L+G cuts final payouts for savers

Published:
22 October 2008
Topic:
News,Money,Savings

Long-term savers with insurer Legal & General are to have their final payouts slashed by up to 9%.

The decision to cut the final bonuses paid on with-profits policies, reducing their maturity value by between 5% and 9%, was blamed on the current turbulence in investment markets.

The group said the return made on its conventional life with-profits fund between January 1 and October 13 this year had been minus 14% after tax.

The change means that someone who had paid £50 a month into a mortgage endowment policy for 25 years would receive a final payout of £38,565, compared with one of £41,293 before the reduction in the final bonus.

An investor who had paid £200 a month into a pension for 20 years would see the maturity value of their final payout fall to £90,999, down from £98,511 if the final bonus had not been reduced. The regular bonuses paid on the policies will remain unchanged.

Mark Gregory, managing director of with-profits at Legal & General, said: "We have made the decision to reduce final bonus rates to take account of some of the negative movements in the investment markets.

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

Copyright © PA Business 2008

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