UK Royal London Gives Annual Returns of 8.4% on Endowment Policies Print E-mail

Royal London maintains position among top with profits payouts

Monday, 17 March 2008

Royal London, the UK's largest mutual life and pensions company, has today announced bonuses for 2007 on its with profits policies.  The announcement covers with profits policies written by Royal London, including those written under the Scottish Life brand since 1 July 2001.

Key Points

  • Royal London continues to deliver payouts which are among the best of the major providers
  • Annual bonus rates for Personal Pensions have increased
  • The benchmark 25-year payout on a Royal London £50 per month 25-year with profits endowment maturing on 1 January 2008 is £48,773[1], an annualised return of 8.4%, representing a real2 return of 4.9% p.a.
  • During 2007 the Royal London Fund recorded a return of 3.9%3 (before tax).



Commenting on today's announcement Royal London Group Finance Director Stephen Shone said:

"We have continued our policy of bringing payouts gradually into line with asset share while following the smoothing policies set out in our Principles & Practices of Financial Management (PPFM).  The result of the declaration is that Royal London customers continue to enjoy some excellent payouts."

Comparative Payouts

The following table, taken from the figures contained in other companies' own press releases, supports the assertion that Royal London's payouts are among the best of the major providers in the industry.  It shows comparative payouts on the benchmark 25-year £50 per month endowment savings policy.

Parent Co.

Brand/Original Insurer


Royal London

Royal London



CGNU including GA





Legal & General

Legal & General



Commercial Union


Scottish Widows

Scottish Widows



Norwich Union


Standard Life

Standard Life


Friends Provident

Main Series


**maturity value as at 1 February 2008

***maturity value as at 1 March 2008

**** maturity value as at 1 May 2008

all other figures quoted are as at 1 January 2008

(Source: Royal London and companies' own press releases for all companies with over £10bn funds under management.  This list only includes companies which have announced a payout on their 25-year conventional with profits endowment policies.)

Commenting on the prospect for future returns, Stephen Shone continued:

"The investment outlook continues to be dominated by low inflation and interest rates.  I expect that the future headline returns on investments will be comparatively low by the standards of the last 25 or 30 years.

"Nevertheless the arguments for investing in real assets over the long term remain strong.  Over the long term, real assets - such as those backing our with profits fund - have delivered above inflation returns for investors.  Today's results show that the annualised return on a Royal London 25-year with profits endowment is 8.4%.  This represents an annualised real rate of return of 4.9% ie 4.9% over and above inflation."

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