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27 Jan 2021


Mutuals leading the way on payouts

The latest survey by Investment, Life & Pensions Moneyfacts has revealed how many mutual societies are outperforming the larger, more well-known life offices when it comes to their with profits payouts.
The analysis examined the latest with profits bond, full cost endowment and with profits pension returns over various periods. It found that mutual societies are rewarding their members with payouts by up to as much as 26% more than those delivered by plcs.

With profits endowments
In terms of the average full cost endowment payout the mutual societies outperformed their plc counterparts over all the terms surveyed (10, 15, 20 and 25 years). For instance, the mutual providers have delivered an average full cost endowment payout of £48,581 after 25 years compared with £38,463 from the average plc, a superior return of 26% (see Table 1).

The gap is even wider when looking at the very best returns on offer. For instance, over 25 years the top return from a mutual society (Healthy Investment £74,737) is a massive 80% higher than the best return from a plc (Norwich Union £41,189).


Table 1: Average full cost with profits endowments payouts 2007 – (£500 gross annual premium as at 1 March 2007)





10 years




15 years




20 years




25 years




Fund maturity value of a full cost with profits endowment after own charges have been deducted on 1 March 2007 for male non-smoker aged 29 years 11 months at outset having contributed a gross annual premium of £500.

With profits bonds
The strong performance of the mutuals is also evident in the latest with profits bond payouts. The average difference between payouts offered by mutuals compared to plc’s is just over 5% after both five and ten years (see Table 2). The excellent performance of the mutuals is particularly evident over five years, where they have delivered three of the top four payouts, including the highest from National Deposit Friendly Society (£39,178).

Table 2: Average With Profits Bond Payouts 2007 – (£25K single premium as at 1 February 2007)





5 years



+ 5.3%

10 years



+ 5.9%

Survey assumes no income has been withdrawn for a male aged 29 yrs 11 months at outset and is based on a £25K single premium.


With profits pensions
The mutual societies are also delivering some of the highest payouts on with profits pensions, with the average mutual delivering 18% more than the average plc after 20 years and 11% after 25 years (see Table 3). Once again the top 20 year (LV= £73,914) and 25 year (Wesleyan Assurance £144,755) payouts have been posted by mutual societies. In comparison, the best returns from plcs were £54,871 (Prudential) after 20 years and £117,570 (Prudential) after 25 years.


Table 3: Average with profits pension payouts 2007 – (£1K gross annual premium as at 1 April 2007)





5 years



+ 6.8%

10 years



+ 5.6%

15 years



+ 7%

20 years




25 years









Fund value after own charges have been deducted on 1 April 2007 for a male retiring at the age of 65 years having contributed a gross annual premium of £1K.


Richard Eagling, Editor of Investment, Life & Pensions Moneyfacts said: “Contrary to popular belief, superior with profits performance is often posted by the smaller mutual companies and not necessarily by the household names. These latest results clearly highlight the advantages mutuality can bring for customers. Since a mutual society is run in the interest of its members, unlike a plc it does not have to pay any of its surplus profits to shareholders. Instead, most mutuals have been able to reward their policyholders through higher payouts from their with profits funds.”

Nick Breton, spokesperson for Harrogate-based engage Mutual Assurance added: “It comes as pleasant reading that friendly societies and other smaller mutuals are providing better returns for planholders than many larger, household name life companies.  As a modern mutual, we’ve always believed that our investors are better off saving and investing with us in order to help meet their plans for themselves and their families.  In fact over one and two-year investment periods, engage investors would have been in second spot for with profits bond returns, and would have seen above-average returns for other periods.”



Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry. 

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