2026 Bonus Rates for Former Equitable Life Assurance Society (ELAS) With-Profits Annuity Customers

Regular Bonus

Once a Regular Bonus is added to your Plan, it can’t be removed. It is added to your Guaranteed Annuity income. We also take the Anticipated Bonus Rate into account when working out your new Guaranteed Annuity income. 

To maintain investment flexibility and to protect our customers, we aim to keep the level of all guaranteed benefits across our with-profits savings and investment products at a sustainable level.

The cost of providing the guarantees on former ELAS With-Profits Annuities has remained at a level that enables us to declare a Regular Bonus, which will add to your Guaranteed Annuity income.

Overall Rate of Return (ORR)

The 2026 ORR is applied on your Plan anniversary falling on or after 1 April 2026. The ORR generally reflects the investment performance of the With-Profits Fund (after allowing for smoothing and charges) in the previous calendar year. The same ORR applies to all Plans, and in normal circumstances we would not expect it to be negative. 

Interim Rate of Return (IRR)

The IRR is applied on your Plan anniversary falling on or after 1 April 2026 and is intended to give credit for the expected future investment return on the With-Profits Fund from 1 January 2026 until your Plan anniversary falling before 31 March 2027, allowing for smoothing and charges. 

The IRR can change or be removed at any time.

The change in your Total Annuity income at your next Plan anniversary will reflect the level of ORR and IRR declared, after removing the IRR declared in the previous year. We also take the Anticipated Bonus Rate and any Guaranteed Interest Rate for your Plan into account when working out your new income.

We promise to pay you the higher of either your Guaranteed Annuity income or your Total Annuity income.

Our With-Profits Fund aims to smooth some of the highs and lows of investment performance for our savings and investment customers, like our former ELAS customers. We achieve this by holding back some of the investment returns in good years (generating a smoothing profit for the Fund), with the aim of using these profits to support bonus rates in years when investment returns are lower (and smoothing losses would be generated).

The smoothing profits and losses for all our former ELAS customers are monitored through a specific BSA, which was set up when these Plans transferred across to us on 31 December 2007. We operate the BSA with the ongoing aim that it should tend to a zero balance over the lifetime of our former ELAS customers, subject to managing short-term smoothing profits and/or losses. We review the balance of the BSA ahead of each Bonus Declaration.

This year, the balance is such that we have been able to make a further upwards adjustment to the 2026 ORR from the BSA. The balance of the BSA will continue to be reviewed ahead of each Bonus Declaration, and further adjustments to the ORR at future Bonus Declarations may be made as part of our prudent ongoing management of our former ELAS business.

The former ELAS With-Profits Annuity is designed to provide a regular income for life, no matter how long that may be, which is linked to the performance of our With-Profits Fund. We also promise to pay you the higher of your Guaranteed Annuity income and your Total Annuity income. 

Your level of income at the start of your Plan depended on your Anticipated Bonus Rate (ABR) and whether your Plan had a Guaranteed Interest Rate (GIR). The higher your combined ABR and GIR, then:

• the higher your initial income  
• the lower the potential for future increases in your income, and
• the greater risk of falls in your income over time.

Your future level of income depends on the combination of:

• The level of your Total Annuity income, which depends on the  Overall Rate of Return (ORR) and Interim Rate of Return (IRR) we declare relative to your ABR and any GIR.
• The level of your Guaranteed Annuity income, which depends on the level of the Regular Bonus we declare relative to your ABR.

The combination of the ORRs and IRRs we declare represents your fair share of the profits, after charges and smoothing, earned on the With-Profits Fund since the transfer of your Plan to Prudential on 31 December 2007.

We promise to pay you the higher of either your Guaranteed Annuity income or your Total Annuity income.

The IRR is applied on your Plan anniversary falling on or after 1 April 2026 and is intended to give credit for the expected future investment return on the With-Profits Fund from 1 January 2026 until your Plan anniversary falling before 31 March 2027, allowing for smoothing and charges.

The IRR can change or be removed at any time.  

The IRR is an annual rate of return. As we apply the IRR to give credit for the expected investment return earned by the With-Profits Fund from 1 January 2026 until your policy anniversary falling before 31 March 2027, then we should only credit your Total Annuity with a proportion of this annual rate. The proportion is based on the number of days between the 1 January 2026 and your policy anniversary. For example if your next policy anniversary is 1 July 2026 then there are normally 181 days from 1 January 2026 to your policy anniversary - you would therefore receive 181/365ths (roughly half) of the IRR.

The income you receive is the greater of your Guaranteed Annuity income and Total Annuity income.

Guaranteed Annuity income - is increased at your policy anniversary by any Regular Bonus declared and decreased by your Anticipated Bonus Rate.

Total Annuity income - is increased or decreased at your policy anniversary by the Overall Rate of Return, decreased by your Anticipated Bonus Rate and decreased by any Guaranteed Interest Rate. It can be further increased or decreased by any differences in the Interim Rate of Return applicable at this policy anniversary and at your last policy anniversary.

No - the method of calculating your new income has not changed. This remains exactly the same as before. A breakdown of this calculation is shown on your yearly statement.

The Prudential Assurance Company Limited (PAC) With-Profits Fund has much greater investment freedom and a more active management policy than the Equitable Life Assurance Society (ELAS) could provide and therefore the potential for better investment returns.

When this business transferred from ELAS to PAC in 2007, ELAS’s Fund was primarily invested in bonds because it was heavily focussed on ensuring that guaranteed benefits could be met. This limited the potential for investment growth. Our Fund is financially strong, which allows us a greater amount of investment freedom and means we can adopt a more active approach to managing our assets, which should be more beneficial to all With-Profits customers.

There was no guarantee that transferring the business from ELAS to PAC would result in increases in your income. The potential benefits and risks of the transfer from ELAS to PAC were set out in the policyholder circular issued in September 2007. This included the risk that your annuity could have had better returns if you were to stay invested with ELAS.

Your level of income at the start of your Plan depended on your Anticipated Bonus Rate (ABR) and whether your Plan had a Guaranteed Interest Rate (GIR). The higher your combined ABR and GIR, the higher your initial income. This combination also meant a higher chance of falls in income in the future. 

Your future level of income depends on the combination of:

• The level of your Total Annuity income, which depends on the Overall Rate of Return (ORR) and Interim Rate of Return (IRR) we declare relative to your ABR and any GIR.
• The level of your Guaranteed Annuity income, which depends on the level of the Regular Bonus we declare relative to your ABR.

We promise to pay you the higher of either your Guaranteed Annuity income or your Total Annuity income.