The with-profits 90:10 fund shares out its profits and losses to policyholders and Zurich. Policyholders receive 90% and Zurich 10%. The fund invests in fixed and variable interest investments, shares, property, cash and more complex financial instruments.
Our glossary of with-profits terms can help with some words or phrases you may not be familiar with.
The mix of investments varies between groups of plans. The asset mix for life and Esitran* plans is shown below:
The investment mix has not changed significantly during 2011 and there are no current plans to significantly change the asset mix in 2012.
For conventional pension plans other than Esitran, the fund invests solely in fixed and variable interest investments to match the high guarantees they have. These plans no longer invest in shares and property.
We seek additional income by selling some fixed interest assets with an agreement to buy them back and using the proceeds to buy variable rate bonds. This is known as a Sale and Repurchase agreement. The asset mix shown above is calculated net of the liability to repurchase the fixed interest assets held in connection with the Sale and Repurchase agreement.
* An Esitran plan is a type of pension plan which was set up when money was transferred from an Occupational pension scheme.
Follow these links to find out more about the assets we invest in:
The fund invests differently for different types of plans. For Esitran plans which invest in all the asset types, the return achieved in 2010 was 12.4% before charges. For life plans, due to tax we have to pay, the return was 10.2% before charges. The charges for managing the fund were approximately 0.5%.
Previous performance figures
Life and Esitran plans
Before tax and charges
|
2001 |
2002 |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
|
-3.1% |
-3.7% |
6.1% |
9.1% |
10.6% |
4.6% |
6.0% |
-0.4% |
9.0% |
12.4% |
After tax
|
2001 |
2002 |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
|
-2.0% |
-2.4% |
5.3% |
7.8% |
8.8% |
4.2% |
5.4% |
-0.1% |
7.3% |
10.2% |
Pension plans other than Esitran
Since July 2009 pension plans other than Esitran have invested only in fixed and variable interest investments. This part of the fund returned 10.3% before charges. The plan guarantees are currently higher than the returns we have achieved since your plan started and those we expect from the fund.
|
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
|
10.6% |
4.6% |
6.0% |
-0.4% |
5.9% |
10.3% |
Information we send to customers
We send information to customers each year about the fund performance and any bonus applicable to their plan.
Life plans or Esitran plans
The 2011 bonus booklet, sent to customers during March 2011.
Pension plans, other than Esitran
As fund performance is unlikely to increase the final plan payout for these customers, we are sending a frequently asked questions sheet with this year's annual statement.
The rates below were declared on 9 January 2012.
Regular Bonus Rates
Regular bonuses are added to plans as a percentage of the basic sum assured and previous bonuses.
|
Product Type |
Life Plans |
Pension Plans |
|
Bonus on Sum Assured |
0.25% |
0% |
|
Bonus on Existing Bonus |
0.25% |
0% |
Final Bonus Rates
Final bonuses are based on fund performance over the time of the investment in comparison to bonuses already added to make sure each generation of investors receive their fair share. This is calculated by comparing the value of the plan's share in the fund based on fund performance (the 'asset share') with the basic sum assured and bonuses added since the plan started. Any final bonus is calculated as a percentage of attaching bonuses only. Where a plan has been increased, each increase is treated as a separate plan to determine the final bonus rate. Although rates are generally lower for longer durations, they are applied to a much higher level of existing bonuses.
Now the fund is closed, we aim to give all remaining investors a fair share of the estate. The estate is the part of the fund we can use to help maintain bonus rates in poor times and to meet unexpected payments. For 2012, unless plan guarantees are higher, we will include in the final bonus rate an estate distribution of 2% of asset share for investors leaving the fund.
The rates of final bonus depend on future fund performance and are not guaranteed. They change without notice. This table below shows the current final bonus rates for life plans.
|
Life Plan Final Bonuses |
|
Start Year |
Final bonus for plans maturing during 2012 |
|
1966-1984 |
46% |
|
1985-1989 |
101% |
|
1990-1995 |
129% |
|
1996-2009 |
Only plan increases were allowed. The final bonus rate for the increase varies with each year. |
Pension plans, other than Esitran plans taken out after 1990, are not attracting any final bonus.
There are two guides:
» Full manual - The ‘Principles and Practices of Financial Management’ (PPFM) shows how we manage the money in the with-profits 90:10 fund. This was last updated in January 2012.
» Summary of the full manual. This was last updated in March 2011.
Zurich Assurance Ltd has to tell its with-profits policyholders each year if it has complied with its obligations in the PPFM. It does this through the annual report (last published in June 2011, next issue due June 2012) from the Board of Directors, including a separate report from the With-Profits Actuary on Zurich Assurance Ltd's compliance with the PPFM (Principles and Practices of Financial Management). In preparing the report, the directors seek the view of the independent person.
It is the opinion of the board of directors that during 2010:
- the company has complied with its obligations in the PPFM
- the way discretion was exercised was appropriate
- competing or conflicting rights, interests or expectations were addressed in a reasonable and proportionate manner.
The report contains further information on this, particularly for bonus rates, investment strategy, surrender values, expenses and charges, changes to the PPFM and customer communications. (you may wish to refer to the PPFM for the definition of technical terms).
