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Widows goes into gobbledegook to slash payouts

IFAs are accusing Scottish Widows of going against the spirit of the Raising Standards initiative with its “opaque” with-profits bonus declaration which sees many payouts cut by up to 22 per cent and others getting no terminal bonus.

Widows, a front-runner in the ABI initiative which extols the virtues of plain English, has been attacked for the cryptic presentation of its bonus declaration and using terms such as “rate of price increase” to describe the cuts.

A Widows spokesman claims it does not fall foul of Raising Standards by using such terminology. It would not confirm if such phrases would be used in policyholders&#39 annual statements.

The cuts could lead to terminal bonuses being wiped out altogether on some contracts and will see reversionary bonuses on pensions cut by 12-22 per cent and 12-18 per cent on endowments.

The maturity value on a 25-year £50-a-month endowment sinks to £59,762 from £74,627 last year.

Widows deputy actuary Kevin Doerr says: “I expect it to be the case that some terminal bonuses will be lost. It is a sign that guaranteed benefits are biting in.”

Pensions Protection Investigation Accreditation Board chief executive John Cox says: “We encourage the use of plain English but do not require it across the board. This might be an area that we look into in the future.”

Syndaxi principal Robert Reid says: “With-profits is opaque enough without companies using actuarial language.”

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Neptune video: UK economy: a sustainable recovery?

After years of a slowly brewing economic recovery, the UK has seen a strong rise in growth in recent months. Mark Martin, manager of the Neptune UK Mid Cap Fund, discusses the strength of this recovery and whether it is sustainable.

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