Hundreds of thousands of long-term savers with Standard Life have had the returns on their policies cut or frozen despite the group's with-profits fund making a double-digit gain.
The life insurer said it was maintaining the regular bonuses it paid on half of its one million with-profits policies, but it warned that the returns on 500,000 unitised policies would be lower than the ones paid in February 2010.
The group said it had decided to cut the bonus rates to enable it to maintain flexibility over the amount of money it invested in equities and property, which it believes will deliver better returns in the long run.
But the decision was criticised by financial adviser AWD Chase de Vere. Its head of communications Patrick Connolly said:
"Standard Life is still strong enough to maintain a reasonable weighting in growth assets such as equities and property in many of its funds, but policyholders are not necessarily seeing the full benefits of this.
"It seems that, almost regardless of investment performance, many with-profits funds are still paying for mistakes they have made in the past and it is their policyholders who suffer. We can expect further reductions in bonus rates and payouts in the future."
The group is reducing the annual bonuses it pays on unitised with-profits life funds to 1.25 per cent from 1.5 per cent while returns on unitised pension plans are being cut to 1.5 per cent from two per cent. Returns on convention with-profits policies will remain unchanged.