Bonus Statements 2008 - Frequently asked questions

These have been produced to help you understand your annual statement and include a number of questions on various types of policies. If you do not find the information you require, please contact us.

How will I know my policy type?
If the value of your policy is based on an initial sum assured plus bonuses (both annual & final), this is a Conventional With Profits policy.

If your policy purchases units in an investment fund, or funds, this is a Unit-Linked policy.

If your policy looks very similar to unit-linked policies except the value of units increase in line with bonuses added to your policy, this is a Unitised With Profits policy.

What are bonuses and how do they work?
Bonuses only apply to With Profits policies (Conventional and Unitised). You will receive part of your share of these profits in the form of an annual bonus which we add to your policy.

In addition to your existing annual bonus, a final bonus may be payable when the policy ends.

Why have I received my statement?
For Conventional With Profits policies – your statement provides details of the amount added to your policy this year, in the form of an annual bonus. The amount added increases the guaranteed benefits which your policy will provide in the future.

For Unit-Linked policies – your statement shows the value of your policy on the statement date. Some statements also provide a summary of units allocated or deducted since the last statement date.

For Unitised With Profits policies – your statement shows the value of guaranteed benefits which your policy will provide in the future, unless a market value reduction applies (see ‘What is a Market Value Reduction (MVR)?’). Some statements also show the value of your policy on the statement date.

On what dates are the annual statements based?
For Conventional With Profits policies – this year’s annual bonus was added to your policy on 2 April 2008. If your policy matures, or you were to die, during the following 12 months you might have some extra annual bonus added as well, depending on what type of policy you have.

For Unit-Linked and Unitised With Profits policies (except Stakeholder Pensions and Group AVC policies) – the statement shows the position of your policy on 31 March 2008.

For Unit-Linked and Unitised With Profits (Group AVC policies) – the statement shows the value of your policy on
30 April 2008.

For Unit-Linked (Stakeholder Pensions) – the statement shows the position of your policy on 5 April 2008.

Why does it take so long for you to send me my statement?
The calculations involved in preparing your statements are detailed and to ensure the accuracy of all policy statement figures, we have a rigorous quality control procedure that takes place before we send your statement. Due to the complexities and volumes concerned, this process usually takes several weeks.

If you would like an up-to-date valuation of your policy or further details on your unit movements, please contact us.

Does the policy have to be in force for a full year before an annual statement is produced?
For Conventional With Profits policies – your policy must have started before 1 January 2008 and still be in force on 2 April 2008.

For Unit-Linked and Unitised With Profits policies (except Stakeholder Pensions and Group AVC policies) – your policy must have contained units within it on 31 March 2008.

For Unit-Linked and Unitised With Profits (Group AVC policies) – your policy must have contained units within it on 30 April 2008.

For Unit-Linked Stakeholder Pensions – your policy must have contained units within it at some point during the year 6 April 2007 to 5 April 2008.

How is my annual bonus calculated?
For Conventional With Profits policies – the notes at the bottom of your statement normally say what the annual bonus rates are. For most types of policy, the annual bonus is calculated as a percentage of the sum assured plus a percentage of the bonuses you already have.

For Unitised With Profits policies – these do not have bonuses added each year as such – any bonus payable is added to your policy throughout the year by increases in the unit price.

What is a final bonus and how is it calculated?
This only applies to With Profits policies (Conventional and Unitised). A final bonus may be added to your policy when it matures or if you die. We do not guarantee these bonuses so they may change from time to time but certainly at least once a year when new bonuses are declared.

It is usually calculated as a percentage of the annual bonus depending on how long your policy has been in force, but the exact method does vary for different types of policy. We may add an allowance for a final bonus if you cash in your policy. However, please note that in some circumstances you will not be entitled to a final bonus.


Wesleyan Assurance Society membership benefits


It will state on your statement if you are entitled to membership of Wesleyan Assurance Society.

What does membership of the Society mean?
As a mutual society, we are able to share our success with our members, without needing to consider the potentially conflicting interests of shareholders.

In 2007, the Mutual Rewards Scheme was launched for members as at 31 July 2007 entitling them to a £100 cashback reward, when taking out a new product from us or topping up an existing one.

This is the first example of our drive to find new ways to reward our members for their loyalty and membership. And you can expect more in the future.

In addition, members and policyholders have exclusive access to two guaranteed investment products which have proved very popular and remain unique in the market place.

Questions only applicable to Unitised With Profits policies

What is a Market Value Reduction (MVR)?
This is an adjustment we might make if you choose to take money out of your policy when investments have fallen in value, which might mean your With Profits units have a reduced value.

This adjustment can be applied to protect the interests of the policyholders remaining in the fund. However, we can’t always apply a MVR, as it depends on the circumstances. Your policy document will say in what circumstances a MVR may be applied. On 31 March 2008 no MVR adjustments were applied.

Statutory money purchase illustrations (SMPI)

Why does my pension statement include an illustration of what my pension may pay me at retirement?
For most types of pension policies, insurance companies are now required by law to provide, each year, an illustration of the pension income that your policy may provide at retirement.

In this way you can assess whether the income from your pension arrangements will be sufficient to meet your needs when you retire.

The illustration allows for inflation between now and your assumed retirement date. That is, it shows the possible benefits in terms of today’s money.

We have included a further document with your illustration, a leaflet entitled ‘Information about your pension illustration’. This provides further details about your illustration and the assumptions on which it is based. We strongly advise you to read this document.

Why have I received an illustration for some of my pension policies but not others?
We do not normally provide an illustration for policies that are less then two years away from the selected retirement date on that policy, or for certain types of policies that commenced prior to 1 July 1988. However, you can always request an illustration by contacting us.

Why are the assumed current earnings shown on my illustration very different from my actual current earnings?
We only show an assumed current earnings value on illustrations where our records indicate that the Government will pay National Insurance rebates into your policy in the future. We do not, however, have a record of an individual’s current earnings. Therefore, we have to estimate them based on the amount of the most recent rebates paid into the policy.

What are protected rights policies?
These policies were set up to allow people to contract-out of the State Second Pension (S2P, previously SERPS). They also made it possible to transfer state benefits into a personal pension from another pension arrangement.

What is the Free-Standing Additional Voluntary Contribution Scheme (FSAVC)?
The FSAVC was designed to top-up policies from an employer’s occupational pension scheme. Benefits can now be taken independently of the occupational pension scheme.

What are retirement annuities?
These are policies that were set up before July 1998 and have been subsequently replaced by personal pensions. The rules for tax-free cash have changed to allow 25% of the pension fund and benefits to be taken from the age of 50 (until 5 April 2010 after which it will become 55).

Why is my retirement age shown as 55 when my policy was set up with a retirement age less than this?
Under legislative changes introduced on 6 April 2006, the minimum retirement age from 6 April 2010 onwards will be 55. If your policy originally had a retirement age of less than 55, but a retirement date of 6 April 2010 or later, we have assumed the benefits will now be taken at 55.

Why are the contribution amounts shown slightly less than the actual amounts that I am paying?
The contribution amounts shown on your illustration do not include the cost of Waiver of Contribution Benefit, if applicable. This benefit allows your plan contributions to continue if you are unable to work due to sickness or accident. The illustration shows only the amounts that are used to provide benefits at retirement.

Further information

For Unit-Linked policies
A short guide has been produced which explains how we manage our unit-linked funds.

For With Profits policies
Short guides have been produced which explain how we manage our With Profits funds.

We hope this has told you more about how we are looking after your investment. However, if you would like any more information, please contact us.