Over the past 10 years, assets invested for customers in Legal & General’s With Profits Fund have returned 43 per cent before tax. This is well ahead of inflation as the Retail Price Index has risen 30 per cent over the same period and compares favourably with the average balanced managed fund return of 21 per cent*.
Carl Dowthwaite, With Profits Actuary said: “The strong return generated for customers in Legal & General’s With Profits Fund in 2009 demonstrates the benefits of investing with a leading With Profits provider. Having protected payouts from the worst of the market falls in 2008 we are pleased that customers will benefit from the recovery in 2009.”
“In recent volatile markets the core features of With Profits, including the greater stability offered by smoothing, continue to prove attractive for many savers. We have seen sales of With Profits Bonds rise by 96% in 2009, which is a clear sign of the continued appeal of With Profits among cautious investors who are seeking long-term real returns. We remain committed to the future of With Profits.”
Highlights: Investment values for policyholders
· Annual bonus rates unchanged for Conventional Endowment customers
· A 25 year, £50 a month mortgage endowment maturing on 1 March 2010 has delivered an investment value of £34,486, £108 above the target amount of £34,378.
· £200 a month invested in a pension over the past 20 years with a retirement date of 1 March 2010 has delivered an investment value of £77,909 (versus premiums paid of £48,000).
· £10,000 invested in a bond 10 years ago has increased in value to £12,121 on 19 February 2010.
* Source: Lipper for Investment Management
For further examples of investment values please see Appendix One.
Legal & General has approximately 700,000 With Profits customers and approximately 38,000 endowments matured in 2009.
APPENDIX ONE
Further examples of investment values for With Profits Products
Pensions (Pension Plan, male retiring at age 65, £200 per month)
Plan Term | Transfer value as at 1/3/2009 | Total payments since 1/3/2009 | Retirement value as at 1/3/2010 | Return over year |
10 year | £22,908 | £2,400 | £30,132 | 20.1% |
15 year | £36,351 | £2,400 | £45,893 | 19.0% |
20 year | £63,949 | £2,400 | £77,909 | 17.8% |
Savings Endowments (Endowment, male aged 29 at entry, £50 per month)
Plan Term | Surrender value as at 1/3/2009 | Total payments since 1/3/2009 | Investment value as at 1/3/2010 | Return over year |
20 year | £17,659 | £600 | £20,310 | 11.4% |
25 year | £31,989 | £600 | £35,603 | 9.3% |
Mortgage Endowments (Level premium mortgage endowment, male aged 29 at entry, £50 per month)
Plan Term | Surrender value as at 1/3/2009 | Total payments since 1/3/2009 | Investment value as at 1/3/2010 | Return over year |
20 year | £17,740 | £600 | £20,403 | 11.4% |
25 year | £30,986 | £600 | £34,486 | 9.3% |
With Profits Bonds, based on an initial investment of £10,000
Date of investment | Cash-in value as at 19/2/2009 | Cash-in value as at 19/2/2010 | Return over year |
19 Feb 2000 | £10,643 | £12,121 | 13.9% |
19 Feb 2005 | £10,251* | £11,372 | 10.9% |
*This value is quoted before a 2% charge that applies. This charge is designed to recover initial costs, and is therefore excluded when measuring investment returns over the year.
1) The 14 per cent return generated in 2009 is on total assets backing With Profits policies and is stated pre-tax and charges. Returns generated for individual products may differ from this value.
2) RAG status for a typical £50 per month, 25 year endowment mortgage maturing in Q1 2010 is Green with policies delivering a small surplus (£108) above the target amount (£34,378)) – see investment values above. RAG status based on the re-projection mailings completed last year (2009) for policies maturing over the next five years is Green 5%, Amber 9%, Red 86%.
3) The asset allocation for the major product classes at 31.12.2009 were as follows;
Legal & General Assurance Society Limited.
Registered in England No 166055.
Registered office: One Coleman Street, London EC2R 5AA.