Divi-boost Friends in bonus cuts

INSURER Friends Provident has cut bonus rates on almost a million saving plans, just weeks after increasing its shareholders' dividend and posting record new-business figures.

Payouts on a host of with-profit plans will be cut by an average of 3%. The maturity value of a 15-year £200-a-month unitised pension is now £58,540 compared with £61,812 in March.

Managing director Ben Gunn said: 'Although our with-profits fund has returned to positive growth in the first six months of the year, the actual return is still less than what is needed for final bonus rates to stand still.'

Friends last month reported a 9% jump in first-half new business and upped its interim dividend bill by 2% to a total of £43m.

The Financial Services Authority, has issued consultation on new rules to allow a 'realistic' assessment of life firms' solvency requirements.