2017 Bonus Rates for Former Equitable Life Customers
We aim to secure the highest total return for the Fund over the long-term, while maintaining an acceptable level of risk and protection for planholders.
In 2016, our With-Profits Fund performed well in the face of market uncertainties.
In 2017, we’ll maintain our prudent approach to managing the With-Profits Fund, which is a key pillar of the Fund’s success. We aim 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 protection for planholders. We’ll also continue to smooth some of the extreme highs and lows of short-term investment performance.
Your level of income at the start of your Plan depended on your Anticipated Bonus Rate (ABR) and whether your Plan had a Guaranteed Interest Rate (GIR). The higher your combined ABR and GIR, the higher your income in the early years. This combination also meant a higher chance of falls in income in the future. Your future level of income depends on the combination of:
- The level of Regular Bonus, Overall Rate of Return (ORR) and Interim Rate of Return (IRR) we declare relative to your ABR
- Any GIR
The combination of the regular bonus, ORR and IRR we declare represents your fair share of the investment return, after charges and smoothing, earned on the With-Profits Fund since the transfer of your Plan to Prudential on 31 December 2007.
Our With-Profits Fund has continued its record of strong medium to long-term performance, benefitting With-Profits customers in difficult market conditions.
In order to maintain investment flexibility and to protect the financial strength of our With-Profits Fund, we aim to keep the level of guaranteed benefits on all our with-profits Fund at a sustainable level. Due to the high level of guarantees on these with-Profits annuities a Regular Bonus of 0% has been declared.
Customers who are receiving their Total Annuity will see their income rise if the combined effect of the declared Overall Rate of Return (ORR) and Interim Rate of Return (IRR), after offsetting the IRR declared at the preceding bonus declaration, exceeds the combined effect of the Anticipated Bonus Rate (ABR) and any Guaranteed Interest Rate (GIR). Where customers are in receipt of their Guaranteed Annuity, they will continue to see their income reduce by the level of their ABR.
So what are the 2017 Bonus Rates?
Former Equitable Life With-Profits Annuity customers , who are receiving their Total Annuity will see year-on year- increases in income of 11.9%.
The 2017 bonus rates to be applied to your annuity on the plan anniversary following 1 April 2017 are:
- Overall Rate of Return: 13.5%
- Interim Rate of Return: 3.5%
The IRR can change or be removed at any time.
The change in your Total Annuity at your next Plan anniversary will reflect the level of ORR and IRR declared, after removing the IRR declared in the previous year. We also take the Anticipated Bonus Rate, and any Guaranteed Interest Rate for your Plan, into account when working out your new income.
What does this mean to my income?
Former Equitable Life With-Profits Annuity customers, who are receiving their total annuity, will see average year-on-year increases in income of 11.9%, before allowing for their Anticipated Bonus Rate (ABR) and any Guaranteed Interest Rate (GIR), as a result of the bonuses declared in the February 2017 bonus declaration. This means that, for an annuity customer with a combined ABR & GIR of 6.5%, their income will fall by 5.4% at their next Plan anniversary from1 April 2017.
Where customers are in receipt of their Guaranteed Annuity they will continue to see their income reduce by the level of their Anticipated Bonus Rate (ABR).
Only plans issued before 1 July 1996 are subject to a Guaranteed Interest Rate. This is 3.50% for all such plans.
If you have any questions on this years Bonus Declaration, please read our frequently asked questions.