.”
Friends Provident communications manager Jim Murdoch says: “It may be difficult
to compare bon uses and this may be a moot point for the industry. But each company has its own actuary to compose bonuses. We are trying to be equitable to each generation of policyholders.”