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Bonus declaration overview.
AN OVERVIEW OF OUR PERFORMANCE
On Thursday 21 February 2013, we announced bonus rates for all our with profits plans for 2012, after delivering a return of 10.6% on the assets we hold for with profits policyholders. This return is before we have taken off investment expenses, tax and any policy charges. Over the past 10 years, assets invested for customers in Legal & General’s With Profits Fund have delivered a return of 7.7% per annum before tax.
COMMENT FROM LEGAL & GENERAL’S WITH PROFITS ACTUARY
Tim Sheldon, With Profits Actuary said: “The strong investment return generated for Legal & General’s With Profits customers in 2012 demonstrates the benefits of investing with a leading with profits provider. Our active management of risk and a balanced asset mix are key reasons for our With Profits Fund outperforming many of our competitors. This year's results have produced double digit returns, demonstrating the advantage of the freedom to capitalise on opportunities to boost investment returns for our policyholders. Whether invested in a with profits bond, pension or endowment the long-term returns delivered for our customers have beaten inflation. We believe with profits remains a good choice for investors seeking steady growth from a spread of investments over the longer term and the additional benefit of some downside protection.”
Read the full announcement on the Legal & General Group Plc website
INVESTMENT MARKETS - A REVIEW OF 2012
The investment markets were very volatile in 2012 due mainly to the Euro debt crisis and political uncertainty in Greece. The European Central Bank’s commitment to save the Euro helped financial asset prices recover. Global growth stabilised in the second half of the year.
Emerging markets such as India and China showed signs of slowing down for the first three quarters of 2012, as some central banks kept interest rates high to manage inflation. This was followed by a recovery later in the year as market confidence returned.
The US economy began to recover in the labour and housing markets. The combination of extensive spending cuts and tax increases, which were due to be implemented at the end of the year, were delayed.
UK and Overseas equities put in a strong performance. UK Corporate Bonds also performed well, but UK Property performed less well and UK Government Bonds were relatively flat over the year.
WITH PROFITS PERFORMANCE HISTORY
The graph below shows how the assets we hold for our with profits policies have performed for each of the last eight calendar years, 1 January to 31 December. The performance is a combination of the returns received from all the investments. These investment returns are before we’ve taken off investment expenses, tax and any policy charges. You can find more information about deductions and policy charges in your policy documentation.
Please note that the returns used to calculate bonuses for individual plans over the years will not be the same as those shown below. This is because the investment approach may vary for each customer, depending on the type of policy held. This may be for a number of reasons, one of which is to reflect the varying features and benefits of different with profits products.
Please note that all investment returns are rounded to the nearest percent.
Past performance is not a guide to future performance.
You can find out specific product details by clicking on the relevant link in the left hand navigation.
With Profits Investment Mix
With profits invests predominantly in the following asset classes:
With profits invests in shares because they are widely believed to provide the best long-term return. Over the short term, the value of a fund investing in shares can go up and down a lot. Share prices can change dramatically in response to the activities and financial performance of individual companies, as well as being influenced by general market and economic conditions.
With profits invests in fixed interest securities that aim to provide a stable income over a fixed length of time. These are essentially a loan, usually to a company, or sometimes to a government. The return on a fund investing in fixed interest securities comes from the interest that the company or government pays on the loan, and the value of the securities. Fixed interest securities are less risky than shares but are likely to provide a lower return over the long term.
Property fits well in a balanced investment mix as its returns aren’t directly linked to the returns from shares. Investment includes holdings in offices, retail space and industrial property, which can offer good prospects for long-term returns. Commercial property can provide growth through rises in the value of the property and through the steady income stream that can be received from rents.
We invest in a mix of assets which can help to reduce the impact of poor performance by any one asset type. As the assets react differently to economic factors, when one is not performing well, another may be performing better.
The pie chart below shows the mix of assets for our with profits policies as at 31 December 2012.
Bonus statement mailing dates
We send all our with profits customers an annual bonus statement showing how their plan has performed over the previous year. Please use the following dates as a guide to when statements will be mailed in 2013:
- With profits annuities - March to April 2013
- With profits bonds - February to May 2013
- With profits endowments and savings plans - May 2013
- With profits pensions - June to July 2013
It's worth remembering that the value of your investment can fall as well as rise and you could get back less than you invested.
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With profits guides
Here you'll find easy to understand factsheets on 'smoothing', market value reductions and bonus declarations.
Frequently asked questions about the With Profits Fund
Take a look at the answers to the most commonly asked questions about the With Profits Fund.
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Use our free and secure online service, My Accounts, to find out the current value of your Legal & General investment or pension, seven days a week.
