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Strong returns as Pru sees with-profits boom

With-profits business is booming for Prudential which revealed this week that its life fund has delivered returns of 91 per cent over five years and 134 per cent over 10 years.

The fund returned 7.2 per cent last year and Pru says allits endowments will meet repayment targets.

Total retail with-profits sales in 2007 rose by 21 per cent to £2.3bn while with-profits bond business leaptby 59 per cent.

Annual bonus rates on the Prudence bond and personal pensions rise from 3.25 per cent to 3.5 per cent.

A with-profits individual pension on a 20-year term at £200 a month will pay out £117,469, an annualised return of 8.2 per cent.

A 10-year bond with a £10,000 single premium will pay out £17,361, represen-ting an annualised return of 5.6 per cent.

The closed Scottish Amic-able fund showed a returnof 6.5 per cent and 98 per cent of ScotAm endowments are expected to meet targets.

Pru says it will announce by the end of June if a reatt-ribution of its £9bn inher-ited estate will go ahead.

Chief actuary David Belsham says: “I think that during the current market volatility, this is the time when people will look at the benefits of smoothing and guarantees. People are looking for security and with-profits is very attractive.”

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