L&G reduces final bonus rates on with profit policies

Following poor investment conditions and turbulence in the markets in 2008, Legal & General has announced that payouts on with profits policies are being adjusted through reductions in final bonus rates which are being introduced from today. No changes are being made to regular bonus rates.
Mark Gregory, Managing Director of with profits said: "We have made the decision to reduce final bonus rates to take account of some of the negative movements in the investment markets. Through smoothing we are protecting our customers from the full impact of these market falls.

"In making these changes, we are ensuring fairness between all of our customers, whether they are leaving or remaining in our with profits fund.

"We are committed to the future of with profits and continue to see demand for our products, especially amongst cautious investors."

Key Figures

The overall investment return after tax on the assets backing Legal & General's conventional life with profits policies was circa -14% for the period from 1 January to 13 October 2008.

The reduction in final bonus rates will lead to cuts in payouts typically of between 5% and 9%.

A 25-year £50 a month mortgage endowment maturing after this change will pay £38,565 compared to £41,293 before this change.

A 20-year £200 a month pension maturing after this change will pay £90,999 compared to £98,511 before this change.