Standard Life cuts client returns by thousands of euro

SOME 100,000 Irish clients of Standard Life, including pensioners, endowment and SSIA funds holders, are to see returns cut by thousands of euro.

Plummeting share values on world stock markets have forced Standard Life to slash bonus payments by 15%.

This is the third time Standard Life, Europe's largest mutually-owned life insurer, has cut bonus payments in just over a year.

The move will reduce the final payout on a 25-year endowment policy, maturing now, into which someone had paid €60 a month to €143,135 from €121,612 before today's cut.

A policyholder with a pension into which €200 a month had been paid for 25 years will see the final payout fall to €500,414 from €586,959, but still the equivalent of an annual return of 14.4%.

Group finance director John Hylands said: "Despite the reduction we applied to withdrawal values in September last year, there was still a significant difference between the amount being paid to customers and the market value of the underlying assets.

While surrender activity remained low, this did not represent a significant issue.

"However, we have recently seen a significant increase in surrenders. For this reason we have taken action now to protect the majority of customers who intend to remain fully invested." Mr Hyland said investment conditions remain extremely challenging.

"The returns we are delivering are highly competitive and compare favourably to other investment choices. During the year we added more than £1.5bn in bonuses to with-profits policies. These returns not only demonstrate the benefits of investing with a financially strong mutual, they emphasise the value of with profits products in general."

Standard Life believes that markets will recover in the next few years, but that long-term investment returns will not match those of past years.

"Because of this we are likely to need to continue reducing the amounts we pay to customers who take retirement benefits or whose life policies mature," Mr Hylands said.

"Falling bonus rates will not necessarily mean that individual policies will not grow in value just that final payouts may