Aviva savers' bonuses will be cut

Wed. July 22, 2009; Posted: 04:19 PM

Jul 19, 2009 (Financial Mail on Sunday - McClatchy-Tribune Information Services via COMTEX) -- NUNPF | Quote | Chart | News | PowerRating -- Aviva, formerly Norwich Union, says that investments underlying savers' with-profits plans dropped by up to 4.1 per cent in the first half of 2009.

The falls will mean cuts in terminal bonuses for most policies maturing now or soon.

But Aviva stresses that the funds' "smoothing" mechanism, designed to protect against sharp declines in stock markets, is functioning well. Over the past decade a with-profits bond has grown in value by 25.2 per cent compared with the FTSE All-Share's 19.7 per cent rise.

Aviva says that most 25-year endowment policies maturing this year will meet their original target mortgage sum.

But 94 per cent of mortgage-linked endowments maturing from 2010 onwards are facing a shortfall.

Policyholders eligible for cash payments under Aviva's drawn-out reattribution deal have until August 21 to return their papers and elect to receive cash windfalls or not. Go to policyholderadvocate.org.

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