Life insurer Norwich Union blamed the tumbling stock market today as it cut bonuses and payouts for 3.3 million policyholders.
The group, part of Aviva, said it had been forced to take "prudent action" given the difficult investment climate.
Annual bonuses on with-profits pension products will fall from 4.75 per cent to 4 per cent - and from 3.75 per cent to 3.25 per cent on life and investment plans.
Norwich Union said the average payout on maturing policies would be down by around 12 per cent with a 20 per cent drop on some pensions.
With-profits policies aim to smooth out stock market volatility by spreading returns out across the life of a product.
Mr Mike Urmston, Norwich Union's chief actuary, conceded the group would be reviewing its bonus rates more regularly in the future.
He added it was not just the FTSE 100 Index's 24 per cent drop last year that had hit the group but "several years of poor investment performance".
PA
