Bonus declaration overview.
ANNUAL BONUS DECLARATION
On Thursday 16 February 2017, we announced bonus rates for all our with profits plans for 2016, after delivering a return of 15.3% 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 5.9% per annum before tax. Past performance is not a guide to future performance.
Commenting on our 2016 with profits performance Jackie Noakes, Managing Director Savings, Legal & General Assurance Society said:
“Our with profits customers will benefit from a year of strong investment returns for 2016 of 15.3%. This clearly demonstrates the benefits for our existing customers of remaining invested in a fund with a broad range of assets. It also means that our with profits customers continue to see steady growth on their investments over the long-term, well in excess of inflation.”
INVESTMENT MARKETS - A REVIEW OF 2016
Major global economies grew at different speeds during 2016. The US economy continued to grow steadily while China’s economic growth slowed. In the UK, economic growth was supported over the summer by a cut in interest rates of 0.25%, following the unexpected vote to leave the European Union. Economic growth in the euro zone and Japan continued to lag both the UK and US economies. Brazilian and Russian economies improved throughout the year as oil prices recovered.
Equity markets delivered positive returns with US equities outperforming global markets. Trump’s election victory pushed market levels higher on investor expectations of more US government spending and pro-business policies. These returns were substantially enhanced for UK investors when the exchange rate of the pound (sterling) fell against the US dollar following the EU referendum in June. The UK equity market was led higher by large globally focused companies with international earnings that were also enhanced by the same weakness in the pound. Elsewhere, equity returns for sterling investors in Europe, Japan and Emerging Markets were all positive.
Bond markets delivered a positive return. Most of the gains in sterling corporate bonds came in the third quarter as the Bank of England announced a new corporate bond buying scheme. Higher rated government bonds were supported by demand from risk-averse investors in the first half of the year as interest rates remained low worldwide.
After a positive first half to the year, UK Commercial Property prices fell following the UK referendum result. However, the impact on rental income was less severe and total returns for the year were positive albeit modest.
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 nine 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 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 link for the relevant product at the bottom of this page.
WITH PROFITS INVESTMENT MIX
With profits invests mainly in the following asset classes:
UK and overseas shares
Fixed interest securities
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 2016.
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 2017:
- With profits annuities - March 2017
- With profits bonds - March to April 2017
- With profits endowments and savings plans - May 2017
- With profits pensions - June 2017
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.
To see the investment returns and asset mixes for specific with profits products, please visit the following pages:
Bonds bonus declaration