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ScotMut cuts with-profits bonuses

Scottish Mutual is slashing its with-profits bonuses by up to 18 per cent for pension and life policies.

The annual bonus rate on unitised with-profits pensions fell by 1 per cent last year to 4.5 per cent and on life policies, it fell to 4 per cent from 4.75 per cent in 2001.

ScotMut says continuing poor performance of investment markets, where returns on UK equities have fallen on average by 19 per cent over the last two years, is the reason for the reduction in its bonuses.

A 10-year policy maturing on April 1, 2002 for a 40-year-old male non-smoker paying £50 a month will fall to £7,945 this year as opposed to £9,375 in 2001, a drop of 15.3 per cent.

Public relations manager Christine McAllister says: “There is understandable unease among investors about stockmarket investment given the difficult conditions we saw in 2001 but the continuing appeal of with-profits remains its ability to protect investors from those extremes.”

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