What is the Special Bonus?
It’s a bonus paid every five years to policies invested in the Aviva Life & Pensions UK Limited FLC Old With-Profits Sub-Fund.
The rules about the Special Bonus were originally contained in a 2001 court scheme which described how surplus in the funds should be allocated to various groups of policyholders and shareholders.
The court scheme required that a Special Bonus be determined at 5-yearly intervals starting from 31 December 2005.
The 2001 court scheme has since been incorporated within successor court schemes. The rules about Special Bonus are contained in a court scheme dated 1 October 2017.
What is a court scheme?
When insurance policies are transferred from one company to another, the financial and other terms of the arrangements are set out in a document, which is approved by the High Court.
A key purpose of such a court scheme is to ensure no groups of policyholders are adversely affected by the transfer (either at the time, or later).
How do we know if a Special Bonus is payable?
The court scheme requires us to compare the financial strength of 2 funds, the FLC New With-Profits Sub-Fund and the FLC Old With-Profits Sub-Fund. If the FLC Old With-Profits Sub Fund is materially stronger, then we are required to distribute some of the excess assets as Special Bonus.
How will this impact my policy?
You do not need to take any action. If a Special Bonus is to be added to your policy you will be informed.