One-off bonus

In 2020, we announced we were using some of the proceeds from the sale of the LV= General Insurance business to pay our long-standing members an exit bonus when their eligible policies came to an end. Each year, the LV= Board would decide what exit bonus rate to award considering what funds were still available from the sale proceeds and a range of other factors. This has meant the rate of the exit bonus varied over time.

The Board decided to convert the exit bonus to a one-off bonus, added to the value of an eligible policy on 1 April 2026. The conversion allocates the related proceeds from the sale of the LV= General Insurance business, simplifying the future distribution of profits to our members, and reduces the risk of eligible members not receiving the exit bonus amount in the future.

Previously, any exit bonus would have been allocated when eligible policies matured, were cashed in, paid out a death claim or when money was received from the policy which meant it could be more easily reduced or removed. In exceptional circumstances, the one-off bonus can still be reduced or removed, just like the exit bonus, though can be reinstated at a later date. However, changing to a one-off bonus means any reductions should be smaller and affect all long-standing policyholders equally, whether their policy ends at that time or not.

Broadly, we expect payouts to remain materially the same because of the conversion of the exit bonus to a one-off bonus. It reduces the risk of members not receiving the exit bonus amount in the future by adding it to the values of all remaining policies on 1 April 2026.

The one-off bonus rate of 4.60% (less a small allowance for the costs of making the change) is invested in the same underlying mix of assets as the rest of the policy benefits.

In exceptional circumstances, the one-off bonus can still be reduced or removed, just like the exit bonus, though can be reinstated at a later date. Changing to a one-off bonus means any reductions should be smaller than the exit bonus approach.

Members whose policies made the biggest contribution to the growth of the LV= General Insurance business and were exposed to the most risks during that time were eligible for the exit bonus. The same policy types that were eligible for the exit bonus are eligible for the one-off bonus. 

Members with eligible policies which are no longer invested with LV= will have previously received their exit bonus.

• LV= Conventional with-profits policies and with-profits annuities:
• IB & OB conventional with-profits whole of life policies
• IB & OB conventional with-profits endowment policies
• OB conventional with-profits low cost endowment policies
• OB conventional with-profits pensions (before retirement)
• OB conventional with-profits pensions (annuity in payment)
• With Profits Pension Annuity
• Pension Income Plus Annuity

• LV= Accumulating and unitised with-profits savings and whole-of-life policies:
• Flexible Whole Life policies 
• Tax Free Savings Plan
• Flexible Savings Plan
• Mortgage Savings Plan
• MAX
• Regular Savings Plan
• Family & Legacy Fund
• With Profits Life ISA

• LV= Accumulating and unitised with-profits pension policies:
• Appropriate Personal Pension policies  
• Flexible Personal Pension Plan
• Top-Up Company Pension Plan
• With Profits Retirement Plan

• LV= unitised with-profits bonds:
• Flexible Investment Bond
• Mutual Investment Bond
• With Profits Growth Bond
• With Profits Investment Bond
• With Profits Income Bond
• Bank of Ireland Bond
• All-In-1 Investment Bond
• Guaranteed Capital Bond

Like the exit bonus, the one-off bonus amount is not guaranteed and does not increase guaranteed benefits or the ‘underpin’, when conventional pension lump sum benefits are paid.

Members with other LV= with-profits policies or RNPFN or Teachers Assurance policies won’t receive the one-off bonus. 

Previously, the exit bonus rate was reviewed at least annually by the LV= Board, but it could have been reviewed more frequently if the Board considered it appropriate.

Once a new rate had been agreed, it was then applied to eligible policies to uplift payouts and income*.

The historical exit bonus rates and dates of change:

The rate reductions since 2020 were primarily caused by growth in policy values being greater than the return on exit bonus funds. In reviews since 1 June 2024, the exit bonus rate was maintained at 4.60%.

The one-off bonus rate added to the value of eligible policies on 1 April 2026 is the same as the last exit bonus rate (4.60%) less a small allowance for the costs of making the change.