Bonus Declaration FAQs February 2022

Who is affected by the Bonus Rates Announcement?

All Prudential customers who have a With-Profits element to their plan, except for investments made in any of the PruFund funds.

These include:

What bonus rate will I get as a result of this year's declaration?

Annual/Regular and Final Bonuses are the way you receive your share of the profits of the Fund. Different types of plan receive different bonus rates. See the Annual/Regular Bonuses for our With-Profits products.

This year, for most of our planholders, we’re pleased to increase final bonus rates. We calculate the final bonus value with the aim that the total return on planholders’ plans represents a fair share of the Fund’s profits earned over the lifetime of their plans, after taking into account, for example, charges, the effects of smoothing and any applicable tax. 

This year, we’ve also got additional money in the With-Profits Sub Fund to share with some of our With-Profit planholders. Because of this, we’ve increased the unsmoothed value of their plans by 1.75%. This is reflected in our final bonuses from this year. There’s a chance we might have to take back this extra money. You can find out more on our website at: pru.co.uk/aboutadditionalsurplus

Any final bonus declared in February 2022 may be payable when planholders leave the With-Profits Fund, in the forthcoming bonus year. Any final bonus isn’t guaranteed.

How do I find out how the declaration impacts me?

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.

What determines what I might get back?

There are a number of factors that affect the amount you get back from your Plan, which cannot be predicted. These include:

*Our With-Profits Fund aims to smooth some of the extreme ups and downs of investment performance in order to provide a more stable return from year to year.

Why is the return on my Plan different to the overall return for the With-Profits Fund?

Generally, the better our With-Profits Fund performs, the more scope we'll have to pay bonuses. We aim to pay you a fair share of the investment return over the lifetime of your investment. Try to keep in mind that the total bonuses added to your Plan won't reflect the performance of the underlying fund exactly because of, for example:

Please see information specific to your Plan to find out more.

How strong is the Prudential With-Profits Fund?

The Prudential Assurance Company Limited (PACL) With-Profits Fund is one of the largest and financially strongest in the UK. The size and strength of our Fund allows us to invest in a very wide range of asset types and individual companies.

Following the merger of the Scottish Amicable Insurance Fund (SAIF)  with the With-Profits Sub Fund how is my plan affected?

Following the merger of the SAIF fund with the with-profits sub-fund (WPSF) on 1 April 2021, ex-Scottish Amicable With-Profits planholders are now invested in the WPSF.  Please visit pru.co.uk/saifmerger for more information on the merger.

I have a mortgage endowment with Prudential - what does a red, green or amber letter mean for me?

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.

I have a mortgage endowment plan with Prudential and I’ve had a letter saying it might not be enough to pay off my mortgage. What action should I take?

As a result of turbulent market conditions in some past years, the payouts of some mortgage endowment plans may have fallen. This could mean that the amount you receive from your Plan may not be enough to pay off your mortgage, and you may have a shortfall. If you've had a letter from Prudential we understand that you may be concerned about what to do next.

You’ve got two main options:

If your Plan is the only way you have of paying off your mortgage, you should speak to your mortgage lender right away. If you want more information you can write to Prudential, Lancing, BN15 8GB, quoting your Plan number.

What are your thoughts on future bonus rates?

Future bonus rates will depend on how well the Fund does in the future. The Prudential Assurance Company Limited With-Profits Fund is one of the largest and financially strongest in the UK. The size and strength of our Fund allows us to invest in a very wide range of assets and individual companies.

Are you making changes to your Market Value Reduction (MVR) approach?

A Market Value Reduction (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.

Related Content