More Pain for "With-Profit" policyholders

Standard Life, traditionally one of the better and bigger bonus paying companies have announced that roughly half opf their with-profit policyholders will have their bonus reduced this year. The bonus is set to be cut from 1.50% to 1.25% - hardly something to write home about- or indeed reflecting investment returns over the last 12 months. They estimate that this will be relevant to around 500,000 policyholders.

My main gripe with this is not with Standard Life, but with the concept of "with-profits" which was originally thought to be an investment process that smoothed the ups and downs of the market, providing a lower risk investment strategy over the long-term. In pratice, it is virtually impossible to value a with-profit investment or indeed have much clarity in projecting future growth. However, they are certainly not what everyone was led to believe.