The value of your investment can go down as well as up and you may get back less than you paid in. Laws and tax rules may change in the future. Your own circumstances and where you live in the UK also have an impact on tax treatment.

Important information

Your guarantee is an important feature of your with-profits investment that can be very valuable. Conditions apply for guarantees. For example, if you transfer or surrender your plan you will lose your guarantee. So please seek financial advice if you are thinking of moving out of with-profits. There's likely to be a charge for advice.


Most types of with-profits investments benefit from bonuses. The main types are regular and final bonuses. Our Stakeholder Pension Plan does not have any bonuses.

Regular bonuses

We aim to increase your plan’s guaranteed amount over time. We can do this by adding regular bonuses, and some with-profits investments have a guaranteed growth rate.

If the regular bonus rate is zero no bonus is added to the guaranteed amount until we set a new rate. But if your with-profits investment has a guaranteed growth rate the guaranteed amount continues to increase.

Final bonuses

We may pay a final bonus when your with-profits investment comes to an end.

The amount of any final bonus will depend on a number of factors, including the:

  • Payments you make
  • Deductions we make
  • Investment returns on the assets in the with-profits fund
  • Amount of smoothing we apply

The graph below shows how a with-profits investment’s guaranteed amount and payout value can change over time and this could result in a final bonus.

The darker line shows how the payout value could change over time.

The lighter line shows how the guaranteed amount can grow over time - this is the minimum amount that we will pay when the guarantee terms are met. 

ValueRetirementdateTimePayout valueGuaranteed amountFinalBonus

This graph is based on a Personal Pension Plan and doesn’t represent actual plan performance. It is only to give you an idea of how final bonuses work. We have assumed a single payment has been invested in a unitised with-profits plan and that smoothing is applied to the payout value over this period.

For more details on bonuses see the with-profits guide for your type of plan.


Smoothing can help to:

  • Protect your with-profits investment from short-term market movements
  • Provide some protection and stability to both your plan value and any payments from a With Profits Pension Annuity
  • Generally ensure that when there are financial market highs, you can benefit over time and when there are lows your plan value doesn’t immediately suffer the full effects

But it’s important to know that from time to time, depending on market conditions, smoothing may be reduced or switched off. 

How does smoothing work?

You can see in the graph below how the value of a with-profits investment could go down as well as up over time without smoothing (darker line) and how smoothing could affect the payout value (lighter line). The payout will be smoothed down at times and smoothed up at others.


smoothing graph

This diagram is for illustrative purposes and doesn’t represent actual plan performance. It is only to give you an idea of how smoothing can work.

For more details on smoothing see the with-profits guide for your type of plan.