IFAs have given a cautious welcome for Standard Life's bonus declaration, describing it as “marginally” better than expected.
The company is cutting bonuses on with-profits pol-icies by up to 1 per cent, with payouts on conventional and unitised policies down by an average of 7 per cent.
Standard says that a year of strong investment performance means that most policies have seen a return of more than 10 per cent on premium and surrender values in the past 12 months.
The changes mean that a 25-year with-profits endowment policy taken out by a male aged 30 and paying £50 a month, will pay out £62,603, down from £69,386 in August last year.
A 20-year unitised pension held by a male retiring at age 65 and paying £200 a month, will pay out £143,080, down from £155,536 last August.
Independent insurance analyst Ned Cazalet says: “We expect Standard Life's surrender and maturity values to decline over the next few years, not least because of the bonus rate reductions announced.”
Hargreaves Lansdown head of pension research Tom McPhail says: “It was marginally better than we expected and it puts their current circumstances into context. Payouts are continuing to look good in comparison to competitors and the reversionary bonus rates are still competitive, 3.25 per cent on pensions is still quite acceptable in the current climate.”
Standard Life head of with-profits communications David Hare says: “This is actually a pretty good bonus announcement. The majority of policies are still getting good returns. We like to think that we are still working hard for policyholders and we think they have made a good choice.”