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Pru keeps with-profits bonus rate at 3.25%

Prudential chief executive Mark Wood says holding bonus rates on its with-profits fund shows that the asset class is still a strong vehicle for investment.

The firm says the bonus on the Prudence bond and pension is unchanged from last year at 3.25 per cent. This is the first time since 1990 that rates have stayed the same in consecutive years.

Pru recently responded to Treasury select committee criticisms over endowment shortfalls by sending 15,000 customers likely to face an endowment mortgage shortfall the offer of a remortgage of the interest-only part of their existing arrangement and says only 16 customers have made loan applications.

Wood says Pru is not time-barring misselling complaints because the exercise illustrates that many customers only concentrate on mortgage shortfalls near the time of maturity.

He says: “We are confident about the future of the with-profits market and we believe with-profits continues to offer a valuable way of saving. Our financial strength enables us to complete strongly.”

Optima Financial manager of financial services Martin Card says: “I cannot see people flooding back to with-profits funds because of a 3.25 per cent bonus although this is good news for people already invested in these funds as the bonus payment is higher than with competitors.”

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