Terminal Bonuses

srcandas

There are a few things that seem rather odd to me about these. It is like they are mystical.

Taking three of my personal pensions with profits I get:

1. We can say nothing beyond one might exist and it will be calculated on the day of the retirement offer.

2. Although in previous years we have kept it secret now with 6 months to go we can give you a figure but it may change.

3. We give you its value clearly on each annual statement:

Year -- Fund size --- Bonus
2008 -- 38257.67--- 4554.59
2009 -- 35392.23 --- 989.22
2010 -- 42483.67 --- 2205.99
2011 -- 48095.79 --- 3855.32

This figure in one case is almost 20% of the fund and thus not having a clue about it doesn't lend itself well to planning.

I guess the incredible fluctuations in the 3rd case show their nervousness. However in another fund my supplier has adjusted my investments to avoid severe fluctuations as I approach the final years of the plan. Why can they not offer that for terminal bonuses. It would aid planning.

Anyway a question. Is there anywhere a sample explanation (preferably written in English ) of on what basis this is actually calculated? I'd love to know if it really relates to how much port is drunk in the boardroom.

:beer:

sandsy

Annual bonuses generally reflect the ongoing investment income earned by the with profits fund over the year and attributed to your policy, ie. dividend income etc.

Terminal bonuses typically reflect the capital gains earned by the assets attributed to your with profits contract over the period it's been held. Usually, capital gains are much more volatile hence the figures can vary significantly for contracts of different terms, held over different periods.