Smoothed Return Announcement
2018 was a difficult year for financial markets, which experienced lots of ups and downs. These impacted our With-Profits Fund because it invests globally in many different investments. Despite this we’ve been able to provide some protection to our customers from the extremes of market volatility through the smoothed returns that we’ve announced at the 2019 declaration.
We’ll continue to manage the Fund prudently. We’ll aim to secure the highest total return for the Fund (after any tax and investment expenses) while maintaining an acceptable level of risk and protecting our planholders. We’ll also continue to smooth some of the extreme highs and lows of investment performance.
We aim to ensure those with an annuity get their fair share of the With-Profits Fund's investment returns via the announced Smoothed Return. In addition to the investment returns on the Fund, the Smoothed Returns we announce depend on several factors including:
- the effective date of the annuity
- how we expect investments to perform in the following months
- our views on mortality
- adjustments for smoothing
- your Plan's charges.
The announced Smoothed Return can be changed and isn't guaranteed until it's due to be paid on your clients next Plan anniversary. It could even be negative, for example, if stock markets perform badly. The effect of the Smoothed Return we announce on your clients income is included in your yearly statement. This webpage explains the 2019 Smoothed Return Announcement for the Income Choice Annuity.
See the bonus declaration for the With-Profits fund.
On the Bonus Declaration literature page, you will find literature and sales aids that you can use to discuss bonus declaration with your clients.
How does this affect the Income Choice Annuity product?
Effective Date |
1st |
2nd |
3rd |
4th |
5th |
6th |
7th |
8th |
9th |
10th |
11th |
|---|---|---|---|---|---|---|---|---|---|---|---|
| 09/03/09 to 05/04/09 |
7.1% | 8.5% | 9.0% | 7.0% | 6.0% | 8.0% | 8.5% | 5.0% | 10.0% | 12.0% | 2.5% |
| 06/04/09 to 05/04/10 |
7.1% | 7.1% | 6.5% | 5.0% | 7.5% | 8.5% | 5.0% | 9.0% | 11.0% | 1.0% | n/a |
| 06/04/10 to 05/04/11 |
6.5% | 4.5% | 4.5% | 6.5% | 7.0% | 4.0% | 8.0% | 11.0% | 1.0% | n/a | n/a |
| 06/04/11 to 05/04/12 |
6.0% | 4.5% | 6.5% | 7.0% | 4.0% | 8.0% | 11.0% | 1.0% | n/a | n/a | n/a |
| 06/04/12 to 05/04/13 |
6.0% | 6.5% | 6.5% | 3.5% | 8.0% | 11.0% | 1.5% | n/a | n/a | n/a | n/a |
| 06/04/13 to 05/04/14 |
6.0% | 6.0% | 3.0% | 8.0% | 11.0% | 1.5% | n/a | n/a | n/a | n/a | n/a |
| 06/04/14 to 05/04/15 |
5.0% | 2.5% | 7.0% | 9.5% | 1.5% | n/a | n/a | n/a | n/a | n/a | n/a |
| 06/04/15 to 05/04/16 |
5.0% | 6.0% | 8.0% | 1.0% | n/a | n/a | n/a | n/a | n/a | n/a | n/a |
| 06/04/16 to 05/04/17 |
6.0% | 8.0% | 1.0% | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a |
| 06/04/17 to 05/04/18 |
6.0%* | 1.0% | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a |
| 06/04/18 to 05/04/19 | 4.5%* | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a |
*This applies to customers originating from our Flexible Lifetime Annuity (FLA) only.
Source: Prudential
Past performance isn't 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 each plan anniversary. The Smoothed Return can be changed and it is not guaranteed until it becomes payable at the next plan anniversary.