With Profits is a type of pooled arrangement that may invest in companies, both in the UK and overseas, government stocks, property, and other types of assets. Instead of receiving direct investment returns, for example dividends, rents, interest and capital appreciation, With Profits planholders receive bonuses.

Two types of bonuses may be paid: an annual bonus and a final bonus. The type of contract held will determine how bonuses are paid. For example, for our Crest contracts the annual bonus is included in the unit price which is calculated daily. The rate of annual bonus included in the unit price is decided from time to time by the Directors after receiving actuarial advice and making an allowance for expenses. We decide regular bonus rates by considering what we think the fund can afford to pay now and in the future. To do this we look at current investment conditions and the economic outlook for the future. We try not to change the amount of regular bonus we announce too much from year to year.

For the unitised With Profit funds available to our Talisman, Retirement Solutions and individual range of contracts, the unit price stays constant and bonus units are declared at least yearly.

 In addition a final bonus may be payable on retirement, death, transfer or a switch to other funds for all of the fund ranges.

When exiting the With Profits fund a Market Value Reduction (MVR) may be applied to reduce the value of units in adverse market conditions, this means that you could get back less than the amount you originally invested. The reduction is applied to ensure a fair level of payouts to everyone invested in the fund. If this did not occur, the investors remaining in the fund would not receive their fair asset share. The MVR does not apply to units on death or at the chosen retirement date.

The With Profits funds are invested in a mixed portfolio which includes Government and other fixed interest stocks, company shares (both UK and overseas) and property. The asset mix is chosen with an eye to maximising the long-term return on investments while paying due attention to meeting the Company's obligation to fulfil its guaranteed liabilities.

Payments made into a plan which invests in the With Profits fund are invested in the Royal London Ordinary Long Term fund.


More detailed information on asset allocation and investment returns can be found in the following factsheet:

Principles and Practices of Financial Management

All companies who offer with profits investments are required to publish a document detailing the way in which they manage the With Profits fund. You can find copies of our Principles and Practices of Financial Management (PPFM) by visiting Royal London PPFM.