Friends' cuts bring gloom for savers

13 April 2012

LIFE insurer Friends Provident has taken the knife to bonus rates for with-profits policyholders affecting up to one million savers and bringing more misery to thousands of homeowners.

Payouts on maturing with-profits policies will reduce on average by 3% compared with February this year, the insurer's fourth cut in 18 months. From today there is a quarter-point drop in regular annual bonus rates and final bonuses for unified with-profits policies, and the same fall in final bonus rates on conventional with-profits policies.

Hardest hit are around 470,000 home owners with a Friends Provident with-profits endowment mortgages, whose policy values fall 5.75% from six months ago.

The payout on a £50-a-month 25-year endowment is now £48,334, down from £51,283 six months ago. That policy would have paid out £61,749 in February 2003.

Ben Gunn, managing director of Friends' life and pensions business, said: 'The changes announced today to bonus rates will ensure that there will be a closer alignment of policy payouts with their underlying investment values.'

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in