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's share of the with profits fund, thereby removing any financial incentive to withdraw early. Maturity and retirement values are not affected by today's 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.”