Bonus Declaration for 2016
09.05.2017 by CarolineBarrett
On 2nd May 2017, we announced our with profits bonus rates.
- Investment Performance: During 2016 our With Profits Fund saw strong returns, growing by 7.8% for the year, despite challenging market conditions.
- Asset mix: The With Profits Fund was split across Gilts (28.26%), Corporate Bonds (21.53%), Equities (19.65%), Property (26.73%) and Cash (3.83%) as at 31st December 2016.
- Bonus Rates have been increased or maintained where appropriate to do so.
- Terminal bonus rates have been added or increased on some policies to maintain fair asset share.
- No Market Value Reductions (MVRs) are currently being applied on any policies.
We announced the following bonus rates, which are net of all charges:
2016 Reversionary Bonus Rates
|Product||2016 Reversionary (Net) Bonus Rate|
|Investment Bond (opened before 13/09/2016)||1.40%|
|Investment Bond (opened after 14/09/2016)||2.50%|
|Individual Savings Account (ISA) (opened after 01/07/2014)||3.10%|
|Junior Individual Savings Account (JISA) (opened after 01/07/2014)||3.10%|
|Tax Exempt Savings Plan (TESP)||1.50%|
|Junior Tax Exempt Savings Plan (JTESP)||1.50%|
|Regular Savings Plan (RSP)||1.00%|
2017 Current Bonus Rates
|Product||2017 (Net) Bonus Rate|
|Individual Savings Account (ISA) (opened before 01/07/2014)||1.50%|
|Junior Individual Savings Account (JISA) (opened before 01/07/2014)||1.50%|
|Child Trust Fund (CTF) – Non-stakeholder Version||1.50%|
Past performance is not a guarantee of future performance. Bonus rates are not guaranteed, but once added cannot be removed.
FREQUENTLY ASKED QUESTIONS
How does With-Profits Work?
The aim of the With Profits Fund is to reduce investment risk by spreading investments over different asset classes. It is considered a low to medium risk investment and we aim to provide smoothed investment returns over the long term by varying the weightings in each of these asset classes.
Every year we may declare a bonus rate, for each type of plan. Any bonus declared is added to plans eligible for bonus during this period and once added can’t be removed. The amount of any bonus is decided annually by the Society Board following advice from our Chief Actuary.
The amount depends on the returns achieved by the Society on its investments, the Society’s expenses and other factors such as the number of policyholders dying or cashing in their policies. We use smoothing, in order to try and even out the annual bonus, which means retaining some of the surplus in good years to supplement those in poorer years.
In the event of withdrawal, transfer or death we aim to give members a fair share in the With-Profits Fund. This may result in a Terminal Bonus or Market Value Reduction being applied to ensure that a fair asset share is paid.
What is a Reversionary Bonus Rate?
A Reversionary Bonus Rate is added to your plan annually. Reversionary Bonuses are usually added after the end of the year and reflect the performance of the fund during that period. We don’t guarantee a bonus will be added each year, but once added it can’t be removed.
What is a Current Bonus Rate?
A Current Bonus Rate is added to your plan incrementally throughout the year on a daily basis. We don’t guarantee a bonus will be added each year, but once added it can’t be removed.
What is Terminal Bonus?
You may receive a Terminal Bonus upon withdrawal of your funds from the Society.
A Terminal Bonus may be applied to your withdrawal to ensure you receive your fair asset share. For example Terminal Bonuses may be paid on withdrawals where financial markets are experiencing a significant upturn or where money was held back as part of our smoothing process.
A Terminal Bonus is not guaranteed and can be withdrawn or changed at any time.
What is a Market Value Reduction (MVR)?
A Market Value Reduction (MVR) may be applied upon withdrawal of your funds from the Society.
An MVR might be applied on a withdrawal where the value of your policy is above your fair asset share. This would usually occur if you were to withdraw money from your policy when the financial markets were experiencing a downturn. An MVR will not be applied upon death.
An MVR may change at any time without notice.
Have you ever applied a Market Value Reduction (MVR)?
The Society applied an MVR of 2% on Child Trust Fund (non-stakeholder) and Individual Savings Accounts (opened before 01/07/14) between 03/09/2015 and 21/03/2016.
No MVR is currently being applied on any policies.