Standard Life reduces withdrawal values

Standard Life yesterday announced a further reduction in values paid on withdrawals from its with profits fund.

The adjustment, which applies to surrenders, switches and transfers, follows a significant increase in withdrawal activity.

Conventional life policies will now be subject to a Surrender Value Reduction of up to 20%, while unitised pensions will be subject to a reduction of up to 25%. Similar changes will apply to other types of life and pensions policies. The SVR was previously 10%.

The reductions will bring surrender, switch and transfer values more closely into line with each customer&#39s share of the with profits fund, thereby removing any financial incentive to withdraw early. Maturity and retirement values are not affected by today&#39s announcement.

John Hylands, group finance director, says: “Despite the reduction we applied to withdrawal values in September last year, there was still a significant difference between the amount being paid to customers and the market value of the underlying assets. While surrender activity remained low, this did not represent a significant issue. However, we have recently seen a significant increase in surrenders. For this reason we have taken action now to protect the majority of customers who intend to remain fully invested.”