General question on Terminal bonuses

A question about : General question on Terminal bonuses

I am trying to understand Terminal bonuses on my Aegon (formerly Scot Equitable Pension) Personal Pension (Group Scheme). See other thread.

How is a terminal bonus calculated?

I have the chart Terminal & Market Value Reduction Rates effective 1 Jan 2015 which lists a monthly % from 1996 to date. Am I right that you multiply the Ј contribution made in each month by this percentage. The total of all these is the sum held back and paid on termination?

I understand these % can be changed by Aegon at any time so aren't guaranteed.

I have googled and looked around but can't find much on this aspect especially not an 'idiots guide'

I have also incidentally come across 'Estate Distribution' which don't seem to be a 'Reversionary Bonuses' or 'Terminal Bonus'. I don't understand this either!

Can anyone explain or redirect me please?

Best answers:

• [QUOTE=dunstonh;67756869]In very simple terms, there is an underlying investment fund that will go up and down in value. Then there is your fund that cannot go below a certain level and the annual bonuses, that once added, cannot be taken away. At times, the underlying fund value could be lower or higher than your fund value. When its below, you are likely to see a reduced terminal bonus. When its above, you will likely see a higher terminal bonus.
  Mmm, plenty wriggle room then?
  I understand the general principle of With Profits, but when the amount quoted is more than 1/3 of the fund value I get nervous. My nerves are not helped at all when the company - Aegon - tell us mid-term that they are reducing the unit value of the fund.
  How can they do this? At a stroke this reduces the value of everyones share of the fund, so does the surplus then get paid out in Terminal Bonuses?
  There is such a lack of transparency - I have less than 16 months to my 60th birthday( the point at which policyholders are automatically removed from the With Profits funds), how can anyone make an informed judgement without knowing the full facts?
• Dunston Thanks
  I think I too understand the principle of with profits and how terminal bonuses try to ensure that you get a fair share of the pot when you leave the scheme (be that when market returns are high, or low).
  Quote:
• Where did this come from? I have passed 60 without being advised of it.[/QUOTE]
  Well, this was what I was told but I'm wondering now if its because when I set this policy up many moons ago, I elected to have my normal retirement date shown as age 60? The person I spoke with at Argon mentioned the Max age of 60 in a very matter of fact way but maybe that's because the conversation was all about my policy although my questions to him in relation to the with profits funds were more generic.
  Anyway, if your NRD is shown as 65 or even later, then this is maybe the explanation?
  You any further on with your investigations?