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Widows cuts payouts on with-profits plans

Scottish Widows has maintained reversionary bonuses this year but has cut terminal bonuses by up to 4 per cent.

The reversionary bonus on a conventional with-profits plan remains at 1.25 per cent on the basic sum assured and 2.5 per cent on existing bonuses.

For pension funds effected before February 15, 1999, the reversionary bonus is 1 per cent on the basic benefit and 1 per cent on existing bonuses. For pension funds effected after February 15, 1999, it is 3 per cent on basic benefit and 3 per cent on existing bonuses.

Terminal bonuses have been cut by up to 4 per cent so that the payout on a maturing 25-year with-profits endowment falls to £91,538 from £95,482 last year. On a 10-year endowment policy, the payout falls to £9,309 from £9,804 last year.

Widows says payouts on conventional and unitised with-profits policies will total £850m compared with £700m last year.

Group chief executive Mike Ross says: “Scottish Widows is continuing to ensure fair value is paid to with-profits policyholders in relation to the worth of the assets underlying the policies. Financial strength is critical in maintaining competitive returns over time. As part of the Lloyds TSB group, Scottish Widows is well placed to provide competitive payouts.”

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