With-Profits Bonus Declaration February 2022

In 2021, our globally diversified With-Profits Fund performed well in mostly positive financial markets, despite the backdrop of Covid-19 uncertainty.  

As a result of this performance, I’m pleased to announce that this year we’re keeping Annual Bonus rates at the same level as last year for all customers. Final Bonus will be increased for most of our customers and therefore the value of their plans. 

We’ve also got additional money in one of our funds to share with some customers. This means some of our With-Profits customers invested in our With-Profits Sub Fund will receive a share of this surplus. You can find out more on our website at pru.co.uk/aboutadditionalsurplus

How we look after your money

We invest your money in the Prudential Assurance Company Limited With-Profits Fund. This is one of the largest and 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 (after any tax and investment expenses), while maintaining an acceptable level of risk and protecting you, our With-Profits customers.

How our Fund performed

The table below shows the returns for The Prudential Assurance Company Limited With-Profits Fund over the last 1, 5 and 10 years.

Performance of our With-Profits Fund in the 1, 5, 10 years to 31 December 2021*

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)

10.1

30.7

91.7

5.5

6.7

Prudential With-Profits Fund (before tax)

12.0

36.2

113.3

6.4

7.9

Source: Prudential. These values are before charges and the effects of smoothing and are for the main asset pool in our With-Profits Sub-Fund, which is relevant to the vast majority of our customers.

* Please note, the Fund returns don’t include the additional surplus shared as part of the Prudential Assurance Company Limited 2020 and 2022 bonus declarations.

For investments in our With-Profits Fund, the value of your plan depends on how much profit the Fund makes, and how it’s shared out as bonuses. When we take these factors into account, the bonuses we’re adding to your plan won't reflect the performance of the underlying fund exactly because of, for example charges, the effects of smoothing and any applicable tax. You can find more information in your yearly statement.

We can’t predict the future so past performance isn’t a guide to future performance. The value of your plan can go down as well as up so you might not get back the amount you put in.

How we set our bonus rates

For Annual Bonus rates, we look at the economic outlook and the returns we expect our investments to earn in the future. The Annual Bonus rates we've announced show that the With-Profits Fund has the investment flexibility to cope with market volatility and continue to deliver competitive overall returns. 

For Final Bonus rates, we aim to ensure the total return on customers’ plans represents a fair share of the Fund’s profits earned over the lifetime of their plans. This is after taking into account, for example, charges, the effects of smoothing and any applicable tax.

Our Final Bonus rates include, where applicable, additional money we are sharing with some of our With-Profits customers at this bonus declaration, which is further to the additional money we shared in 2020. Your Final Bonus isn’t guaranteed. There’s also a chance we might have to take back the additional money in future, to protect the interests of all customers and the financial strength of our With-Profits Fund. Unless something very unusual was to happen, we wouldn’t expect to have to do this. 

How we apply a Market Value Reduction

Sometimes, we may need to apply a Market Value Reduction if you decide to take money out of your plan. This will depend on the type of plan you have. This will reduce your fund value, but we’ll do this to make sure you get a fair plan value.

In 2022 we'll continue to manage the Fund in a prudent manner, just as we always have. 

Thank you for investing with us.

John Foley 
Chief Executive, M&G plc

 

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