Tuesday 28 February 2017
Phoenix Group announces its with-profits bonus rates for
2016/2017
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Estate distribution continues to uplift maturity values on most of our funds
Almost eight in ten (78%) of our policies are now receiving an annual bonus (up
from less than 40% four years ago)
Very low interest rates are impacting levels of annual bonus in some funds
Commenting on the announcement, Andy Moss, Chief Executive of Phoenix Life, said: “We are pleased to be
able to maintain annual bonuses on many of our policies this year, despite the very low market rates of interest.
We also continue to apply estate distribution to final pay-outs, a key differentiator between open and closed
funds.”
Distribution of excess assets (estate distribution)
As a closed fund provider, many of our with-profits funds have excess assets (sometimes called the ‘estate’) in
addition to those needed to pay benefits to our policyholders. For example, in the PLL Phoenix With-Profits (ex
Royal Life/ RSA) fund, estate distribution is adding 28.8% to the final pay-out on the vast majority of policies. This
number is strong across most of our other funds too, with estate distribution adding up to 25.7% to policies in the
PLL SPI (ex Scottish Provident) fund, up to 25.5% to policies in our PLAL Pearl fund and up to 24.4% of the
policies in our PLL SMI (ex Scottish Mutual) fund.
Annual bonus rates
Despite very low market rates of interest, and often uncertain market conditions, we have been able to continue
paying annual bonuses from the majority of our funds:

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Conventional life policies in the Phoenix With-Profits Fund are paying an annual bonus of 2.5%
Conventional pension policies in the Phoenix With-Profits Fund are also paying an annual bonus of 2.5%
Conventional UK life policies in the SPI With-Profits Fund are paying an annual bonus of 3%
Unitised with-profits pensions in the Britannic With-Profits Fund are paying an annual bonus of 2.5%
Once added, an annual bonus cannot be taken away so it adds an additional level of guarantee for our
policyholders.
As an example of what this means for policyholders, a typical 30 year old policyholder, paying in £64 per month
into a 25-year life endowment in the Phoenix With-Profits fund, maturing in 2020, has already built up a
guaranteed minimum pay-out on maturity of £19,882, assuming that premiums continue to be paid. This year we
have added an annual bonus of 2.5%, which would increase the guaranteed minimum benefit for this example by
£485 to £20,379. We currently expect to also add a final bonus to this policy when it reaches maturity, provided
that markets continue to perform in line with our expectations. Adding an annual bonus does not change the
overall amount we expect to pay when the policy matures. It does however increase the minimum amount of
benefit that is guaranteed, thereby giving the policyholder greater security should investment markets perform
badly.
The annual bonus rates for some of our larger classes of policy are shown in Appendix 2. Annual bonuses are
also being paid on many of our smaller classes of policy.
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Tuesday 28 February 2017
Final bonus rates
We will normally add a final bonus if the underlying value of the investments is greater than the benefits already
guaranteed. We continue to add final bonuses to policies in many of our funds, which may boost the final pay-out
significantly when the policy matures. For example, in the case of former Scottish Mutual policies, now under PLL
SMA With-Profits fund, 44% of the maturity pay-out on a 25 year life endowment policy will be through a final
bonus. Similarly, 42.5% of the maturity pay-out on a 25 year life endowment policy of former Royal Life policies,
now under PLL Phoenix With-Profits fund, will be through a final bonus.
There are a significant number of policies where the benefits already guaranteed are higher than the value of the
underlying investments and for these policies we do not add a final bonus. These guarantees can also be very
valuable; for example, a typical single-premium pension policy with PLL SAL, originally sold by Sun Alliance in
1992 to a 40-year old man for a 25-year term (maturing in 2017), provided a sum assured of £17,751 in return for
a premium of £3,476. This meant that the policy would produce a return to maturity of 6.7% per annum after tax,
even if no bonuses were added. In fact, annual bonuses were added to the policy during the 1990s when
investment returns and interest rates were generally higher than they have been in recent years and it was
expected that these investment conditions would continue. More recently the annual bonuses have been low but
the overall annual bonuses added of £3,562 mean that the value of the policy at maturity in 2016 is £21,313, even
though no final bonus is payable. This gives the policyholder an overall return after tax of 7.5% per annum.
Further examples of final bonus rates, and policy pay-outs, for some of our larger classes of policy are shown in
Appendix 1.
Market value reductions (‘MVRs’)
MVRs are in place to ensure that all policyholders receive a fair share of the fund and those that remain in the
fund are not disadvantaged. For example, within the NPLL, SMA and SPI funds certain policies receive a
guaranteed annual bonus of 4%, even if the underlying fund does not produce this return.
The vast majority of our funds are not levying an MVR. For those policies which do have an MVR, MVR-free
guarantee dates, which provide protection for policyholders against MVRs, exist for many of our policyholders. For
example, some With-Profits bonds, such as those originally sold by Britannic Assurance OB Fund, now part of
PLL, still have future MVR-free dates available.
We ensure that any such date is clearly communicated to policyholders in their annual statements, via a specific
letter as the date approaches and also during any contact they make with us regarding encashment and
withdrawal. We also allow policyholders a reasonable period to utilise these ‘windows’, often longer than stated in
their original policy wordings to ensure they don’t miss out.
Examples of the MVRs on some of our larger types of policies are set out in Appendix 3.
-EndsEnquiries
Shellie Wells
Head of Corporate Communications
Phoenix Group
020 3735 0922/07872 414 137
[email protected]
Shirley Collyer
Lansons
020 7294 3615
[email protected]
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Tuesday 28 February 2017
Appendix 1: Final bonus and policyholder returns for larger policy types+
25 Year Life Endowment (£50 per month, male aged 30 next at entry)
With-profits
Maturity
Value
Final Bonus
Within Maturity
Value
Return on
premiums
(p.a.)
No.
maturities
2017H1
PLL Alba (Britannia Life)
PLL Britannic
22,027
5,241
2.9%
355
31,650
9,333
5.5%
250
30,612
30,211
32,073
23,885
29,432
13,019
13,343
10,254
6,022
10,991
5.3%
5.2%
5.6%
3.5%
5.0%
1463
88
946
661
1127
Return on
premiums
(p.a.)
4.4%
No.
maturities
2016H1
100
PLL Phoenix WithProfits (ex Royal Life / RSA)
PLL SMA (ex Scottish Mutual)
PLL SPI (ex Scottish Provident)
PLL SAL (ex Sun Alliance)
PLAL Pearl 90:10
Personal Pension – 20 Year Regular Premium (£200 per month)
With Profits Fund
Maturity
Value
76,135
PLL Britannic
Final Bonus
Within Maturity
Value
18,669
Appendix 2: Annual bonus rates for larger policy classes+
Conventional with-profits life
With-profits fund
Products
PLL Alba (Britannia Life)
All UK Life
On sum
assured
0.00%
PLL Britannic
PLL Phoenix With-Profits (ex
Royal Life/ RSA)
PLL SPI (ex Scottish Mutual)
Ex Britannic (1986 entry)
1.10%
0.00%
Main UK Life
2.50%
2.50%
UK Life
3.00%
3.00%
PLL SAL (ex Sun Alliance)
UK Life
0.10%
0.10%
PLAL Pearl 90:10
Ordinary Branch Compound
0.00%
0.00%
On bonus
0.00%
Conventional with-profits pensions
With-profits fund
Products
PLL Alba (Britannic Life)
PLL Phoenix With-Profits (ex
Royal Life/ RSA)
All UK Pension
On sum
assured
0.00%
UK Pensions
2.50%
2.50%
PLL SMA (ex Scottish Mutual)
Main UK Pensions
0.00%
0.00%
PLL SAL (ex Sun Alliance)
PLAL London Life Limited
PLAL Pearl 90:10
PLAL Pearl 100:0 SERP
PLAL National Provident Life
Limited
Main UK Pensions
Pension Compound Pool 4
Ordinary Branch Compound
All
0.05%
0.00%
0.00%
0.00%
0.05%
0.00%
0.00%
0.00%
All
0.00%
0.00%
On bonus
0.00%
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Tuesday 28 February 2017
Unitised With-profits Life***
With-profits fund
Products
On basic units
On bonus
units
PLAL Pearl 90:10
Post 1995 Life
0.75%
0.42%
PLL Phoenix With-profits (ex
Royal Life/ RSA)
Pre August 2000
2.50%*
Post July 2000
2.00%*
With-profits fund
Products
On basic units
On bonus
units
PLL Britannic
Britannic OB UWP Pensions
2.50%
2.50%
PLAL Pearl 90:10
Personal Pensions v1 (pre
1996)
2.50%
2.50%
PLL Phoenix With-Profits {ex
Royal Life/ RSA)
Linked to Profit Plus Fund
0.10%
0.10%
Series 1 & 2 accumulation
4.00%**
Other series accumulation
Series 1
3.00%*
4.00%**
Series 2
4.00%*
Series 1 ordinary units
4.00%**
Unitised with-profits pensions***
PLL SMA (ex Scottish Mutual)
PLL SPI (ex Scottish Provident)
PLAL National Provident Life
Limited
Appendix 3: Current MVRs (February 2017) for larger policy classes+
Unitised With Profits Life (Single Premium)
With Profits Fund
PLAL Pearl 90:10
PLL Phoenix With-Profits (ex Royal
Life / RSA)
PLL SPI (ex Scottish Provident)
PLL SMA (ex Scottish Mutual)
Product
Post 1995
Life
Pre August
2000
Post July
2000
UK UWP
Life
UWP
Series IV
10 year
15 year
20 year
0.00%
0.00%
0.00%
n/a
0.00%
n/a
0.00%
0.00%
0.00%
0.00%
0.00%
n/a
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Tuesday 28 February 2017
Unitised With Profits Pensions (Single Premium)
With Profits Fund
PLL Britannic
PLL Phoenix With-Profits (ex Royal
Life / RSA)
PLL SPI (ex Scottish Provident)
PLL SMA (ex Scottish Mutual)
PLAL National Provident Life
Limited
Product
Ex Britannic
Pensions
Solutions
UK UWP
Pensions
UWP
Series I&II
Series 1
ordinary
units
10 year
0.00%
15 year
-1.9%
20 year
0.00%
n/a
n/a
n/a
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
-20.9%
-29.6%
-37.5%
+Other rates may apply for other policy classes
*No bonus units, bonus is applied as an increase in unit price.
**Guaranteed minimum rate. No bonus units, bonus is applied as an increase in unit price.
***Bonus rates on most unitised with-profits policies may be changed at any time.
Important additional information:
1. Phoenix Life has more than 100 legacy brands within the life company so customers may now be in a
fund with a different name to the product they originally took out. For a full list of legacy brands – please
visit our website. h//www.thephoenixgroup.com/site-services/who-services-your-policy.aspx.
2. The value of investments can go down as well as up and is not guaranteed, past performance is not a
guide to the future. It is possible that you may not get back the amount you put in.
3. This press release is intended for use by the media only. If you are a policyholder and would like to find
out information about your specific policy then please contact the customer number listed on your annual
statement or visit our website for the details at www.phoenixlife.co.uk.
Background to the closed fund industry:
Phoenix operates 13 with-profits funds in the UK which are all closed to new business. The funds were all closed
to new business by their previous owners, in many cases after experiencing difficulties. By bringing together a
number of closed funds under one umbrella, Phoenix aims to apply its expertise to provide a fair outcome for its
with-profits policyholders, whilst balancing this against the need to maintain adequate security for policyholder
benefits, and recognising the challenging history that many of the funds experienced under their previous
ownership.
The Phoenix Group:
The Phoenix Group is the UK’s largest specialist consolidator of closed life and pension funds with over 6.1 million
policyholders and £74 billion of assets held by the Group’s life companies, including the newly acquired AXA
Wealth, SunLife and Abbey Life businesses.
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Tuesday 28 February 2017
As at 31 December 2015 there were just over 4.7 million policies in force across Phoenix Life (not including the
acquired AXA Wealth, SunLife, and Abbey Life policies)
This figure includes:
• Over 2 million whole-of-life and endowment policies
• Over 1.7 million pensions
• Nearly 419,000 annuities in payment
• Over 240,000 pure protection policies (term assurances, critical illness and income protection)
• Nearly 211,000 investment bonds
Split across:
• Over 1.9 million Non-Profits policies. (This includes policies which were originally With-Profits
but which have been paid-up and no longer receive bonuses)
• Over 900,000 Traditional With-Profits policies
• Over 960,000 Unit Linked and Index Linked policies
• Over 880,000 Unitised With Profits policies
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