Legal And General Cuts Endowment Payouts By Up To 9.5%

Legal & General Endowment

Legal & General has today announced that it will be cutting final bonus rates on most of its With Profits policies.

Policies including mortgage endowments, saving endowments and pensions will feel the measures that have been taken because of the continuing of difficult conditions.

In fact, people that were twenty-nine at entry, paying £50 a month into a twenty-five year Legal And General Endowment mortgage, will find that on March 1 2009 the returns on their policy will be down by 9.5% for the year, from £39,613 on March 1 2008 to £36,414.

Those with a 20 year With Profits Legal & General annuity policy will also see as much as 8.7% Shaved off the price following the statement.

The cuts are, according to Legal And General Endowment, part of a process called smoothing, that means that investors continue to benefit to some degree in spite of worsening market conditions.

Commenting, finance director of Legal & General’s With Profits business, Carl Dowthwaite, said: “With Profits continues to provide tasty long term returns and has given patrons real protection from market volatility.

“In current conditions the core features of With Profits mean that it is still a good choice for financiers. Our investment plan places us in a robust position to gain from market recovery.”

Shares in Legal & General fell by as much as 30 per cent earlier this week, amid fears over its capital reserves.