Royal London maintains position among top with profits payouts

Royal London, UK mutual life and pensions company, has announced bonuses for 2007 on its with profits policies.

The announcement covers with profits policies written by Royal London, including those written under the Scottish Life brand since 1 July 2001.

Key Points

Royal London continues to deliver payouts which are among the best of the major providers

Annual bonus rates for Personal Pensions have increased

The benchmark 25-year payout on a Royal London £50 per month 25-year with profits endowment maturing on 1 January 2008 is £48,773, an annualised return of 8.4%, representing a real2 return of 4.9% p.a.

During 2007 the Royal London Fund recorded a return of 3.9%3 (before tax).

Commenting on today’s announcement Royal London Group Finance Director Stephen Shone said: “We have continued our policy of bringing payouts gradually into line with asset share while following the smoothing policies set out in our Principles & Practices of Financial Management (PPFM). The result of the declaration is that Royal London customers continue to enjoy some excellent payouts.”

Commenting on the prospect for future returns, Stephen Shone continued: “The investment outlook continues to be dominated by low inflation and interest rates. I expect that the future headline returns on investments will be comparatively low by the standards of the last 25 or 30 years.

“Nevertheless the arguments for investing in real assets over the long term remain strong. Over the long term, real assets - such as those backing our with profits fund - have delivered above inflation returns for investors. Today’s results show that the annualised return on a Royal London 25-year with profits endowment is 8.4%. This represents an annualised real rate of return of 4.9% ie 4.9% over and above inflation.”