Friends Provident is cutting payouts on with-profits policies by an average of 6 per cent despite the fund showing growth for the first time in three years.
A 65-year-old male paying £200 a month into a conventional with-profits personal pension over 20 years will receive £127,273, down from £146,373 in August last year.
A male aged 30 next birthday paying £50 a month into a conventional with-profits endowment with a 25-year term will receive £51,283 compared with £58,535 in August.
Regular bonus rates on Friends' Main Series with-profits products have fallen by between 0.25 and 1 per cent.
Bonus rates on its New Generation pensions are down to 2.4 per cent from 3.4 per cent while bonuses on pension investment bonds are cut to 1.5 per cent from 2.5 per cent. Bonuses on unitised with-profit bonds drop to 1.5 per cent from 2 per cent.
Conventional endowment and personal pension plans have both seen their bonuses halved to 0.25 per cent.
Managing director Ben Gunn says although the with-profits fund has returned growth of 9.4 per cent, the cumulative investment return since 2000 is -6.5 per cent.
Gunn says: “Our expectation is that investment returns in the future will continue at lower levels than those experienced in the last two decades and, with existing guaranteed benefits also being generally at high levels, regular bonus rates need to come down.
“Payouts currently are on average slightly above the actual underlying values and the changes announced today to final bonus rates will ensure that policy payouts move more in line.”