The with-profits funds explained

  • With-profits 100:0

    Fund information: unit linked plans in series 4, 5, 6, 8 & 9

    The with-profits 100:0 fund gives policy holders all the fund's investment returns, but deduct contractual charges and for life contracts, tax to policyholders.The fund invests in fixed and variable interest investments, shares, cash and more complex financial instruments.

    Asset Mix

    The investment mix for plans is shown here. The investment mix has not changed significantly in the 12 months to 31 December 2019 and there are no current plans to significantly change the asset mix in 2020. We expect the percentage invested in shares and options to remain close to 29%.

    100 0

    How did the fund perform in the 12 months to 31 December 2019?

    The return achieved by the assets allocated to unit linked plans was 8.1% before tax and charges. This return is applicable to pension plans but reduced to 6.6% for life plans and investment bonds before charges because of tax we have to pay. The charges for managing the fund are included in your plan charges. You can find out more about charges in your plan documents.

    Previous performance figures

    Before tax and charges
    2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
    7.2% 5.1% 6.1% 4.3% 5.5% 1.3% 8.2% 4.6% -1.7% 8.1%
    After tax
    2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
    6.2% 4.5% 5.3% 4.0% 4.7% 1.3% 6.9% 4.1% -1.2% 6.6%

    Current bonus rates

    All Plans (the rates below were declared on 13/01/2020)
    Fund Series Regular Bonus Current Final Bonus/MVR
    4 EL/4 EP 1.25/1.5% Varies daily
    5 EL/5 EP 2.25/2.5% Varies daily
    6 EL/6 EP 2.25/2.5% Varies daily
    8 EL/8 EP 2.05/2.3% Varies daily
    9 EL 2.05% Varies daily
    The final bonus or MVR will change daily as it's calculated with reference to the performance of the fund over the time you were invested. The final bonus added to plans when they end means everyone receives a fair share of the fund's performance. This is calculated by comparing the value of the plan's share in the fund based on fund performance (the 'asset share') which includes bonuses added since the plan started.

    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 to meet unexpected payments. For 2020, unless plan guarantees are higher, we will include in the final bonus rate an estate distribution of 7.5% of asset share for investors leaving the fund. This rate can change at any time.

    Any final bonus increases and any MVR reduces the total value of the with-profits units. Many plans have a date on which we guarantee not to apply any MVR. This date will be shown on your yearly statement, although since 6 September 2010 we have not applied an MVR to any withdrawals from, or cancellations to, plans investing in the with-profits funds.

    Information we send to customers

    From June 2015 yearly bonus information has been included with yearly statements.

    A copy of the leaflets, showing information about fund performance over the previous 12 months can be found through the following links:

    Bonus leaflets for year to:

    How is the with-profits 100:0 fund managed?

    The Principles and Practices of Financial Management’ (PPFM) shows how we manage the money in the with-profits 100:0 fund. This was last updated in March 2020.

    How do I know you're managing the fund properly?

    Zurich Assurance Ltd has to tell its with-profits policyholders each year if it has complied with its obligations in the PPFM (Principles and Practices of Financial Management). It does this through the annual report (last published in April 2019, next issue due April 2020) from the board of directors, including a separate report from the with-profits actuary on Zurich Assurance Ltd's compliance with the PPFM. In preparing the report, the directors seek the view of the independent person.

    It is the opinion of the board of directors that during 2018:

    • the company has complied with its obligation 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).

    The board of directors have appointed Alison Carr to provide it with an independent assessment of compliance with the PPFM. Mrs Carr will also advise the board on how any competing or conflicting rights and interests of policyholders and shareholders have been addressed. This role is a senior manager appointment (SMF15) within the FCA’s Senior Managers and Certification Regime. The board have given Mrs Carr this Statement of Responsibilities for her role. The Statement of Responsibilities covers all aspects of the management of and the exercise of discretion in respect of the fund, including those matters which Rule 20.5.3 of the FCA’s Conduct of Business Sourcebook requires to be covered in a terms of reference.

  • My choices

    You may have been thinking about what to do with your plan, this section will help you understand the choices you have. You might also want to look at the guidance given by the Money Advice Service on their website. [Zurich is not responsible for the content of external websites]

    Does the plan still meet my needs?

    Your circumstances and needs may have changed since your plan started and you should also be aware that the investment strategy of the Zurich with-profits funds has changed over the years. Your adviser will be able to help you decide whether the plan still meets your needs.

    Like many other with-profits funds, the Zurich funds don’t invest in equities to the extent they did before the stock market falls in 2000-2002. The funds are now invested significantly in fixed and variable interest investments and have limited exposure to shares.

    We will let you know each year how the fund is invested for your plan.

    Can I cash in my life plan or investment bond without being charged a penalty?

    Zurich aims to pay a value that is fair to you and to the other policyholders remaining in the fund whenever you end your plan. There is no specific penalty for ending a life plan early. Some investment bonds have a fixed charge where withdrawals are made within the first five years of the investment.

    A market value reduction (MVR) could apply if you take benefits before any MVR free date shown on the yearly statement or the bonus statement. However, we are not currently applying an MVR when investments are taken out of either of our unit linked with-profits funds. Ask us for a value of your plan now and at maturity to make a comparison before you decide what to do. If you’re not sure, ask an adviser.

    Can I cash in part of my plan?

    This depends on the type of plan you have:

    • Pension plans cannot be normally be cashed in, although it’s possible to take some of the benefits as tax-free cash when you buy retirement income. They can be transferred to other providers.
    • Life plans and investment bonds were often issued as a cluster of individual contracts which can be cashed in separately. If your plan is being used as security for a loan, we would need the lender’s agreement.
    • Investment bonds also allow partial withdrawals where you can take some money from each cluster.

    Taking money from your plan can create an income tax liability. There is a difference in the tax treatment of withdrawals between cancelling clusters and taking money from each cluster. You should seek advice if you're not sure which method is best for you.

    Can I switch to another unit linked fund? 

    Yes, you can usually move your investment into other funds. If you’re making regular payments you can invest future payments into other funds. The with-profits fund is no longer open to new money so if you switch out, you won’t be able to switch back in.

    Different unit-linked funds invest in different types of assets, so you should consider the level of investment risk you are comfortable with. These funds do not smooth investment returns, so if the value of the investments fall, the value of your policy falls at the same rate. You also need to take into account the value of any guarantees you might lose. We recommend you seek advice if you are considering this option.

    Can I stop making payments but still keep my plan?

    Yes. Plan administration charges and the cost of providing any life cover or other plan benefits would continue to be met by cancelling units. This may mean your final plan value could reduce and eventually stop without a value.

    If you wanted to restart payments, the with-profits fund would no longer be available. For life plans, restarting payments would only be allowed within 13 months if you repaid all the ones missed.

    Can I transfer my pension plan to another insurer?

    Yes. On yearly statements we tell you what the transfer value is at that time. Values aren’t guaranteed and can change daily. If you transfer your plan on the selected retirement date any market value reduction would not apply. Your selected retirement date is shown on the yearly statement or the bonus statement.

    Some pension plans started before 1996 may incur a charge if you take benefits or transfer your plan earlier than the date you selected. On these plans, the plan charges were high in the early years and the amounts allocated to plans from regular payments increased in later years. Ask us for illustrated maturity values and make sure you understand the value of guarantees before you decide to transfer.

    You should also take account of any set up charges for a new plan. We recommend you seek advice if you are considering this option.

    Can I take regular withdrawals from my bond?

    Yes. We can make regular payments from your investment bond either as a fixed amount or as a percentage of the bond value. Withdrawals greater than 5% of the amount(s) invested may create an income tax liability. Your yearly statement tells you whether or not we might apply any MVR. Find out about setting up a regular withdrawal.

    What do I do if I need advice?

    If you want more information about the plan, please talk to your adviser or call us – we’ll be pleased to help. If you haven't got an adviser, here are details on how you can find one.

    0370 333 1500

    Monday to Friday 8.30am - 6.30pm and on Saturday 9.30am - 12.30pm, excluding Bank holidays.

    We may record or monitor calls for training and quality purposes.

  • Plan questions

    Unit linked plans were sold after 1985 and generally offered a choice of funds to invest in, including the unit linked with-profits fund. The with-profits fund was closed to new customers in 2003 and is generally no longer available for new investments to existing plans. Payments to us buy units in the fund(s) of your choice. Bonuses are added to these plans by increasing the price of the with-profits units. We send customers a statement each year (near the plan anniversary) showing the value of the units in each fund. Each year, following the bonus declaration, we also send customers information about the fund performance together with a statement telling them what the bonus rate(s) are for the series invested in.

    This section aims to provide answers to some of the questions we are asked by customers about their investment in with-profits.

    What with-profits fund do I invest in?

    Your yearly bonus statement will show which with-profit fund you invest in. Series 1, 2, 2a, 2b, 3, 3b & 7 invest in the 90:10 fund and Series 4, 5, 6, 8 & 9 invest in the 100:0 fund. Alternatively, please call us on 0370 514 3624.

    What are the different types of bonus?

    This includes regular bonuses, final bonuses and market value reductions (MVR).

    A regular bonus will be added to a plan by changing the unit price each day. Once added, it cannot be taken away. Bonus rates depend on the type of plan and the series you invest in. They can change at any time. The reason for different final bonus rates for different plan types and series is to give each group of customers their fair share of the fund. This is achieved by adding a final bonus or applying a market value reduction (MVR) when units are cancelled. An MVR protects the interest of those who remain invested within the fund. The amount and timing of investments as well as the claims and expenses experienced by different groups of customers means any final bonus or MVR can vary from plan to plan. Further information can be found in the guides explaining how we manage the fund.

    The yearly statement shows the MVR or final bonus at that point in time. It will also show if the plan has a date on which we guarantee an MVR will not apply. However, since 6 September 2010 we have not applied an MVR to any withdrawals from, or cancellations to, plans investing in the with-profits funds.

    For the 90:10 fund, the final bonus/MVR rates are regularly reviewed. They tend to change once a year but we can change them more frequently if necessary. We do not give customers advance notice. The bonus rates differ with each series.

    For the 100:0 fund, the final bonus/MVR rates change daily. The bonus rates differ with each series.

    What is smoothing and how does it work?

    Smoothing is a method of reducing the ups and downs in the value of your investment by paying out the returns through a system of bonuses. This is a special feature of with-profits.

    Smoothing works by holding back some of the returns from good times to help pay out bonuses in poorer times. Equally, losses made in poor times may also reduce gains in good times. In the long term we can only pay out what the funds assets achieve. We will do this by increasing guaranteed payouts when it is prudent.

    If you end your plan early and at a time when the bonuses added are more than the amount justified by the funds performance, we might apply a market value reduction.

    How much is my plan worth?

    We send you a statement each year, near your plan anniversary, showing you the fund value and the surrender or transfer value at that time. Values can change from day to day.

    If you want to know the current surrender or transfer value, please call us on:

    0370 333 1500

    Monday to Friday 8.30am - 6.30pm and on Saturday 9.30am - 12.30pm, excluding Bank holidays.

    We may record or monitor calls for training and quality purposes.

    What guarantees does my plan have?

    Your plan benefits are guaranteed provided you maintain any regular payments. Guarantees may apply only at a particular date, for example the maturity date or selected retirement date.

    Regular bonuses once added cannot be taken away. Some guarantees may be valuable and you should make sure that you understand them before taking any action.

    Guaranteed rates of annual bonus (on unit linked with-profits plans in Series 1, 2, 2a, 2b and 7)

    The following series have a minimum yearly bonus:

    With-Profits Series
    		 Pension (EP)
    		 Life (EL)
    Series 1 (excluding offshore) 
    		 Rate set each year - current rates
    		 N/A 
    Offshore Series 1* 4% 3%
    Series 2* 4% 3%
    Series 2a* 1% 0.75%
    Series 2b 1% 0.75%
    Series 7* 4% N/A


    * No more money can be paid into these series.

    Market value reduction (MVR) free date

    At maturity, selected retirement date or death, we would not apply any MVR. Investment bonds started after August 1995 have an option, usually on each 10th anniversary of the plan to cancel the with-profit units without any MVR applying. This date is shown on your yearly statement, although since 6 September 2010 we have not applied an MVR to any withdrawals from, or cancellations to, plans investing in the with-profits funds.

    What benefits does the plan provide?

    Your yearly statement shows what benefits the plan provides at maturity/retirement or if you die before your plan ends. Some plans include additional benefits covering illness and these will also be shown on your yearly statement. If you want to find out more about the benefits call us on:

    0370 333 1500

    Monday to Friday 8.30am - 6.30pm and on Saturday 9.30am - 12.30pm, excluding Bank holidays.

    We may record or monitor calls for training and quality purposes.

    How much might I get back when my plan ends?

    We can provide an illustration based on current assumptions using different rates of investment return. These will give you a range of values for your plan using assumptions for investment growth and our expectation of future charges. These are included automatically on most yearly statements.

    If you have an endowment plan, we will send you an illustration each year showing you if it’s on track to meet the target amount at maturity. Find out information about the illustrations we send out on mortgage endowments.

    Mortgage Endowments

    When does my plan end?

    You can see this on your plan yearly statement or if you have a mortgage endowment, this can be found in the ‘Your plan now…’ section of your plan update letter. Alternatively, to find out more call us on:

    0370 333 1500

    Monday to Friday 8.30am - 6.30pm and on Saturday 9.30am - 12.30pm, excluding Bank holidays.

    We may record or monitor calls for training and quality purposes.

    Can I end my plan early?

    Yes. We’ll need the written instructions of all the plan owners and the plan documents. To make sure we only deal with the plan owners, we’ll also ask for evidence of identity such as bank statement or copy driving licence. The confirming your identity leaflet will give you more information about this process.

    If you have a pension plan, you can currently start taking your pension at anytime after 55 (age 50 for offshore pension plans). If you belong to a pension scheme, you will need to deal with the scheme administrators or if this is your own plan, call us for more details of your options.

    0370 333 1500

    Monday to Friday 8.30am - 6.30pm and on Saturday 9.30am - 12.30pm, excluding Bank holidays.

    We may record or monitor calls for training and quality purposes.

    You may also want to consider the alternative choices available under your plan detailed in the Understanding your choices section.

    How can I get more information about my plan?

    If you want more information about the plan, please talk to your adviser or call us we’ll be pleased to help. If you haven't got an adviser, here are details on how you can find one.

    0370 333 1500

    Monday to Friday 8.30am - 6.30pm and on Saturday 9.30am - 12.30pm, excluding Bank holidays.

    We may record or monitor calls for training and quality purposes.

    How do I change my address?

    You can let us know your change of address by calling us or completing and returning the change of address form. If you are also changing your name, we will require proof of this.

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