If you have savings or investment plans with Metfriendly you should receive your bonus statement by early March each year.
Your benefit statement – bonus rates FAQs
What bonus rates have been paid this year?
Bonus rates are decided towards the end of each calendar year. You can see all previous bonus rates here.
Can my bonus rate be compared directly with interest rates offered by banks/building societies?
Metfriendly With-Profit Savings Plans are not the same as Bank and Building Society savings accounts. The rates are difficult to compare directly.
The most important thing to note is that our bonuses get calculated from (and added to) your Sum Assured, not just to the amount of money you pay in. Under a “conventional” policy your Sum Assured is higher than the total premiums you have paid in until you near the end of your policy term.
We publish a CFPPFM – (Consumer Friendly Principles and Practices of Financial Management) which describes, in a ‘Customer Friendly’ way, how we calculate our bonus rates. The Association of British Insurers also publishes useful information. We are happy to discuss anything about our plans with you; please get in touch.
Can my ISA bonus rate be compared directly with cash ISA interest rates being advertised by the high street banks/building societies?
The 1.5% bonus for 2015 is an annual bonus applied to your ISA investment. This annual bonus is a reflection of the return on secure investments over recent years. At the time of encashment you may also be entitled to a final bonus which reflects additional investment growth which is not already distributed by way of an annual bonus. We are currently paying final bonuses on ISAs which have been invested for 3 or more years. These final bonuses depend on current market conditions. So far this year we have been paying a final bonus rate of 13% on an ISA invested 5 years ago or 28% on an ISA invested 10 years ago [Correct as at 01/01/2016].
Taking the final bonus into account an ISA invested 5 years ago will have grown at a rate equivalent to an average of 4.0% per annum. In general the longer you leave the policy running the higher the final bonus, but final bonuses can fall to reflect market conditions.
What about my With-Profit Bond or Flexible Savings Plan, are these subject to a final bonus like the ISA?
Yes. The annual bonus is a reflection of the return on secure investments over recent years. At the time of cashing-in, you may also be entitled to a final bonus which reflects additional investment growth which is not already distributed by way of an annual bonus. We are currently paying final bonuses on cashing-in investment plans which have been running for 3 or more years. These final bonuses depend on current market conditions. So far this year we have been paying a final bonus rate of 13% on a Bond invested 5 years ago [Correct as at 01/01/16].
In general the longer you leave the investment plan running the higher the final bonus on cashing-in, but final bonuses can fall to reflect market conditions. (On 01/01/16 we were paying a final bonus of 28%, 45% and 72% on Bonds taken out 10, 15 and 20 years ago respectively.)
Why are there different bonus rates for different tables?
For some tables, such as the With-Profit Bond and the ISA, the Benefit or Sum Assured is based on what you have already paid us. For other tables, however, the Sum Assured is based on what you will pay us over the term of the plan. Therefore, the profits we earn on each type of table are different. Also, on these tables where we reclaim some of the tax which we otherwise pay on the underlying investments, we pass on this saving to you by way of a higher bonus rate.
How do you calculate bonuses?
The bonus we add each year is a consistent way of distributing a projected pre-tax investment return of about 4% per annum (2015 annual bonus rates). On average, we earn more than this – and the excess is distributed as a final bonus at maturity or on cashing-in. We also reflect any return of our capital to members in the final bonus.
When do you pay a final bonus?
If you pay us a lump sum, then a final bonus may be payable on or after the third anniversary. Regular contributions to ISAs and Flexible Savings plans may also qualify for a final bonus after 3 complete years measured from the end of each plan year. Other regular contribution contracts attract a final bonus at maturity. Final bonuses are not only included in maturity claims – they are also included in our calculation of surrender values from the 6th anniversary onwards.
Can the final bonus be negative?
We have to reflect the return we make on our investments, even in bad times, so we may use a negative final bonus to adjust surrender values downwards – but not maturity values or death claims. In particular, lump sum investments could be reduced by a “market value reduction” (MVR) – effectively a negative final bonus. Metfriendly does not currently (01/01/2016) apply a MVR to any of its products but reserves the right to do so in a fair manner.
Why is the Sum Assured less than I will have paid in?
The Sum Assured on a “conventional” plan (not ISAs, Bonds or Flexible Savings Plans) is a figure which is calculated at the start of your contract and which is higher than the total premiums you have paid in until near to the maturity date.
The Sum Assured is also used to calculate the payout on death. By keeping the Sum Assured below the full amount which you will have paid in, we have allowed for the expenses incurred in running the policy, and the cost of providing the death benefit.
Also, the lower the guaranteed return, the more freedom we have to choose investments – we would otherwise have to invest more in very low risk investments which both historically, and particularly recently, have given lower returns.