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Royal London cuts terminal bonus on Scottish Life policies

Royal London is reducing the terminal bonuses on some with-profits policies in the closed Scottish Life fund.

Final bonus rates for longer-term conventional with-profits plans have been reduced from 15 per cent at January 1 this year to 11.25 per cent from September 1.

Rates on 20-year plans fall from 25 per cent to 19.75 per cent and on 25-year terms from 45 per cent to 37.25 per cent.

Terminal bonus rates for shorter plans and annual bonus rates have been maintained.

Group finance director Stephen Shone says: “The reduction in final bonus rates for longer-term policies in the Scottish Life fund is primarily as a result of an increase in liabilities relating to guarantees which apply to certain policies in the fund.

“As a result, the demutualisation enhancement has been reduced until further notice from 1.25 per cent to 0.75 per cent a year for both future and historic investment returns.

“Final bonuses have been reduced to maintain a fair relationship between payouts and underlying asset shares.”

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