SCOTTISH WIDOWS WITH-PROFITS BONUS RATES Scottish Widows announces changes to bonus rates for its with-profits policies as of 1 January 2018. Regular bonus has been added to 250,000 unitised with-profits policies and 38,000 conventional with-profits policies. The Scottish Widows With-Profits Fund pre-tax investment return was 9% for the 12 months to 31 December 2017. Market Value Reductions (MVRs) do not apply to any Unitised With-Profits units. A 25-year 50 a month mortgage endowment will pay 26,640. A 20-year 200 a month personal pension will pay 79,685. 1
Included in this news release: 1. payouts 2. Regular bonus rates 3. Final bonus rates 4. Financial strength 5. Asset mix 6. Number of policies 7. Fund size 1. MATURITY PAYOUTS PAYOUT EXAMPLES The tables below show examples of how the values of typical policies changed over the last 12 months. Conventional With-Profits Policies a) Personal Pension 1/1/17 1/1/18 at 1/1/18 of 25 years 99,282 114,271 30,248 2,400 14,989 The above example is based on a male, investing 200 a month, for 25 years, ending one month before retirement at age 65 on 1 January 2018. b) Life Endowment 1/2/17 1/2/18 at 1/2/18 of 25 years 23,186 27,225 8,053 600 4,039 The above examples are based on a male non-smoker investing 50 a month from age 29 for the policy terms shown ending on 1 February 2018. c) Life Mortgage Endowment 1/2/17 1/2/18 at 1/2/18 of 25 years 22,687 26,640 7,879 600 3,953 The above examples are based on a male non-smoker investing 50 a month from age 29 for the policy terms shown ending on 1 February 2018. 2
Unitised With-Profits Policies a) Personal Pension 1/1/17 1/1/18 at 1/1/18 of 5 years 10,137 13,363 602 2,400 3,226 10 years 26,866 31,514 4,655 2,400 4,648 15 years 46,466 52,877 10,358 2,400 6,411 20 years 69,899 79,685 19,583 2,400 9,786 The above examples are based on a male investing 200 a month, for the terms shown above, ending one month before retirement at age 65 on 1 January 2018. b) With-Profits Bond over the 1/1/17 1/1/18 period 20 years 19,897 22,088 2,191 The above example is based on a 10,000 single contribution on 1 January 1998, made by a male aged under 70 at the outset. 3
2. REGULAR BONUS RATES a) Conventional With-Profits Policies Regular bonuses on conventional with-profits policies are normally reviewed annually and are added on 31 December each year. The rates added on 31 December 2017 are set out below. The rates in brackets are those added on 31 December 2016. Product Category Bonus Rates per annum Sum Assured Attaching Bonus Life Contracts 2.00% (2.00%) 3.00% (3.00%) Pre-15 February 1999 Pensions 0.00% (0.00%) 0.00% (0.00%) Post-15 February 1999 Pensions 1.00% (1.00%) 1.00% (1.00%) b) Unitised With-Profits Policies With effect from 1 January 2018 the regular bonus rates for unitised with-profits policies are as shown below (the last declared rates, from 1 July 2017, are in brackets). Product Category Bonus Rates per annum Pension-fund policies 2.75% (2.50%) With Profits Bond & Regular Premium Life 3.50% (3.25%) policies Flexible Investment Bond 3.25% (3.00%) Jersey Bond 3.75% (3.50%) International Investment Bond (Sterling) 3.75% (3.50%) International Investment Bond (Euro) 3.00% (3.00%) International Investment Bond (Dollar) 4.25% (3.75%) All of these policy types are eligible for. 4
3. FINAL BONUS RATES Final (or 'terminal') bonus rates are set taking account of the actual investment experience of investment with the further aim of smoothing out the extremes of fluctuations in stock markets. Rates vary depending on policy types and terms. The following tables show examples of the rates applying from 1 January 2018. The rates in brackets are those declared previously on 1 July 2017. a) Conventional With-Profits Policies Final bonus Year of entry Life assurance Regular premium pension Single premium pension 1965 243% (221%) - - 1975 130% (116%) 89% (80%) 112% (162%) 1985 71% (59%) 25% (21%) 47% (40%) 1995 62% (50%) 36% (32%) 18% (13%) 2005 N/A 50% (45%) 50% (43%) The is expressed as a percentage of guaranteed cash benefit, including regular bonus added. b) Unitised With-Profits Pension Policies Units Purchased Final bonus 1990 67% (59%) 1995 64% (56%) 2000 29% (23%) 2005 41% (35%) 2010 30% (25%) 2015 67% (59%) The is expressed as a percentage of the bid price of units, which includes regular bonus added. 4. FINANCIAL STRENGTH Independent consultants and ratings agencies have analysed Scottish Widows financial strength and we have been allocated the following ratings: The rating agency Moody s has rated Scottish Widows as A2 (Good) The rating agency Standard & Poor s has rated Scottish Widows as A AKG Actuaries & Consultants has rated Scottish Widows as B+ (Very Strong) 5
5. ASSET MIX With Profits Fund The majority of with-profits policies are currently backed by the following mix of assets Fixed interest Corporate Government Loans secured against commercial property 31 December 2016 30 June 2017 31 December 2017* 12% 11% 10% 5% 6% 3% 4% 4% 4% Property 10% 10% 10% Equity shares UK shares Non-UK shares 19% 29% 21% 30% 22% 30% Absolute return** 12% 12% 13% Other investments 9% 6% 8% (Including cash deposits) *Estimated asset mix based on the most up to date information available (30 November 2017) ** Absolute return is an investment strategy which aims to generate investment performance from relative stock movements rather than from the general performance of an asset class. 6. NUMBER OF WITH-PROFITS POLICIES IN FORCE The total number of with-profits policies in force as at 31 December 2017 is shown below. Number of Policies Life Pensions Total Conventional 25,000 37,000 62,000 Unitised 32,000 218,000 250,000 Total 57,000 255,000 312,000 7. FUND SIZE The size of the With Profits Fund as at 31 December 2017 is 11.5bn. ENDS For further information please contact: Kevin Brown, Scottish Widows, 07500 910 904 Kevin.brown2@lloydsbanking.com Notes to editors: 6
Scottish Widows was founded in 1815 as Scotland s first mutual life office and is one of the most recognised brands in the life, pensions and investment industry in the UK 7