When eligible policies end, they’ll currently receive an exit bonus of 4.75%
The exit bonus rate is reviewed annually by the LV= Board in January of each year, but it can be reviewed at other times if there is a need to. They consider factors, when deciding what rate to apply – including what funds are still available, how investment markets perform, the number of active members who are eligible to receive it and our current and projected financial strength.
Once the new rate has been agreed, it will then be used to uplift pay-outs and income for eligible policies, typically from the following 1st March. We’ll publish this rate on our website on or shortly after this date.
The Board declared an initial exit bonus rate of 5.75% in 2020 and this was maintained at the review in January 2021.
The funds for exit bonus were initially invested in cash-based assets, and strong investment returns increased the policy values over which the funds for exit bonus have to be spread which reduce the percentage of exit bonus payable. This lead to an exit bonus of 5.0% being declared from 1 June 2021 and 4.75% from 1 September 2021. Since mid-2021 the funds for exit bonus have been invested in similar assets that the main benefits for policies are invested in. This helps stabilise the exit bonus rates declared in future.
The exit bonus rate declared for 1 March 2022 remained 4.75%. This rate will continue to be used to uplift payouts and income for eligible policies until the next rate is declared, which would be on 1st March 2023 unless there is a need to review it earlier. Where pension income is being uplifted, the rate of exit bonus will be the current rate on the anniversary of when the policy started. The level of the income will then not change for a year.
We don’t add the exit bonus to guaranteed benefits, or when the underpin on conventional pension lump sum benefits is paid.