Scottish Widows has cut bonus rates for with-profits policies in its mid-year review.
Bonus rates fall by 0.5 per cent for its flexible investment bonds, Jersey-based with-profits bonds and investments in the flexible options bond income fund made in 2002.
The rate for investments in the flexible options bond income fund made in the first half of 2003 will reduce by 0.25 per cent. Other regular bonus rates remain unchanged.
Widows says despite the upturn of the market in 2003 and the relatively flat market levels in 2004, the FTSE index declined by 36 per cent between January 1, 2000 and July 1, 2004. Its with-profits funds depend largely on investment in equities and the total value of its assets has decreased within this period.
Widows actuarial director Adrian Eastwood says: “We believe that with prudent management and a fair approach to bonus distribution, with-profits will continue to offer attractive returns to policyholders.”
Paladin Financial Services IFA Tim Purdon says: “An unprecedented period of time was enjoyed in the bull market and it will now take a long time for the stockmarket to return to previous peaks. I am not surprised by bonus reductions, given the political and economic situation.”