The mutual bonus scheme is designed to reward eligible members for their ownership of LV= and the risks taken in supporting the establishment and growth of our trading businesses in life and general insurance.
The mutual bonus will be used to increase the value of eligible policies. Currently only with-profits polices invested in the LVFS with-profits fund have received a mutual bonus, however for Flexible Guarantee Bond Series 3 and Flexible Guarantee Funds Series 2 mutual bonus to date is zero, in line with the expectation at time of sale. However this does not mean that these plans will never receive a mutual bonus or that with-profits members are the only members who can receive mutual bonus. For most policies it will form part of the amount payable when the policy matures, pays a death claim or is cashed in.
For With Profits Pension Annuity and Pension Income Plus Annuity policies, the mutual bonus will increase the income payable to the policyholder alongside the normal annual bonus allocation.
However the scheme could evolve over time.
Each year the LV= Board considers whether to declare a mutual bonus and, if so, the level and form of the bonus and which policies should receive it. This will take into account:
Future mutual bonuses will 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. We also want to consider other ways that can reward our members more generally for their investment in LV=.
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.
As a Flexible Guarantee Bond/Flexible Guarantee Funds policyholder you are eligible to receive mutual bonus on your plan. However, for Flexible Guarantee Bond Series 3 and Flexible Guarantee Funds Series 2 the mutual bonus declared is currently expected to be zero, particularly as these policies have not been in force for long.
RNPFN with-profits members do not invest in the LVFS with-profits fund and did not contribute to the growth of the group’s trading businesses. Instead they are part of a separate, ring-fenced fund. Eligible policyholders in the RNPFN Fund may benefit from the distribution of the inherited estate of the Fund in the form of ‘terminal bonus enhancement’ (also known as ‘TBE’).
Teachers Assurance Fund with-profits members do not invest in the LVFS with-profits fund and did not contribute to the growth of the group’s trading businesses. Instead they are invested in the separate, ring-fenced Teachers Assurance Fund. Policyholders in the Teachers Assurance Fund may benefit from the distribution of the inherited estate of the Fund in the form of a ‘special bonus’.
The Board has the discretion to distribute surplus to all members i.e. to members who hold either with-profits or non-profit policies. The LV= 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.
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 its shareholders. A member is a person who holds life insurance, protection, investment or retirement policies with us. For more details see the members section. The mutual bonus is designed to reward our members for their ownership of LV=, and the risks taken supporting the establishment and growth of our trading businesses in life and general insurance however, we will continue to assess the appropriate rewards for our members and this may change. Currently the mutual bonus is only paid to with-profits members (and members with conventional Industrial Branch free-paid or conventional paid-up policies which are treated as with-profits) but the Board continue to consider this position and whether they wish to extend mutual bonus or reward members in other ways for their membership of LV=.