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L&G slashes terminal bonuses by up to 9.5%

Legal & General has cut payouts on with-profits by an average 9.5 per cent for pensions and 7.5 per cent for other life policies.

The company, which has completed a rights issue, says it was forced to take action following significant falls in world equity markets. Only terminal bonuses are affected, with annual bonus rates remaining unchanged.

L&G says customers who have already had written quotations of maturity values will have the quotes honoured.

The interim bonus cuts follows similar steps taken by Axa, Friends Provident, Norwich Union, Pearl, Prudential, Scottish Mutual and Standard Life.

Newman Houghton & Co consultant David Brunning says: “It is very disappointing but understandable in the current environment.L&G is not bullet-proof.”

L&G UK actuary Ian Gibson says: “We have taken this action so that payouts more fairly reflect the value of the underlying assets and so balance the interests of customers whose policies are due to mature now and those whose policies are due to mature in the future.”

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