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Strong Pru smooths over cuts

Prudential is cutting with-profits bonuses by up to 11 per cent.

Reversionary bonuses on personal pensions drop to 4.5 per cent from 5 per cent and on the Pru bond to 4 per cent from 4.5 per cent.

In contrast, Scottish Widows slashed bonuses on some policies last month by 33 per cent.

Pru is paying out £2.8bn in bonuses despite an underlying investment return of -3.5 per cent on its with-profits fund.

Sales of its with-profits bonds through IFAs rocketed by a third to a record £2bn from £1.4bn last year.

Appointed actuary David Belsham says: “The strength of the with-profits fund has ena-bled Pru to provide smooth returns significantly ahead of both the underlying investment return and the FTSE 100 index.”

Informed Choice managing director Nick Bamford says: “Pru is financially a very strong company and I think its increased sales reflect the view among IFAs that it is a core provider of with-profits bonds.”

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