Members Mutual bonus

Answering your questions about our mutual bonus

What is a mutual bonus and why do we pay one?

The mutual bonus scheme rewards eligible members for their investment in the establishment and growth of our trading businesses.

How does it work?

Each year the board decides whether to declare a mutual bonus and, if so, the level that will be awarded. They consider factors like:

  • the performance of our trading businesses
  • our capital position
  • smoothing profits and losses
  • the contribution made by various groups of members (for example risks taken by them in supporting the establishment and growth of LV=’s trading business).

If the board feel 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-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. 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.

How much is the 2019 mutual bonus worth?

Our 2019 mutual bonus declaration of £27 million was based on the financial performance of Liverpool Victoria Financial Services Limited (LV=) in 2019. This means that since 2011 we have given a total of £210 million back to our eligible members. As a result, these members have benefitted from a mutual bonus uplift within their with-profits payouts of:

LV= policy group Uplift 
Conventional with-profits policies and with-profits annuities
1.0%
Accumulating and unitised with-profits policies except Flexible Guarantee policies
1.0% 
Flexible Guarantee Bonds Series 1 and 2 / Flexi Guarantee Plan / Flexible Guarantee Funds Series 1
0.5%
Flexible Guarantee Bonds Series 3 / Flexible Guarantee Funds Series 2 policies that have been in force for at least 12 months (i.e. that were in force on 31 March 2019)
0.2% 

The different enhancements, applied for 2019, reflect the contribution to the success of our trading business made by these different groups of policyholders.

It will typically add the following amounts of money to conventional with-profits policies and with-profits annuities assuming they are currently worth £10,000:

LV= policy group Addition 
Conventional with-profits policies and with-profits annuities
£100
Accumulating and unitised with-profits policies except Flexible Guarantee policies
£100 
Flexible Guarantee Bonds Series 1 and 2 / Flexi Guarantee Plan / Flexible Guarantee Funds Series 1
£50 
Flexible Guarantee Bonds Series 3 / Flexible Guarantee Funds Series 2 policies that have been in force for at least 12 months (i.e. that were in force on 31 March 2019)
£20 

Mutual bonuses will form part of the amount payable either when the policy matures, pays out a death claim or is cashed in, except for eligible annuitants who will receive an increase in their income.  For most with-profits policies it is added by increasing any final bonus or top-up bonus (or reducing any Market Value Reduction).

What mutual bonus has been declared in the past?

Here is a summary of our mutual bonus declarations to date:

  Mutual bonus declaration  Uplift to LV= with-profits policy payouts 
2011 £19m  1.0%
2012 £21m 1.1% 
2013 £22m 1.0%
2014 £24m 1.0%
2015 £27m 1.0%
2016 £18m 0.5%
2017 £26m Conventional with-profits policies and with-profits annuities
1.0% 
Accumulating and unitised with-profits policies except Flexible Guarantee policies
1.0% 
Flexible Guarantee Bonds Series 1 and 2 / Flexi Guarantee Plan / Flexible Guarantee Funds Series 1
0.5%
Flexible Guarantee Bonds Series 3 / Flexible Guarantee Funds Series 2
0.0%
2018 £26m Conventional with-profits policies and with-profits annuities
1.0%
Accumulating and unitised with-profits policies except Flexible Guarantee policies
1.0%
Flexible Guarantee Bonds Series 1 and 2 / Flexi Guarantee Plan / Flexible Guarantee Funds Series 1
0.5%
Flexible Guarantee Bonds Series 3 / Flexible Guarantee Funds Series 2 policies that have been in force for at least 12 months
(i.e. that were in-force on 31 March 2018)
0.2%
2019   £27m  Conventional with-profits policies and with-profits annuities 1.0%
 Accumulating and unitised with-profits policies except Flexible Guarantee policies  1.0%
 Flexible Guarantee Bonds Series 1 and 2 / Flexi Guarantee Plan / Flexible Guarantee Funds Series 1  0.5%
 Flexible Guarantee Bonds Series 3 / Flexible Guarantee Funds Series 2 policies that have been in force for at least 12 months
(i.e. that were in-force on 31 March 2019)
 0.2%
Total £210m  

The monetary figures shown in the above table are rounded.


When is the mutual bonus added to eligible policies each year?

If the Board decide to award a mutual bonus, we’ll usually apply the bonus to the value of eligible policies on 1 March of that year. Exceptions to this are outlined below by policy type:

  • 1 February for With-Profits Pension Annuity policies
  • 1 April for Flexible Guarantee Bond, Flexible Guarantee Fund, Flexi Guarantee Plan, All-in-1 Investment Bond and Guaranteed Capital Bond policies
  • 1 May for Pension Income Plus Annuity (PIPA) policies

The mutual bonus will be part of the amount payable when the policy either:

  • Matures;
  • pays out on death; or
  • is cashed in.

This doesn't apply to eligible annuitants who will get their mutual bonus as an increase in their income.

Once you've declared a mutual bonus, can you ever take it away?
Yes, but we'd only take it away in exceptional circumstances, for example if we needed to protect our financial strength; it could be reinstated if the board believes it's appropriate.
I am a Flexible Guarantee Bond 3 /Flexi Guarantee Plan/Flexible Guarantee Funds 2 policyholder, am I eligible for mutual bonus?

Yes, but only if your policy has been in force for a whole 12 months at the date we made the declaration, i.e your policy was in force on 31 March 2019.

I am an RNPFN policyholder. Why am I not eligible to receive the mutual bonus?

RNPFN Fund with-profits policies do not invest in LV=’s trading businesses as they are part of a separate, ring-fenced fund and do not contribute to the growth of the group’s trading business. Eligible policyholders in the RNPFN Fund may benefit from the distribution of the inherited estate of the RNPFN Fund in the form of ‘terminal bonus enhancement’.

I am a Teachers Assurance with-profits policyholder. Why am I not eligible to receive the mutual bonus?

Teachers Assurance Fund with-profits policies do not invest in LV=’s trading businesses as they are part of a separate, ring-fenced fund and do not contribute to the growth of the group’s trading business. Policyholders in the Teachers Assurance Fund may benefit from the distribution of the inherited estate of the Teachers Fund in the form of a ‘special bonus’.

Why aren't all customers eligible to receive the mutual bonus?

As we are a mutual company, we're owned by our members (who may hold either with-profits or non-profit policies), in much the same way as a plc is owned by external shareholders. A member is a person who holds life insurance, protection, investments or retirement policies with us. For more details see the members section.

The mutual bonus is designed to reward eligible members for the risks taken to support the company and growth of our trading business. Currently the mutual bonus is only paid to certain members, but the Board have this under review and may decide to change the eligibility criteria in the future. 

How do you see the scheme evolving?

Future mutual bonuses will continue to be linked to our business performance and will be declared at the sole discretion of our Board. We intend to declare a mutual bonus in years when both trading profits and financial strength allow.

The Board has the sole discretion to distribute surplus funds to all members i.e. to members who hold either with-profits or non-profit policies. The Board will consider each year whether, at what level and in what form LV= will declare any distribution of surplus, and which members are eligible to receive it.

We can’t guarantee that we’ll be able to announce a mutual bonus every year, as it will depend on our future trading profits and financial strength.

Want to find out more?

✔ You can phone one of our people on 0800 085 4499.
✔ This phone line is available from 8.30am to 6.30pm on weekdays.
✔ For TextDirect dial 18001 first.
✔ We will record and/or monitor your calls for training and audit purposes.