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Pru offers bonus payout protection on WP plans

Prudential is offering an incentive to wary with-profits investors by saying it will protect bonus payouts on new business from being dragged down by the poor investment conditions of previous years.

The company says all accumulating with-profits products bought since the spring of 2002 will have their total bonuses based solely on the fund&#39s performance since that time.

The move is aimed at combating investor concern that any new business will be dragged down by the previous poor years as insurers rebuild their financial strength.

Pru says existing withprofits policyholders will also benefit in respect of premiums paid from spring 2002.

The company also says there will be no drop in bonus rates with the halfyear announcement and, current market conditions withholding, bonus rates such as the Pru bond rate of 3.25 per cent, are expected to remain the same until the full bonus review early next year.

The move comes on the heels of an announcement that Pru has slashed its interim dividend for the first time since the First World War by 40 per cent to 5.3p.

Informed Choice managing director Nick Bamford says: “People should benefit from what their contribution earns rather than benefit from the contributions of historical policyholders.”

Prudential UK chief executive Mark Wood says: “This is great news for our with-profits customers. These moves will benefit more than 1.25 million savers and demonstrate the continuing strength of the Prudential&#39s with-profits products.”

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