With-profits bonus announcement

With-profits bonus announcement

Standard Life today announces a review of its with-profits bonus rates. Most plans affected by this declaration will show an increase in value since the October 2008 bonus review, although as a consequence of 2008?s extreme investment conditions, plan values will generally be lower than a year ago. Many customers continue to benefit from smoothing and the guarantees that apply to their maturity and retirement payouts.

Margaret Flaherty, With-Profits Communications Manager, Standard Life Assurance Limited, said: “2008 was a poor year for investment returns, with the FTSE All Share Index falling 32.8%* over the year. Obviously, this has had an impact on the assets that back all types of equity-related investments, including with-profits funds. We have therefore made changes to final bonus rates and some annual bonus rates to ensure we continue to treat all our with-profits customers fairly.

“Payout values for the majority of plans affected by this declaration will have recovered some of the ground lost at our last bonus review, in October 2008. Over the last 12 months the impact on plan values will not be as severe as the drop in the FTSE All Share Index because of the broad mix of assets in the with-profits fund, and the impact of any smoothing and guarantees that apply.

“With-profits plans are still providing some protection from the worst effects of the significant stock market falls during 2008 for customers reaching maturity or securing their benefits at retirement age. For example, the return since February 2008 on a 20 year savings endowment maturing now has been -4.4% compared to a much more significant drop in the value of the backing assets.”
Sample with-profits payouts

The maturity value today of a 20-year savings endowment plan taken out by a man aged 29 for £50 per month is £19,252. This is equivalent to an annualised return of 4.4% on the total payments made, in addition to the life assurance cover provided throughout the term of the plan. A 65 year old man who paid £200 a month over the last 20 years into an individual pension plan would today be able to buy an annuity with a retirement value of £87,095 giving an annualised return of 5.6% on the total payments made.

The figures shown refer to the past. Past performance is not a reliable guide to future performance. Further information regarding this announcement is contained in the notes attached to the full press release. *FTSE All Share Index at 01/01/2008 - 3286.67 FTSE All Share Index at 31/12/2008 - 2209.29

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