Royal London launches profit sharing for pension customers

Mutual Royal London is to introduce profit sharing for hundreds of thousands of new and existing pension customers from 2017.

All new individual pension and drawdown policies, as well as unit-linked workplace, personal pension and drawdown policies written since 1 July 2001 will benefit from ProfitShare, the firm says.

This includes all auto-enrolment members.

With-profits policyholders will also receive a greater proportion of company profits as a result.

Royal London estimates 600,000 existing customers will be impacted immediately as well as 400,000 new customers over the next five years.

At the end of 2016, and each subsequent year, the mutual will review its financial strength and decide whether a ProfitShare is awarded.

Customers will receive their bonus the following April as long as they have not terminated their policy. The extra funds will be put into a separate account but follow the same investment strategy as the main plan.

Royal London says it aims to award between 0.15 per cent and 0.25 per cent of the unit-linked value of the customer’s qualifying plan.

Royal London chief executive Phil Loney says: “As a mutual company we want to ensure that our customers and members have the best outcomes and  experience, and we wanted to find a way for those members of Royal Londonwho don’t invest in our with-profits fund to also share in the profits of our business.

“Our innovative approach will significantly increase the number of Royal London customers who will see their savings increase through sharing in our profits and will further enhance our already strong competitive position in the pension and drawdown markets.”