Prudential With-Profits Bonus Declaration FAQs

Smoothing is the process by which our With-Profits Fund aims to smooth some of the highs and lows of investment performance, in order to provide a more stable return from year to year. We achieve this by holding back some of the investment returns in good years with the aim of using this to support bonus rates in years where investment returns are lower.

We remain fully committed to With-Profits.

The Fund consists mainly of with-profits business, but it also contains a significant amount of non-profits business. Further details can be found in our Principles and Practices of Financial Management (PPFM).

The total level of assets backing the with-profits business in the Fund was £130bn as at 30 June 2025.

The Prudential Assurance Company Limited With-Profits Fund is the largest with-profits fund in the UK and is financially very strong.

The size and strength of our Fund allows us to invest in a very wide range of assets and individual companies. As a diversified fund, we invest in the shares of hundreds of companies that will be familiar to customers. Importantly, a key strength of the Fund is the ability to capture opportunities directly in high quality property and infrastructure projects in the UK and around the world. Two examples are:

40 Leadenhall: through our allocation to UK Property, the With-Profits Fund’s investment in 40 Leadenhall, a prime City of London office is now valued at £1.2bn (as at 31 December 2025). This building has one of the highest Environmental, Social and Governance (Global Real Estate Sustainability Benchmark) standards possible, and letting is now at over 98% (by Estimated Rental Value). It has remained a top contributor to performance over 2025. This is an excellent example of the With-Profits Fund's ability to allocate capital to large-scale super prime offices that are able to generate strong returns for underlying policyholders, even when broader market conditions are challenging.

The Catalyst investment strategy: is a multi-billion global mandate investing in companies with innovative solutions to some of the world’s biggest social and environmental challenges. Many private companies are increasingly unable to grow due to difficulties in raising capital and this strategy plays a role in filling this gap. This size of investment demonstrates our commitment and means a portion of customers’ money invested in the With-Profits Fund is used for investment in companies with good growth potential, that are not readily accessible to other investors.

The With-Profits Fund predominantly invests within public markets and the two examples of private market investments are just a small proportion of the overall Fund.

The majority of our contracts invest in a With-Profits fund that shares the profits between customers and shareholders. In a 90:10 fund, your share of the allocated profits is 90%, while the shareholders receive the remaining 10%.

Final Bonus may be paid when you take money from your plan. Final Bonus rates are set after considering the unsmoothed value of plans and then applying smoothing. Rather than work out the value of each individual plan, we generally combine all similar plans (that is plans issued in a year which have the same bonus rate) into a single representative plan.

The size of the unsmoothed value of the representative plan and the impact of smoothing means that Final Bonus can vary depending on a number of factors, including how long the plan has been operating for, and the investment returns of the Fund during the lifetime of that plan. (Please also see What are bonuses? for, further details of the factors affecting Final Bonus rates.)

So, if the Regular Bonuses added during the life of your Plan do not represent what we believe to be a fair return, we aim to add a Final Bonus to increase the final value of your Plan. We expect to review Final Bonuses on at least an annual basis, and because they are regularly reviewed, the size of any potential bonus can vary.

Final Bonuses are not guaranteed. If the investment return has been low over the lifetime of your plan, a Final Bonus may not be paid.

The Life Investment Office (LIO), formally known as The Treasury & Investment Office (T&IO), is our in-house asset-allocation expert. It selects a wide range of assets to hold in the With-Profits Fund, in line with the Fund's objective.

The aim of the Fund is to secure the highest total return (after any tax and investment expenses) while maintaining an acceptable level of risk for the Fund and protecting our customers.

The fund spreads investment risk by investing in a range of different asset types, which currently includes UK and international equities, property, fixed interest securities, index-linked securities and other specialist investments.

View the Current Information on the Asset Mix.

For more information, read How we manage our With-Profits Fund.

The With-Profits Fund is supported by a substantial Inherited Estate, wholly owned by the Prudential Assurance Company (PAC), which provides the working capital required to support current and future business, and also helps provide greater investment flexibility for the benefit of our customers. 

As a result, PAC doesn’t consider that customers should have any expectation of a distribution of the Inherited Estate.

If you have a Cash Accumulation or Unitised With-Profits Plan and take money out of the Prudential With-Profits Fund, we might adjust the value of your Plan if the value of the underlying assets is less than the value of your Plan including all bonuses. This adjustment is known as a Market Value Reduction (MVR). It’s designed to protect investors who are not taking their money out and its application means that you get a return based on the earnings of the With-Profits Fund over the period your payments have been invested.

We apply the MVR to your Plan's value including regular and final bonuses. Please read "Your With-Profits Plan - a guide to how we manage the Fund" for more information on bonuses. An MVR will reduce the amount payable on full or partial withdrawals and if investment returns have been low, you may even get back less than you have invested in your Plan. We guarantee not to apply an MVR on any payments made due to death and in other circumstances depending on the terms of your product. Please see your product literature for details, including whether an MVR may apply to the product you’re invested in.

We will send you a statement each year, which will show the impact of the bonus declaration on your Plan. See the bonus rates declared for your product.

The SAIF fund merged with the With-Profits Sub Fund (WPSF) on 1 April 2021. Ex-Scottish Amicable With-Profits customers are now invested in the WPSF.

You should have received regular letters over the last few years telling you whether your Plan is on track to repay your mortgage. These are called re-projection letters. We monitor how many of our endowment customers plans are and aren’t expected to meet their repayment targets, based on accepted industry guidelines. We show this on your letter as red, amber or green. Green means it’s on track (but not guaranteed) and likely to meet repayment targets. Amber means there might be a shortfall. Red means there’s likely to be a shortfall.

If it’s amber or red, the letter will also tell you what your options are and what you need to do next.

An MVR is a deduction we may make on certain withdrawals or switches from, or between, our With-Profits Funds. We're not currently planning any changes to our MVR approach. We regularly review our approach in the light of emerging market conditions and reserve the right to change this without notice. For more information on an MVR please see our Market Value Reduction - A clear explanation document.