With-profits continues to deliver long term growth significantly above inflation

Article date: 21 February 2014

  • With-profits products provide protection for customers who wish to invest in the stock market but don’t want to be exposed to the full impact of volatile market conditions.
  • A £10,000 with-profits bond purchased 10 years ago is now worth £17,248, giving customers an impressive annual return of 5.6%. This has significantly outperformed a bank or building society average savings account return of 1.9% a year over the same period (all figures after tax and charges).
  • A bond invested 10 years ago not only outperforms an average savings account, but also the average return from the ABI UK Mixed Investment 20%-60% Shares - Life Sector, as these annualised returns on a £10,000 investment show:
    •  Aviva With-Profits Bond                                                      £17,248 or 5.6% p.a.
    •  ABI UK Mixed Investment 20%-60% Shares – Life (1)       £15,668 or 4.6% p.a.
    • Average savings account (notes 1&2)                                 £12,077 or 1.9% p.a.
  • From January 2014, annual bonus rates have been increased for many customers, providing a valuable addition to the guaranteed benefits applying to these policies.
  • In 2013, Aviva added £1,043 million in bonuses (£413 million in annual bonuses and £630 million in final bonuses).

2013 Overview

Although investment markets continued to fluctuate during 2013, overall they have performed well, aided by quantitative easing (note 3) and improving economic conditions.

However, despite the FTSE 100 Index ending the year 14.4% higher, the consensus view is that market fluctuations will continue - due to tightening US monetary policy and investor concerns in the UK about when the Bank of England will raise interest rates.

This economic backdrop highlights the importance of Aviva’s prudent approach in managing the With-Profit Funds for the benefit of its customers.

What does this mean for customers?

A 10 year with-profits bond, with an initial investment of £10,000 taken out on 1 January 2004:

  • Has grown by £1,243 or 7.8% during 2013. (all figures net of tax & charges)
  • Is now worth £17,248, a return of 72.5% (5.6% per annum)

A 25-year, £50 per month mortgage endowment in the main Aviva With-Profit Fund, taken out on 1 January 1989:

  • Has grown by £2,932 or 11.6% during 2013. (all figures net of tax and charges).
  • Has a maturity value of £28,869 a return of 4.9% per annum
  • Has benefitted from valuable life cover during the 25 year period.

Aviva’s Pensions and Investments Director, Tim Orton said:

“Our with-profits performance demonstrates the benefits of investing beyond cash. Many of our customers have seen their funds grow by three times that of an average savings account and have significantly increased their spending power.’’

‘’We have a 200 year heritage in managing investment solutions that continue to meet customer needs for growth and income with much less risk than placing their money directly on the stock market. For those customers prepared to accept a degree of risk with their investment, our With-Profit Fund has shown once again the rewards can be impressive.’’

Key bonus rate changes effective on 1 January 2014

Annual bonus rates

  • Annual bonus rates for currently and recently marketed unitised products have increased to 3.0% (from 2.5%) for bonds, 3.75% (from 3.0%) for pensions and 3.5% (from 2.75%) for stakeholder pensions.
  • Most conventional annual bonus rates remain the same or have increased.

Final bonus rates

  • Final bonus rate changes have increased average payouts for unitised life business by 2.7% and for pensions by 3%.
  • Conventional final bonus rate changes have increased average payouts by around 6% for life business and around 4% for pension business.

With-Profit Income Fund

  • 99% of customers invested in this fund will see income levels increase.

Market Value Reductions

  • Market value reductions (MVRs) have reduced by an average of 1.5%, increasing policy values for customers where an MVR applies

With-profits policy impacts in more detail

The table below shows typical changes in policy values over 2013 for with-profits products invested in our main With-Profit Fund. They do not necessarily reflect the changes to an individual policy. The bond and endowment figures are after charges and net of basic rate tax. The pension figures after charges and gross of tax.



Investment details

(started on)

Total investment

Payout value

1 Jan 2014 plus annual yield


Increase  in payout value over last year (excluding  premiums)

Average savings account payout plus annual yield (note 2)


(5 year)


£10,000 single premium,

(1 Jan. 2009)



6.3% p.a.




0.9% p.a.


(10 year)


£10,000 single premium,

(1 Jan. 2004)



5.6% p.a.




1.9% p.a.


 (20 year)

(note 4)


£200/month starting on

(1 Jan. 1994)



5.4% pa




2.7% p.a.


 (25 years)

(note 5)


£50/month starting on

(1 Jan. 1989)



4.9% pa




2.5% p.a.

About the fund, customer numbers and underlying assets

At the end of June 2013, the total value of Aviva’s with-profits funds was approximately £45 billion with almost 1.4 million customers.

  • The main Aviva With-Profit Fund, (the Old and New With-Profits Sub Funds), delivered an estimated investment return of 9.1% before tax (7.9% after tax) in 2013.
  • The equity backing ratio (the amount of equities and property) of the main Aviva With-Profit Fund is 69.8% (as at 31st December 2013).

Asset Mix of the main Aviva With-Profit Fund as at 31st December 2013



(1)   Source: Lipper IM (Investment Management). Figures from 1 January 2004 to 1 January 2014. All values are net of charges and tax.

(2)   The average savings account used is the Moneyfacts Average up to 90 days’ notice £10,000 Index.

(3)   Quantitative Easing is a process used to increase liquidity in the economy, where a central bank purchases government bonds from private sector companies.

(4)   The pension example is based on a male, investing £200 a month for 20 years from 1 January 1994 with a policy maturing at age 65, and a return of fund death benefit. The figures at 1 January 2014 assume retirement at selected retirement age and therefore benefit from the MVR-free guarantee. Figures are gross of tax and after charges

(5)   The endowment example is based on a male, non smoker, aged 29 investing £50 a month for 25 years with the policy starting on 1 January 1989. Figures are net of tax and after charges.

The Office for National Statistics uses the Consumer Prices Index (CPI) as the headline measure of inflation. CPI grew by 2.0% in the year to December 2013 .

The value of investment-linked funds can go down as well as up and is not guaranteed. It is possible that you may not get back the amount invested. Money in a savings account is accessible and safe, and interest, once earned, is guaranteed.                                                            

If you are a journalist and would like further information, please contact:

Fiona Whytock: Aviva Press Office: 01904 452659; 07800 692299; Fiona.whytock@aviva.co.uk 
Louise Soulsby: Aviva Press Office: 01904 452617; 07800 699526; louise.soulsby@aviva.co.uk

Notes to editors:

Aviva provides insurance, savings and investment products to 34 million customers worldwide.

We are the UK’s largest insurer with over 14 million customers and one of Europe’s leading providers of life and general insurance. We combine strong life insurance, general insurance and asset management businesses under one powerful brand. We are committed to serving our customers well in order to build a stronger, sustainable business, which makes a positive contribution to society, and for which our people are proud to work.

We are ranked as one of the UK’s top ten most valuable brands and Aviva Plc is in the top 10% of socially responsible companies globally in the Dow Jones Sustainability World Index.  In 2012 we invested £5.7m into our UK communities. One in three of our employees were involved in community investment activities which included giving nearly 30,000 hours.

Aviva is working in partnership with Railway Children through the Aviva Street to School programme to get children living or working on UK streets back into everyday life, especially education. Find out more at www.aviva.co.uk/street-to-school/

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