Smoothed Return Announcement
In 2022, our globally diversified With-Profits Fund was able to perform very effectively in extremely challenging investment markets and provide some protection to our investors. Our Income Choice Annuity customers have also benefitted from the application of smoothing to provide a more stable return from year-to-year.
We’re also delighted to have additional money in our With-Profits Sub Fund to share with our Income Choice Annuity customers at this bonus declaration. Because of this, we’ve increased the unsmoothed value of their plans by 1.25%. This is the third time in four years that we’ve shared additional money, and the total amount shared now stands at £3.5bn.
The additional money we’ve shared at this declaration, which is further to the additional money we shared in 2020 and 2022, is reflected in our Smoothed Returns from this year. There’s a chance we might have to take back this extra money. You can find out more information here
In 2023, the team will continue to take decisions that allow them to manage the Fund prudently. We’ll aim to secure the highest total return for the Fund (after any tax and investment expenses) while maintaining an acceptable level of risk and protecting our customers.
We aim to ensure those with an annuity get their fair share of the With-Profits Fund's investment returns via the announced Smoothed Return. In addition to the investment returns on the Fund, the Smoothed Returns we announce depend on several factors including:
- the effective date of the annuity
- how we expect investments to perform in the following months
- our views on mortality
- adjustments for smoothing
- your Plan's charges
The announced Smoothed Return can be changed and isn't guaranteed until it's due to be paid on your next Plan anniversary. It could even be negative, for example, if stock markets perform badly.
The effect of the Smoothed Return we announce on your income is included in your yearly statement.
This leaflet explains the 2023 Smoothed Return Announcement for the Income Choice Annuity.
2023 Smoothed Return Announcement
How does this affect your Income Choice Annuity?
| Effective Date (Annuity Start Date) | |||||||||||||||
| Effective Date | 09/03/09 to 05/04/09 | 06/04/09 to 05/04/10 | 06/04/10 to 05/04/11 | 06/04/11 to 05/04/12 | 06/04/12 to 05/04/13 | 06/04/13 to 05/04/14 | 06/04/14 to 05/04/15 | 06/04/15 to 05/04/16 | 06/04/16 to 05/04/17 | 06/04/17 to 05/04/18 | 06/04/18 to 05/04/19 | 06/04/19 to 05/04/20 | 06/04/20 to 05/04/21 | 06/04/21 to 05/04/22 | 06/04/22 to 05/04/23 |
| 2023 | 2.0% | 2.0% | 2.0% | 2.0% | 2.0% | 1.0% | 1.0% | 1.0% | 1.0% | 1.0%* | 1.0%* | 1.0%* | 1.0%* | 1.0%* | 4.5%* |
| 2022 | 19.0% | 19.0% | 15.0% | 15.0% | 14.5% | 14.5% | 14.5% | 14.0% | 14.0% | 10.0%* | 10.0%* | 10.0%* | 10.0%* | 9.0%* | |
| 2021 | 5.0% | 4.0% | 2.5% | 2.5% | 2.5% | 2.5% | 2.0% | 2.0% | 2.0% | 0.5%* | 0.5%* | 0.5%* | 4.5%* | ||
| 2020 | 17.5% | 15.5% | 13.0% | 13.0% | 13.0% | 13.0% | 13.0% | 12.5% | 12.5% | 6.5%* | 6.5%* | 4.5%* | |||
| 2019 | 2.5% | 1.0% | 1.0% | 1.0% | 1.5% | 1.5% | 1.5% | 1.0% | 1.0% | 1.0%* | 4.5%* | ||||
| 2018 | 12.0% | 11.0% | 11.0% | 11.0% | 11.0% | 11.0% | 9.5% | 8.0% | 8.0% | 6.0%* | |||||
| 2017 | 10.0% | 9.0% | 8.0% | 8.0% | 8.0% | 8.0% | 7.0% | 6.0% | 6.0% | ||||||
| 2016 | 5.0% | 5.0% | 4.0% | 4.0% | 3.5% | 3.0% | 2.5% | 5.0% | |||||||
| 2015 | 8.5% | 8.5% | 7.0% | 7.0% | 6.5% | 6.0% | 5.0% | ||||||||
| 2014 | 8.0% | 7.5% | 6.5% | 6.5% | 6.5% | 6.0% | |||||||||
| 2013 | 6.0% | 5.0% | 4.5% | 4.5% | 6.0% | ||||||||||
| 2012 | 7.0% | 6.5% | 4.5% | 6.0% | |||||||||||
| 2011 | 9.0% | 7.1% | 6.5% | ||||||||||||
| 2010 | 8.5% | 7.1% | |||||||||||||
| 2009 | 7.1% | ||||||||||||||
* This applies to customers originating from our Flexible Lifetime Annuity (FLA) only.
Source: Prudential. We can't predict the future. Past performance isn't a guide to future performance. Changes in the income payable from an Income Choice Annuity will depend on the relationship between the Smoothed Return announced and the Required Smoothed Return needed to maintain the customer's chosen income. The income from an Income Choice Annuity can fall as well as rise at each plan anniversary. The Smoothed Return can be changed and it isn't guaranteed until it becomes payable at the next plan anniversary.
Information about our With-Profits Fund
The Prudential Assurance Company Limited With-Profits Fund is one of the largest and financially strongest with-profits funds in the UK. The Fund consists mainly of with-profits business, but it also contains a significant amount of non-profits business. More details can be found in our Principles and Practices of Financial Management (PPFM), you can find this on our website pru.co.uk/ppfm.
The total level of assets backing the with-profits business in the Fund was £117.6bn at 31 December 2022.
Smoothed Returns are the way you receive your share of the profits of the Fund.
© Prudential 2023
"Prudential" is a trading name of Prudential Distribution Limited. Prudential Distribution Limited is registered in Scotland. Registered Office at 5 Central Way, Kildean Business Park, Stirling, FK8 1FT. Registered number SC212640. Authorised and regulated by the Financial Conduct Authority. Prudential Distribution Limited is part of the same corporate group as the Prudential Assurance Company Limited. The Prudential Assurance Company Limited and Prudential Distribution Limited are direct/indirect subsidiaries of M&G plc which is a holding company registered in England and Wales with registered number 11444019 and registered office at 10 Fenchurch Avenue, London EC3M 5AG, some of whose subsidiaries are authorised and regulated, as applicable, by the Prudential Regulation Authority and the Financial Conduct Authority. These companies are not affiliated in any manner with Prudential Financial, Inc, a company whose principal place of business is in the United States of America or Prudential plc, an international group incorporated in the United Kingdom.