Royal London launches profit sharing for pension customers

Loney-Phil-Royal London-2013

Mutual Royal London is to introduce profit sharing for hundreds of thousands of new and existing pension customers from 2017.

All new individual pension and drawdown policies, as well as unit-linked workplace, personal pension and drawdown policies written since 1 July 2001 will benefit from ProfitShare, the firm says.

This includes all auto-enrolment members.

Overall, Royal London says policyholders, including with profits customers, will receive a greater proportion of company profits as a result.

Royal London estimates 600,000 existing customers will be impacted immediately as well as 400,000 new customers over the next five years.

At the end of 2016, and each subsequent year, the mutual will review its financial strength and decide whether a ProfitShare is awarded.

Customers will receive their bonus the following April as long as they have not terminated their policy. The extra funds will be put into a separate account but follow the same investment strategy as the main plan.

Royal London says it aims to award between 0.15 per cent and 0.25 per cent of the unit-linked value of the customer’s qualifying plan.

Royal London chief executive Phil Loney says: “As a mutual company we want to ensure that our customers and members have the best outcomes and  experience, and we wanted to find a way for those members of Royal London who don’t invest in our with-profits fund to also share in the profits of our business.

“Our innovative approach will significantly increase the number of Royal London customers who will see their savings increase through sharing in our profits and will further enhance our already strong competitive position in the pension and drawdown markets.”

Royal London spend on existing profit share arrangements for with profit funds

Royal London ProfitShare

*Royal London estimates it would have spent an extra £20m to £30m last year if the new arrangement was in place then

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. What about all those CIS with profit endowment policyholders who received nothing when they were taken over by Royal London? Surely they should get something too?

  2. Simon those CIS customers are members of the closed CIS fund and will benefit from the distribution of any surplus assets that will happen as the fund runs off and from the better long term service and asset management rate card that Royal London has committed to compared with what Coop could have realistically delivered if it had continued to run the business.

  3. Perhaps the reason they got nothing was because they had already been given too much? Perhaps this was also the reason they got taken over? Echoes of Equitable Life perhaps?

  4. The ProfitShare announced enhances the benefit’s and strength’s of being part of the UK’s largest Mutual, Royal London. Great news!

  5. Hats off to Royal London. This is a unique move which only benefits their plan holders. I believe it says a lot about the organisation.

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