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L&G with-profits returns rebound after new business closure


Legal & General’s with-profits funds have seen a near five-fold improvement in their performance this year.

The funds generated pre-tax investment returns of 15.3 per cent for 2016, up from 3.1 per cent in 2015 and 10 per cent in 2014.

The company added fewer bonuses to its with-profits policies last year, however. The £316 million it added was lower than £366 million figure for 2015 and the £387m added in 2014.

This reflects “a gradual reduction in the number of customers as policies continue to mature” the firm says.

The with-profits fund was closed to new business in early 2015 after sales took a hit from the RDR.

L&G managing director of savings Jackie Noakes says: “[Today’s result] clearly demonstrates the benefits for our existing customers of remaining invested in a fund with a broad range of assets. It also means that our with-profits customers continue to see steady growth on their investments over the long-term, well in excess of inflation.”

The company notes, however, that it “may apply an early surrender charge and/or market value reduction if a customer cashes in all or part of their policy or moves out of with-profits. This would reduce the amount paid.”

Over the last ten years, L&G’s with-profits have returned an average of 5.9 per cent, rising to 8.6 per cent for the last 25 years.

The firm’s with-profits growth bonds currently have a 12 per cent allocation in commercial property and 30 per cent in overseas shares.

For with-profits pensions, the commercial property allocation is 9 per cent, 23 per cent is in overseas shares, and 53 per cent in fixed interest securities.


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Endowment claims companies, now packed up and retired living the dream, great job, well done the regulators and the media

  2. Surely the surge in returns is simply down to the fact that once the fund is closed the provider starts to add to the pay out part of the reserve it holds back each year in order to smooth the returns in bad years? Nothing to do with “…remaining invested in a fund with a broad range of assets….” There are numerous funds available that offer that.

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