Investing in with-profits funds means investing in a combination of shares, bonds, property and money market investments. Growth can come in the form of regular and final bonuses from the profits the fund might make.
Our with-profits investments
With-profits policies are designed for the medium to long term, ideally at least 5 to 10 years. We pool your money with that of other customers in one of our with-profits funds and that money is invested in a mixture of shares, bonds, property and money market investments.
The value of your with-profits investment can grow through the addition of yearly bonuses and, for most policies, there is the possibility of a 'final' bonus when your policy comes to an end. Bonuses are not guaranteed and bonus rates can go down as well as up. However, once added they can't be taken away. There is a risk that the value of your investment could go down as well as up and you may get back less than you invested.
With profits investment returns are shared out as bonuses, of which there are two main types, regular (or annual) bonus and final (or terminal) bonus.
Regular bonuses can be added to your policy each year (or more often). Many with-profits policies guarantee a minimum payout on specified dates or events and the addition of regular bonuses increases this minimum level of payout.
A final bonus may be added when you decide to cash-in your policy or if you move out of with-profits by switching to another fund.
A Market Value Reduction (MVR) can apply to some types of with-profits funds. An MVR is an adjustment factor that can be applied to those leaving a with-profits fund at times other than those specified in the contract. This ensures that those leaving the fund do not receive more than their fair share of the underlying investment, and therefore enables us to treat with-profits customers fairly.
How we manage the funds
To help you understand how we manage the with-profits fund in which you’re invested, we produce two types of guides.
These guides can be downloaded from our With-profits useful guides page.
There are technical guides called the Principles and Practices of Financial Management (PPFM) and there are simplified, more reader-friendly versions.
Independent expertise and oversight
We're committed to treating our customers fairly at all times. To support this, we have a With-Profits Committee which brings independent expertise and oversight, to ensure fairness is fully considered in our with-profits decision making.
Looking to apply?
Visit our Select Investment page for more information about the product.
Take a look at our latest news and guides.
17 May 2018
Budgeting for retirement
Four lifestyle changes to prevent your pension pot draining.
14 May 2018
What if I need care?
There are different options if you need long term care when you retire. Take a look to consider how much they might cost.
14 May 2018
How dividend income is taxed
Find out how to make the best use of your your investments by understanding how the annual allowance works and how share income is taxed
18 Apr 2018
What is a pension?
Find out about the different types of pension and how they can help you enjoy a happy and secure retirement.
16 Apr 2018
Your Friends Life pension questions answered
Friends Life is now part of the Aviva group. Find out how this affects your Friends Life pension.
12 Mar 2018
How to use your home to fund your retirement
Find out if downsizing, taking in a lodger or equity release could help to pay for the retirement you have planned.
5 Mar 2018
Choosing a destination: cost of living, buying a property and healthcare.
1 Mar 2018
The costs of retiring abroad
We’ve compared the cost of living in the 3 top European destinations for UK retirees.
25 Feb 2018
Housing options for retirement
Plan now so you can afford the right accommodation for every stage of your life.
11 Feb 2018
How long will your retirement be?
Estimate the length of your retirement so that you can make the right preparations for the life you want to have when you stop working.
6 Feb 2018
When do annuities make sense?
Annuities can provide a stable income for your retirement, but they aren’t the only option. Find out if they’re the right choice for you.
21 Jan 2018
How the State Pension works
Understand when you can claim the State Pension and how much it’s likely to be to start planning for a secure and happy retirement.
17 Jan 2018
How much should you pay into your pension?
Get some help working out how much you need to pay into your pension to help you achieve the retirement lifestyle you want.
11 Jan 2018
Retirement and divorce
If your relationship ends in divorce or annulment, your retirement savings can be shared or split. Take a look at what this could mean for you.
10 Jan 2018
Can't afford to retire?
Find out how you could fix gaps in your retirement finances to give you the security and certainty you want.
7 Jan 2018
What to do after someone dies
Find out what you need to do in the days and weeks following a death, as well as some longer-term considerations.