Each year the LV= Board decides whether to declare a mutual bonus and, if so, the level that will be awarded.
From 2020, for members who have recently received mutual bonuses of 1.0% or 0.5%, the level of future mutual bonuses will be based on things such as; what funds are still available from the sale of the LV= General Insurance business in 2019, how investment markets perform, the number of active members who are eligible to receive it and our current and projected financial strength.
This isn’t the case for our newer members, specifically those who hold Flexible Guarantee Bonds Series 3 or Flexible Guarantee Funds Series 2 policies, which since 2018 have received a mutual bonus of 0.2%. For these policies, and our newer Smoothed Managed Funds Bond, Smoothed Managed Funds Pension, Smoothed Managed Funds Trustee Investment Plan and LV= ISA, the decision to declare a mutual bonus for this group will still be based on factors like the performance of our business, smoothing profits and losses and our current and projected financial strength and the contribution made by various groups of members (for example risks they take in supporting the development and growth of LV=’s business). We won’t use the General Insurance sale proceeds towards maintaining mutual bonuses for these policies.
If the Board decide that it’s right to give a mutual bonus, after consulting with the With-Profits Committee and With-Profits Actuary, a percentage uplift will be applied to the value of eligible with-profits policies.
The decision to give a mutual bonus is at the sole discretion of the Board and is not guaranteed.
Members, or their beneficiaries, will be able to see the benefit of mutual bonuses when either their policy matures, is surrendered or pays out a death claim. So the longer a policy is in place the bigger the benefit could be. If a member has an annuity with us they will instead see the benefit of the mutual bonus through an increase in their regular income. However policyholders won’t see the benefit of a mutual bonus for policies where guaranteed benefits - or the underpin on conventional pension benefits paid as lump sums - are payable, as a mutual bonus is not added to these benefits.