Taking the risk out ofwith-profits

The Government should encourage employers to transfer from their existing occupational benefit schemes into a pooled system that spreads out investment risk

Historically with-profits business involved the pooling of a wide variety of risks; initially mortality but soon investment and, implicitly, expenses and lapse risks. Just as implicitly the outcome of management decisions was pooled. Only what the board, upon the advice of its actuary, felt could safely be distributed was paid out as profit. Perhaps because it was never made explicit that profits can mean losses, when the unplanned happened, there has been disappointment. Some allege that the with-profits concept has not adequately served the policyholders over the years. However this ...