Smoothed Return Announcement
In 2020, our With-Profits Fund delivered a small positive return in what was a highly unusual year for global investment markets. The impact of the COVID-19 pandemic was severe in the early part of the year, although many investment markets, and the Fund, finished positively. Whilst the longer term performance of the Fund remains strong, there is still considerable ongoing uncertainty in relation to the future outlook for global economies and the investment markets which is reflected in this year’s bonuses.
Our Smoothed Returns include additional money we shared with our Income Choice Annuity customers as part of last year’s Bonus Declaration. Our Smoothed Returns aren’t guaranteed. There’s also a chance we might have to take back this extra money in future, to protect the interests of all planholders and the financial strength of our With-Profits Fund. Unless something very unusual was to happen, we wouldn’t normally expect to have to do this.
In 2021 the team will continue to take decisions that allow them 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 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 2021 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?
Announced Smoothed Return Year |
|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Effective Date (Annuity Start Date) |
2021 |
2020 |
2019 |
2018 |
2017 |
2016 |
2015 |
2014 |
2013 |
2012 |
2011 |
2010 |
2009 |
| 09/03/09 to 05/04/09 |
5.0% | 17.5% | 2.5% | 12.0% | 10.0% | 5.0% | 8.5% | 8.0% | 6.0% | 7.0% | 9.0% | 8.5% | 7.1% |
| 06/04/09 to 05/04/10 |
4.0% | 15.5% | 1.0% | 11.0% | 9.0% | 5.0% | 8.5% | 7.5% | 5.0% | 6.5% | 7.1% | 7.1% | |
| 06/04/10 to 05/04/11 |
2.5% | 13.0% | 1.0% | 11.0% | 8.0% | 4.0% | 7.0% | 6.5% | 4.5% | 4.5% | 6.5% | ||
| 06/04/11 to 05/04/12 |
2.5% | 13.0% | 1.0% | 11.0% | 8.0% | 4.0% | 7.0% | 6.5% | 4.5% | 6.0% | |||
| 06/04/12 to 05/04/13 |
2.5% | 13.0% | 1.5% | 11.0% | 8.0% | 3.5% | 6.5% | 6.5% | 6.0% | ||||
| 06/04/13 to 05/04/14 |
2.5% | 13.0% | 1.5% | 11.0% | 8.0% | 3.0% | 6.0% | 6.0% | |||||
| 06/04/14 to 05/04/15 |
2.0% | 13.0% | 1.5% | 9.5% | 7.0% | 2.5% | 5.0% | ||||||
| 06/04/15 to 05/04/16 |
2.0% | 12.5% | 1.0% | 8.0% | 6.0% | 5.0% | |||||||
| 06/04/16 to 05/04/17 |
2.0% | 12.5% | 1.0% | 8.0% | 6.0% | ||||||||
| 06/04/17 to 05/04/18 |
0.5%* | 6.5%* | 1.0%* | 6.0%* | |||||||||
| 06/04/18 to 05/04/19 | 0.5%* | 6.5%* | 4.5%* | ||||||||||
| 06/04/19 To 05/04/20 | 0.5%* | 4.5%* | |||||||||||
| 06/04/20 To 05/04/21 |
4.5%* | ||||||||||||
*This applies to customers originating from our Flexible Lifetime Annuity (FLA) only.
Source: Prudential
Past performance isn't a guide to 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.