Prudential has maintained total annual bonus payouts across its with-profits funds at £600m as investment returns slumped to 3.2 per cent during 2015.
Total final bonus payouts – which are paid when the policy reaches maturity – edged up from £1.3bn in 2014 to £1.4bn last year.
Annual investment returns were down, however, from 7 per cent in 2014 to 3.2 per cent last year.
Despite this, the insurer says the fund has delivered cumulative investment returns, before charges and smoothing, of 80.8 per cent over the last 10 years, beating the FTSE-All Share (total return) figure of 71.8 per cent for the same period.
Prudential has around 4 million with-profits policyholders.
Prudential UK & Europe chief financial officer Aki Hussain says: “We have been able to deliver competitive annualised returns for our customers, in spite of the combined pressures of volatile market conditions and persistently low UK interest rates.
“This result demonstrates, yet again, that investing in a financially strong and well-managed with-profits fund can produce consistently strong returns for investors over the medium to long-term. The with-profits smoothing approach has also reduced the full impact of the volatile market conditions in 2015 on policy claim values.”
A 29 year old male who paid a £10,000 single premium into a 20-year Prudential With-Profits Prudence Bond would have enjoyed annualised returns, net of tax and charges, of 5.6 per cent, the firm says.
Likewise, if the same individual made regular premium payments of £200 per month into the Prudential With-Profits Individual Pension over 20 years they would have experienced returns of 5.3 per cent a year.