Prudential policyholders set for pay-out

PRUDENTIAL with-profits policyholders are set for bonus payments totalling £2 billion after the group's fund gained on the back of last year's markets rebound.

The 61bn Prudential with-profits fund returned 18.7 per cent last year, compared with FTSE growth of over 30 per cent, but outstripping the performance of other with-profits funds. The four million Prudential with-profits pension, investment and mortgage endowment policyholders will see the value of their holdings increase by between 3.5 and 9 per cent, the insurer said yesterday.

An investor who took out a 200-a-month Prudential with-profits pension 20 years ago would get 93,538 on maturity this year, an annualised return of 6.2 per cent but 2,700 less than the equivalent policy was worth on maturity a year ago. The annual bonuses paid on with-profits pensions, endowments and bonds will remain unchanged, as will most final bonuses.

Patrick Connolly, head of communications at financial adviser AWD Chase de Vere, said:

"While we don't advocate new with-profits investments, existing Prudential policyholders probably have more reason to be happy than with other providers," he said.