Answering your questions about our mutual bonus

Our aim is to distribute our profits - via the mutual bonus - in a broadly stable and sustainable way, by maintaining our profitability and capital position.  The LV= Board has full discretion and freedom when deciding to award a mutual bonus. The decision to award a mutual bonus is guided by the Board’s overriding responsibility to balance the need to deliver for members both today and in the future, against LV’s investment needs and projected financial strength of the fund. The Board could make adjustments or significant changes to the rates if circumstances require it. For example, if the current performance or capital position of the business differs materially from the business plan. Any past mutual bonuses could be reduced or removed, though could be reinstated at a later date. The Board will always consult with the With-Profits Committee, With-Profits Actuary and Life Chief Actuary, considering how the business has performed against the business plan and what profits are available to distribute from that year.  

Please refer to the ‘The different mutual bonus rates’ section on the mutual bonus page for further information.

If the LV= Board declares a mutual bonus, we'll apply it to eligible with-profits policies as long as it’s been in place for 12 months. For most policies, the amount will be a set percentage of the policy's value on the date the bonus is applied. 

Please refer to the ‘How the mutual bonus works’ section on the mutual bonus page for information on eligibility.

The mutual bonus is not guaranteed to be paid each year and the amount can vary.

The mutual bonus for 2024 amounted to £20 million. This means that since 2011 we have given back a total of £329 million to eligible members. These members have benefited from a mutual bonus uplift for 2024 to their with-profits policies as follows.

The declaration will typically add the following amounts of money to eligible with-profits policies assuming they are currently worth £10,000 and eligible with-profits lifetime annuities assuming the current regular income is £10,000.

Mutual bonuses will form part of the total amount paid out either when the policy matures, pays out a death claim or is cashed in, except for eligible lifetime 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).

However, policyholders won’t see the benefit of a mutual bonus for policies where guaranteed benefits - or the underpin on conventional pension benefits paid as lump sums - are payable, as mutual bonus is not added to these benefits.

Here is a summary of our mutual bonus declarations since it was introduced.

The monetary figures shown in the above table are rounded.

If the LV= Board decides 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 – a mutual bonus will be applied on:

• 1 February for With Profits Pension Annuity policies
• 1 April for Flexible Guarantee Bond, Flexible Guarantee Funds, Flexi Guarantee Plan, All-In-1 Investment Bond, Guaranteed Capital Bond, Smoothed Managed Funds Bond, Smoothed Managed Funds Pension, Smoothed Managed Funds ISA, Smoothed Managed Funds Trustee Investment Plan, LV= ISA policies and With-Profits Fixed Term Annuity 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
• is cashed in

Our aim is to distribute our profits - via the mutual bonus - in a broadly stable, sustainable way by maintaining our profitability and capital position. In extreme situations, such as if the current performance or capital position of the business differs materially from the business plan, the future bonus rates declared each year may vary and could drop below the levels we’re aiming for or be stopped.

We’ve changed the approach to setting mutual bonus rates by setting ratios of the mutual bonus for different groups of policyholders to give very similar outcomes to before. There is more information in the ‘The different mutual bonus rates’ section on the mutual bonus page.

We are still paying an exit bonus to eligible policies. Visit our exit bonus page for further detail.

Yes. Your policy needs to be in place for a whole 12 months before any mutual bonuses will be added to the policy value.

If you have an LV= with-profits product that allows withdrawals, the withdrawals are paid by cancelling (or surrendering) some of the units you have purchased with your policy. Whether mutual bonus is paid out on a partial withdrawal depends on the type of product held.

For LV= Flexible Guarantee Bond, Flexible Guarantee Funds, Flexi Guarantee Plan, All-In-1 Investment Bond, Guaranteed Capital Bond, Smoothed Managed Funds products and LV= ISA policies no mutual bonus is included in the partial withdrawals paid out. For these products any mutual bonus is only paid out when the policy ends. 

For other LV= unitised with-profits products eligible for mutual bonus and that allow withdrawals, the mutual bonus will reduce the number of units we need to cancel for your partial withdrawal. You still receive a fixed withdrawal amount.

For products other than With-Profits Fixed Term Annuity policies, we don’t add a mutual bonus to guaranteed benefits where they are a fixed amount. So if these are higher than the underlying value of your policy including the mutual bonus, then you won’t benefit from the mutual bonus. However, you would be benefiting from the guaranteed benefit.

All With-Profits Fixed Term Annuity policies will be eligible for mutual bonus.

You won’t notice any difference to your income due to the mutual bonus. This is because we don’t add a mutual bonus to guaranteed benefits we're paying.

We aren’t paying any more than your guaranteed benefits, as the amount of money you’ll receive from your annuity is more than the value of the investments it’s paid from, and this is likely to continue. 

You won’t notice any difference to the income due to the mutual bonus. This is because we would begin paying guaranteed yearly income benefits, and we don’t add a mutual bonus to these types of benefits.

We aren’t paying any more than your guaranteed benefits, as the amount of money you’ll receive from your annuity is more than the value of the investments it’s paid from, and this is likely to continue.