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NU and Scottish Widows slash MVRs

With-profits policyholders received a fillip this week with both Norwich Union and Scottish Widows cutting MVRs on its funds.

Following a second year of double digit returns from equities, Widows has slashed MVRs across its unitised with-profits pension and assurance policies from 9 per cent to an average of 3 per cent. NU has cut MVRs on all policies taken out between 1998 and 2001 across its different with-profits funds by between 15 and 40 per cent.

Scottish Widows with-pro- fits fund returned 15 per cent over the past 12 months but contracts maturing this year will offer lower returns than those maturing last year.

Dennehy Weller managing director Brian Dennehy says although this is good news for policyholders, it remains very difficult for advisers to recommend the asset class. He says: “Without the regulatory intervention, with-profits would be in pretty rude health.”

Widows actuarial director Adrian Eastwood says: “The first half of 2005 has seen a further rise in investment markets, with the values of with-profits increasing.”

NU senior actuary David Riddington says: “We hope this downward trend MVRs continues but, of course, it depends on the markets. We will continue to actively review rates.”

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