With-Profits Bonus Declaration February 2020 

Our With-Profits Fund performed well in 2019

We’re pleased to let you know we’re keeping annual bonus rates at the same level as last year for all our customers. We’ll add these to the guaranteed benefits in your plan.

For most of our customers, we’ll increase the final bonus and therefore the value of your plan.

We’re also pleased to announce we have additional money in one of our funds to share with some of our customers. This means some of our With-Profits customers invested in our With-Profits Sub Fund will receive a share of this.

You can find out more details 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 the largest and one of the financially strongest with-profits funds in the UK. The size and strength of our Fund lets us invest in a 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), whilst maintaining an acceptable level of risk and protecting you, our With-Profits customers.

How our Fund performed

The table below shows what the With-Profits Fund has returned over the last 1, 5 and 10 years to 31 December 2019. *

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)

9.6

35.4

94.3

6.3

6.9

Prudential With-Profits Fund (before tax)

11.5

42.0

115.5

7.3

8.0

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 reflect the additional money being shared as part of this With-Profits bonus declaration.

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. 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. 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. By keeping annual bonus rates at the same level as last year, we’re maintaining the Funds investment flexibility to cope with market volatility which will help continue delivering competitive overall returns. This gives the Fund a better opportunity of paying higher final bonuses in future.

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. Any final bonus we’ve declared in February 2020 may be payable if you leave the With-Profits Fund in the next bonus year, but this isn’t guaranteed.

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 2020 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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