2025 Bonus Rates for former Equitable Life 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 products at a sustainable level.

To increase the Regular Bonus, the cost of the guarantees on all former Equitable Life With-Profits Annuities needs to reduce and we also need to be confident that the higher Regular Bonus could be supported by the investment returns we expect to achieve from our With-Profits Fund in the future without impacting the flexibility of our investment policy.

The cost of providing the guarantees on former Equitable Life With-Profits Annuities has remained at a level that enables us to declare a Regular Bonus, which will add to the guaranteed benefits of the Plan.

Overall Rate of Return (ORR)

The ORR is applied on your Plan anniversary falling on or after 1 April 2025. It's designed to give credit for the investment return earned by the With-Profits Fund during 2024, allowing for smoothing and charges. The same ORR applies to all Plans and can be negative.

Interim Rate of Return (IRR)

The IRR is applied on your Plan anniversary and is intended to give credit for the expected future investment return on the With-Profits Fund from 1 January 2025 until your Plan anniversary falling before 31 March 2026, 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.

The former Equitable Life 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, 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.

The combination of the ORR and IRR 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.

The Interim Rate of Return applicable on your plan anniversary is intended to give credit for the expected investment return earned by the With-Profits Fund from 1 January 2025 until your policy anniversary falling before 31 March 2026 allowing for smoothing and charges. The IRR can change or be removed at any time and it is the value of the IRR on your policy anniversary that will determine your income.

The Interim Rate of Return is an annual rate of return. As we apply the Interim Rate of Return to give credit for the expected investment return earned by the With-Profits Fund from 1 January 2025 until your policy anniversary falling before 31 March 2026, 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 2025 and your policy anniversary. For example if your next policy anniversary is 1 July 2025 then there are normally 181 days from 1 January 2025 to your policy anniversary - you would therefore receive 181/365ths (roughly half) of the Interim Rate of Return.

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.