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With-profits bonuses set to plunge

With-profits policyholders are bracing themselves for further bonus rate drops.


Those using with-profits for a mortgage being hit by lower than predicted returns from annual bonus falls may be forced to top-up the amount that is being put in.


Experts claim the falls are partly caused by lower growth in the stock market as well as the erosion of life office reserves used to pay for the pensions misselling scandal.


Cazalet Financial Consulting&#39s Ned Cazalet says: “We will see a big gap between those life offices that are strong and were invested in equities and those that have had to put more of their assets into fixed interests and gilts.”


But Chartwell&#39s Patrick Connolly says: “Most companies will put their rates down again by a quarter of a percentage points, but returns offered by with-profits bonds are still competitive compared with ordinary profit accounts.”

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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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