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With-profits bonuses cut by L&G and Axa

Axa and Legal & General have slashed with-profits bonuses by up to 23 per cent and 20 per cent respectively.

Axa&#39s move means that a 25-year £25 a month endowment will be worth £60,373 at maturity, which is 23 per cent less than the £78,666 it would have paid out a year ago.

The equivalent L&G endowment will now pay out £59,047 compared with £73,566 last year.

Axa, which no longer sells with-profits bonds or endowments but remains in the with-profits pension market, cut bonuses five times last year and L&G cut bonuses twice.

L&G&#39s fund recorded an investment loss of 9 per cent and had 51 per cent in equities at the end of the year while the Axa fund lost 12 per cent and had 54 per cent in equities.

Axa chief actuary Peter Shelley says the payouts are still high relative to the actual investment performance, adding that a 25-year endowment shows annual growth of 9.8 per cent.

L&G head of public relations John Morgan says: “It is disappointing that the markets have gone the way that they have and the bonus declaration reflects this but hopefully there will be better news later this year.”

The Financial Planning Service principal Julian Crooks says: “I hope these are the last bonus cuts for a good while. It is very bad news for endowment policyholders and makes it hard for IFAs to recommend remedial action amid so many uncertainties.”

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