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Institute of Actuaries calls for shake-up of with-profits guides

The Institute of Actuaries is demanding that the PIA revamps with-profits guides, claiming that current bonus rules are flawed and misleading.

The PIA and the institute held a meeting on February 12 to discuss changes to with-profits guides.

The institute also wrote a letter to the PIA urging it to review its guidelines, which have not been changed since 1990.

It wants the PIA to force life offices to provide more detailed information on current bonus practices, including the relationship between reversionary and terminal bonus rates.

The institute is also urg ing the PIA to set a standard method for calculating the value of policies and guidelines to show the average rate of return on policies.

Head of the life board Mike Kipling says: "We hope that the PIA does something for this year&#39s guides. There is a definite need to look at the information provided."

The PIA says discussions are at an early stage and that as yet it has no definite plans to change its guidelines.

Standard Life assistant general manager (marketing) Peter Robertson says: "In practice, the with-profits guide is valuable to everyone, particularly IFAs. But the format and language should be made easier for people to understand."

With-profits guides are due to be published in September. The actuaries&#39 call for a revamp comes just a week after the institute raised fears that millions of with-profits endowment policyholders could get just half their expected payouts because of low inflation and investment returns.

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