Pru freezes bonuses for 4m with-profits policyholders

More than four million with-profits policyholders with Prudential will have their annual bonuses frozen this year despite strong investment returns in 2010.

But total bonus payments are expected to top 2.2 billion, up 200 million on 2010, and investors will typically see year-on-year increases of between 6 and 10 per cent in their policy values, the insurance giant said yesterday.

Its 75.9bn with-profits fund has grown 82 per cent over the past 10 years, compared with a FTSE 100 return of 33.7 per cent over the same period.

David Belsham, chief actuary at Prudential, said: "We have shown, yet again, that investing in a strong with-profits fund can produce strong returns for the cautious investor."

Patrick Connolly, at IFA AWD Chase de Vere, said the figures showed that Prudential remains the leader in the with-profits market.

"The payouts from Prudential compare extremely favourably. even against the other stronger performers such as Legal & General."

For example, the payout on a 10,000 with-profits bond with the Pru over ten years is 15,489, compared with 13,326 from Legal & General, while a 200-a-month 20-year pension with the Pru pays out 92,904, against 77,142 from the equivalent Legal & General policy.