Bonus Declaration (For the year end) 2018
27.03.2019 by Jim Ker
Irrespective of market turbulence, the integrity and vision of the Society has held fast in 2018, enabling us to declare modest bonus rates on our With Profits products. This is due to prudent management of the fund – setting aside some surplus profits from previous years allowing us to declare more meaningful annual bonuses in years of market downturn.
As a mutual, we only exist to serve our Members’ interests. Therefore, we are pleased to inform Members that your Society continues to be in sound financial health, operating within a solvency margin that has not breached our risk appetite, in spite of markets dropping significantly towards the end of the year.
A Robust Society that delivers, regardless of market turbulence
The Society continues to attain its operational goal of growing our Members’ savings over the medium to long term, at a rate that offers a better return than cash deposits. During 2018, the Society has managed to deliver on a number of its operational and regulatory objectives whilst showing that our adopted strategy is starting to bear fruit, despite challenging market conditions.
The Society has been through a highly transformational period over the last few years, with infrastructure, systems, regulatory and personnel changes. 2018 saw further change, with the implementation of the Insurance Distribution Directive (IDD), General Data Protection Regulations (GDPR) and the commencement of the migration of a number of existing policies onto our new Policy Administration System (PAS).
Our Member first values
As we continue to develop opportunities for Members to communicate with their Society, we’d like to remind you of your options to keep n touch with the activities of the Society. You can update your communication preferences at any time and choose how you would like to keep in touch with us.
Your feedback continues to be a crucial tool when it comes to setting the direction of the Society and we encourage Members to communicate their views and suggestions when possible. You can leave your Member feedback here.
Past performance is not a guarantee of future performance. Bonus rates are not guaranteed, but once added cannot be removed. If you have any questions regarding the above information, please visit our FAQ Section below. Alternatively, you can contact us here.
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 medium to low risk investment and we aim to provide smoothed investment returns over the long term by holding back surplus for poorer years.
Our external Actuary reviews the performance of the With Profits fund every year. After charges have been deducted, we look at the current financial position of the fund and estimate how we expect this to change in the future. We make sure that the fund can pay all the guaranteed benefits such as your Money Back Guarantee and bonuses added to date, we then decide if a bonus will be applied. 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.
Any bonus declared is added to plans eligible for bonus during this period and once added, can’t be removed. 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 (also known as an annual bonus rate) may be added to your plan annually after the end of the year and reflects 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.
What is a Final Bonus?
You may receive a Final (Terminal) Bonus upon withdrawal of your funds from the Society.
A Final Bonus may be applied to your withdrawal to ensure you receive your fair asset share. For example, Final 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 Final 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.
A MVR might be applied on a withdrawal where the value of your plan is above your fair asset share. This would usually occur if you were to withdraw money from your plan when the financial markets were experiencing a downturn. A MVR will not be applied upon death.
A MVR may change at any time without notice.
Have you ever applied a Market Value Reduction (MVR)?
The Society applied a 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 products.