The Co-operative Investments Announces With-Profits Rates

The Co-operative Investments Announces With-Profits Rates

The Co-operative Investments today (1 April) announced its annual bonus rates on with-profits policies.

Key points:

The With-Profits Fund benefited from having a diversified asset mix delivering a return of -11.6 per cent during the year. This compares with a return of -26.1 per cent on the FTSE All-Share index (total return) over the corresponding period.
Smoothing of investment returns helps to protect with-profits policyholders from the full impact of stock market volatility. Despite the fund return of -11.6 per cent, traditional with-profits policyholders will typically see a reduction in policy values of around -4 per cent.
With-profits policyholders also continue to benefit from valuable guarantees that apply to their maturity and retirement payouts which provide additional security in times of volatile equity markets.
Annual bonus rates for traditional with-profits policyholders are unchanged.
Reductions to annual bonus rates have been made on With-Profits Bonds. Annual bonus rates of between 0.75 per cent pa and 3.25 per cent pa are now being applied. Previously annual bonus rates ranged from 2.0 per cent pa to 3.25 per cent pa.
In order to fairly reflect the investment conditions seen in 2008, it has been necessary to reduce final bonuses on all with-profits policies as well as to increase Market Value Reductions (MVRs) on with-profits bonds.

Shaun Cooper, With-Profits Actuary at The Co-operative Investments, said: “With-profits policyholders have benefited from being invested in a diversified investment portfolio, the smoothing of investment returns and the provision of valuable guarantees that apply at retirement or maturity. These benefits have helped to reduce the impact on with-profits policyholders of the extreme market conditions seen during 2008.”

“We believe that with-profits policies are a suitable investment option for those investors who are looking to do better than a bank account over the long term while being cushioned from stock market volatility.”

Other relevant information:

The with-profits fund is one of the largest in the UK with nearly 3 million with-profits policies and over £17bn of assets.
A 25-year £50 per month endowment policy maturing on 1 April 2009 will pay £33,984, an annual return of 6 per cent. This compares to a return of £34,896 for a policy being surrendered on 1 April 2008.
The cash-in value of a £10,000 single contribution 10-year Platinum Bond Plus policy is £13,573 on 1 April 2009 – an annual return of 3.1 per cent.
Approximately 33,000 Platinum Bond Plus customers who made their investments before 1 April 2000 will be eligible for a ‘no-MVR guarantee’ from the 10th anniversary of their investment.

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