Wesleyan Assurance is reducing payouts despite a return of 17.2 per cent on the with-profits fund in 2003.
The company says it has more than four times the risk capital margin needed under the new realistic reporting regime.
Conventional life and pension policies will see cuts of 0.25 per cent in the annual bonus on the sum assured and 0.75 per cent for life policies and 0.5 per cent for pensions on attaching bonuses.
Annual bonuses on unitised with-profits products are unchanged.
Payouts will fall by between 3 and 6 per cent on life policies and between 6 and 15 per cent on pensions compared with a year ago.
However, despite the reductions, the payout on 25-year endowment taken out by a male aged 30 next birthday with a premium of £50 a month will rise slightly to £73,128, up from £73,075 at the start of the year. A male paying £200 a month into a 20-year pension and retiring at 65 will receive £156,368, down from £171,263.
Appointed actuary Tim Pindar says: “Our relative financial strength compared with other companies has allowed us to avoid selling equities at the bottom of the market.
“However, future investment returns are expected to be lower than those in the past as inflation is low. This means we have to be cautious about how much we can increase guaranteed benefits over coming years.”