Smoothed Return Announcement
We're pleased to announce that the vast majority of Income Choice Annuity customers will see an increase in their income on their policy anniversary from 6 April.
Income Choice Annuity allows customers to choose an income from a range we provide, which requires an assumed Smoothed Return. This is currently between 1% and 6%. Once again, the Smoothed Returns we're delivering are above the maximum required smoothed return that any customer may need in order to maintain their level of income.
We're also very pleased to say that this has been the case since the launch of Income Choice Annuity, with the Smoothed Returns delivered every year being above the maximum required smoothed return. This means that vast majority of the customers who've taken out an Income Choice Annuity have seen their incomes increase at each policy anniversary. And this latest announcement means that most of our existing customers will see their incomes increase again at their next policy anniversary from 6 April.
The Smoothed Returns we announce depend on several things including the effective date of the annuity, the return from our With-Profits Fund, how we expect investments to perform in the following months, our views on mortality, adjustments for smoothing and the charges we make.
How does this affect your Income Choice Annuity?
| Announced Smoothed Returns for Income Choice Annuity Customers | |||
| Effective date | Policy anniversary 2009/10 tax year |
Policy anniversary 2010/11 tax year |
Policy anniversary 2011/12 tax year |
| 09/03/09 to 05/04/09 |
7.1% | 8.5% | 9.0% |
| 06/04/09 to 05/04/10 |
n/a | 7.1% | 7.1% |
| 06/04/10 to 05/04/11 |
n/a | n/a | 6.5% |
Past performance is not a reliable indicator of future performance. Changes in the income payable from an Income Choice Annuity will depend on the relationship between the Smoothed Return announced and the Required Smoothed Return needed to maintain the customer's chosen income. The income from an Income Choice Annuity can fall as well as rise at the policy anniversary. The Smoothed Return can be changed and is not guaranteed until it becomes payable at the next policy anniversary.
Information about our With-Profits Fund
Prudential's With-Profits Fund was the largest in the UK at around £65.5bn as at 31 December 2010.
"We have shown yet again that investing in a strong with-profits fund can produce strong returns for the cautious investor. The philosophy behind our with-profits offering is one of prudence and consistency and this has enabled us to deliver good annualised returns for our customers over the medium to long-term."
David Belsham, Chief Actuary at Prudential
Smoothed Returns are the way you
receive your share of the profits of the Fund.
To read more about the performance of our With Profits Fund over the last year and what that means for your policy click here.
