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L&G cuts with-profits bonuses

Legal & General has slashed with-profits bonuses in line with other insurers, it has announced today.

The firm blames large falls in the stockmarket over 2008 – its with-profits fund plummeted 18 per cent before tax – and difficult conditions continuing into 2009.

Mortgage endowment annual bonuses have remained at 1.25 per cent while final bonuses have been cut by 19 per cent on policies written in 1984 and 1989. Examples of other cuts in bonuses have yet to be provided by the firm.

Transfer values for pension plans with a 20 year term have fallen by around £6,000 – from £88,214 at the start of March 2008 to £82,785 this year, for a 65 year old male contributing £200 a month.

Meanwhile, transfer values for 25 year term mortgage endowments have dropped around £3,000 – from £39,613 last year to £36,414 in 2009, for a male aged 29 at entry paying £50 per month.

With-profits finance director Carl Dowthwaite says: “With-profits continues to provide attractive long term returns and has given customers genuine protection from market volatility. In current market conditions the core features of with-profits mean that it remains a good choice for investors. Our investment strategy puts us in a strong position to benefit from market recovery.”

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