Royal London has held or increased annual with-profits bonuses for 1 million policyholders as the provider’s open fund posted returns of 8.6 per cent during 2012.
Royal London has two with-profits funds – the open Royal London Long Term fund and the closed Scottish Life fund.
The Royal London fund is divided into life policies and pension policies.
Annual bonuses on regular and single premium life business in the Royal London Fund have been held at 0.5 per cent. Annual bonuses on regular and single premium pension business have increased from 0.5 per cent to 1 per cent.
In the closed Scottish Life fund, annual bonuses have remained unchanged at 0.1 per cent for conventional with-profits endowments and 1.25 per cent for unitised with-profits endowments.
Annual bonuses have also been frozen at 0.1 per cent for conventional with-profits pension policyholders and 2 per cent for unitised with-profits pension policyholders.
Final bonus payouts vary depending on the term of the policy taken out by the investor.
Overall, the provider says most regular premium final bonus rates have been increased for both Royal London and Scottish Life with-profits investors compared with January 2012.
During 2012, the Royal London fund delivered returns of 8.6 per cent while the Scottish Life fund returned 6.6 per cent.
Royal London group finance director Kerr Luscombe says: “Our policyholders have once again enjoyed good returns from their with-profits policies.
“We believe that for such investors the fundamental argument for investing in real assets remains strong. Over the longer term, real assets such as equities and commercial property have delivered above inflation returns for investors.”
Worldwide Financial Planning IFA Nick McBreen says: “In my view the concept of smoothing makes with-profits too restricted and inflexible to react to changes in market conditions.”