With-Profits Bonus Declaration February 2018

Dear Customer,

Strong returns for the With-Profits Fund in 2017

I'm pleased to let you know that the With-Profits Fund, in which you're invested, has had another successful year's investment performance in 2017.

This means that:

Annual Bonuses are maintained in 2017

We're pleased to be able to maintain annual bonus rates for 2017. These will be added to the guaranteed benefits in your plan.

Final Bonuses are increasing compared to 2017

At the point of claim, we will also add a final bonus. So, most customers will see an overall increase in the value of their plan compared to last year.

This is a reflection of the strong returns that our Fund achieved in 2017.

Looking after your money

Your money is invested in the Prudential Assurance Company Limited With-Profits Fund. This is the largest and one of the financially strongest with-profits funds in the UK. The size and strength of our Fund allows us to invest in a very wide range of assets and individual companies.

Our aim is to secure the highest total return for the Fund over the long-term (after any tax and investment expenses) while maintaining an acceptable level of risk and protecting our customers.

Our Fund has performed well over the long term

The table below shows what the With-Profits Fund has returned over the last one, five and ten years to 31 December 2017.

But remember, we can’t predict the future so past performance isn’t a guide to future performance. The value of a plan can go down as well as up so you might get back less than you put in.

 

Fund 1 year

Fund
return
%
5 year
Cumulative
Fund
return
%
10 year
Cumulative
Fund
return
%
5 year
Annualised
Fund
return
%
10 year
Annualised
Fund
return
%
Prudential With-Profits Fund
(after tax)
9.1 47.0 76.5 8.0 5.8
Prudential With-Profits Fund
(before tax)
10.3 56.4 89.6 9.3 6.6


For investments in our With-Profits Fund, the value of your plan depends on how much profit the Fund makes, and how we decide to distribute it.

The table above is the underlying performance of the Fund and doesn't take into account factors such as charges, the effects of smoothing (which aims to smooth the extreme short-term ups and downs of markets) and tax. When we take these factors into account, the bonuses added to your plan won't be an exact representation of the underlying fund performance. See information specific to your plan for further details.

How we calculate bonuses

When we set our annual bonus rates we consider a number of things, such as, the economic outlook and the long-term returns we expect our investments to achieve in the future. The way we calculate our annual bonuses also means the With-Profits Fund will retain the investment flexibility it needs to manage any future market volatility, and continue to deliver competitive overall investment returns. This gives the Fund a better opportunity of paying higher final bonuses in future.

The Final bonus value is calculated in a way that makes sure the total return on a customer's plan represents a fair share of the investment returns earned over the lifetime of the plan. It takes into account, for example, charges, the effects of smoothing and tax. We will expect to pay any final bonus declared in February 2018 when customers cash in or switch out of the With-Profits Fund in the forthcoming bonus year, but this isn't guaranteed.

Market Value Reduction

Depending on the type of plan you have, if you take money out, we sometimes have to apply a Market Value Reduction, and this will have the effect of reducing your fund value. We do this to make sure you receive a fair plan value.

Thank you for investing with Prudential

In 2018, we'll continue to manage the Fund in a prudent manner, just as we always have.

Thank you for continuing to invest with us.

Yours faithfully,

Clare Bousfield
Chief Executive Officer, Prudential UK

 

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